Thoughts on OEM Warranty Issues in the Auto Aftermarket

Dec 2, 2009

As the specialty parts industry has continued to grow and owners of new vehicles increased their desire to select many among ways to accessorize them, there appears to have been a collateral growth in the number of OEM warranty disputes. The increased popularity of diesel-powered vehicles seems to have added to the list of warranty-related problems between owners and dealerships.

In this climate, it has become increasingly important for retail stores and installers who sell and up-fit new vehicles to become aware of how their businesses may be of help to customers facing such disputes.

Some Background Information

Through the 1980s, up to and including the introduction of OBDII [version II of On Board Diagnostics technology] 1996, OEM warranty dispute issues [at the new vehicle dealer level] have been directed to the impact of specialty automotive aftermarket parts on vehicle warranties and exhaust emissions compliance. With regard to the latter, primary concerns dealt with aftermarket parts or systems that were functionally compatible with OEM emissions controls and did not cause emissions levels out of compliance. Over time, this problem has encompassed several areas of activity.

Because the manufacturers of emissions-related aftermarket parts have been provided a path to emissions compliance, “certified” products have been made available that are not technically in violation of OEM warranties.  In addition, the majority of aftermarket specialty parts for engines and powertrains have not provided major boosts in power, with the possible exception of supercharging and nitrous oxide systems, only marketable gains. However, with the recent advent and growing popularity of diesel-powered vehicles [particularly trucks], a new set of circumstances has developed, giving rise to significant changes in the OEM warranty dispute atmosphere.

From the combined perspectives of a retail shop or installation facility, there is an implicit responsibility to be aware of what consumers may face during the service life of their vehicle, with respect to warranty issues.  Although there are legal provisions that enable specialty parts manufacturers to achieve emissions compliance for non-replacement powertrain components, consumers need to know the potential downside of their installation and the steps that can be taken when warranty problem arise.

Even beyond a given vehicle’s warranty period, when any one of a variety of vehicle inspection procedures may be required, it’s important that consumers are aware of their rights and requirements.  As national and global environmental concerns continue to rise and impact the lives of everyday vehicle users, keeping abreast of the “rules and regulations” is becoming increasingly important, largely independent of geographical location.

A Growing OEM Warranty Issue

Since the OEM began distributing documents to their dealerships, describing [often with supporting photographs of damaged parts] specific damage purported to be the result from use of aftermarket “power up” devices [among others], the increase in warranty denials has progressed notably.

Unfortunately, consumers faced with high engine replacement and/or engine repair costs have little or no recourse for relief, other than to seek help from the manufacturers of these parts or take legal action on their own.

Based on procedures defined in the Federal Magnuson-Moss Act [consumer protection document], dealers denying warranties are required to provide proof that an aftermarket part caused a warranty problem. It is at that point of proof where a parts manufacturer may become liable for the failure. In the vast majority of reported failure cases, dealers are not supplying consumers with this information, further exacerbating the problem and flying directly in the face of the M-M Act, thereby preventing consumer relief from the OEM denial.

Retail sellers of such tuning products [and it’s not limited to tuning products] are often unaware that the parts they sell may lead to warranty-related issues, dealing with related component failure. In fact, based on liability release requirements linked to the sale or use of certain aftermarket products, the manufacturers of such parts remove themselves from warranty denial confrontations at the initial sale. Other manufacturers of these products appear to be more concerned about the potential of parts failure and, in fact, offer technical and informational support to consumers when such situations occur.

Consider this example, because it is not at all uncommon. The owner of a diesel-powered pickup truck, being used to tow a fifth-wheel trailer, installs some aftermarket engine/powertrain tuning.  In the normal course of operating the vehicle under these circumstances, an OEM fuel injector hangs open and overloads a cylinder with fuel. While the extent of damage can vary, a requirement to replace the engine is not out of the ordinary.  The vehicle owner is not aware of an OEM Technical Bulletin that not only identifies the cause of damage but directs the dealer [in some instances] on the method of repair.

The owner’s failure to be aware of the OEM problem provides no basis for him to dispute the dealership’s claim that tuning caused the problem. Should the dealer not cooperate and provide proof of the problem’s cause, the tuning device manufacturer has no basis for cause that his product was at fault. So, in such cases, the vehicle owner could be stuck with a $14K repair bill.

Possible Solutions to theWarranty Denial Issue

There are several options that have proven successful. Aside from recommending that a customer purchasing these products should confer with his/her servicing dealership [who will eventually evaluate failures] about their policy regarding “power up” and other products, there are additional possibilities. While some new vehicle dealers actually sell these products, others will categorically deny a warranty if non-stock tuning [or other parts] has even been used and removed. Currently, it is not technologically feasible for a dealer to always make this determination, based on the fact no residual footprints are left in a stock ECU if tuning has been installed and removed.

Once a failure has occurred and warranty denied, one important avenue to pursue is a search for any OEM Technical Service Bulletins that may have been issued to the dealership. Typically and on a routine basis, these outline a factory-related [caused] defect that, in many instances, would normally be within a given warranty’s purview for repair. Websites exist for each of the domestic manufacturers that provide access to TSBs. In the order of GM, Ford and Chrysler, they are as follows: www.gmtechinfo.com, www.motorcraft.com, and www.techauthority.com. While a small fee is required to gain entry for each of these sources, the information they can provide could be well worth the investment, particularly when confronting dealerships who may be incorrectly faulting specialty aftermarket parts for warranty-related problems.

Unfortunately, dealerships don’t always inform consumers of these notices and still assert aftermarket parts caused the failure.  While most consumers don’t have access to these factory documents, some manufacturers of aftermarket parts often do and can offer this assistance.  It can be a tedious and laborious process, but a skilled staff from such companies can help guide consumers through this maze of information to conclude successful results.

Again, unfortunately, some dealerships [even in the face of appropriate Technical Service Bulletin evidence] will continue warranty denial. It is at this point consumers may want to visit the SEMA website to review the Association’s recommendations on what to do if a warranty is denied.  Multiples of information are provided, including contact information that is state-specific for consumer assistance.  SEMA has also been in preparation of an industry-wide warranty program [entitled “Pro Pledge”] with provisions to insure consumers some level of protection in warranty denial situations. There is also a possibility the more progressive manufacturers of aftermarket parts may provide their own support for OEM warranty denials.

Some Overall Thoughts

The fact remains, OEM warranties will be denied, depending upon circumstances. The fact of the matter is dealerships derive more income from having their customers pay for warranty work than from billing the OEM. Consumers contemplating vehicle modifications that could affect a given warranty should take some basic and precautionary steps. These include the following: Prior to product purchase, discuss the extent to which the product manufacturer will support a denial.

Determine if the product is emissions legal and if the company has a history of assisting customers in distress. Speak with the dealership who will be evaluating a possible warranty failure, prior to vehicle purchase [if possible] or who will be servicing the vehicle if not purchased at that dealership. Identify a source for OEM Technical Service Bulletins, prior to any problems. For a fee, this information can be obtained on the Internet. Consumer-friendly repair facilities can also be of help, frequently because they use the same service for repair purposes.  Otherwise, some manufacturers of aftermarket parts maintain a surveillance program that includes monitoring TSBs for involvement of their parts.

Visit the SEMA website www.enjoythedrive.com and check out the “Warranty Denied” segment.  Familiarize yourself with the recommendations provided because it’s part of their membership services to provide this type information.  Overall, become educated about the processes to be followed prior to and during a warranty denial.  It’s not about taking legal steps, at least not at first.  Knowing the laws, keeping track of factory-caused failures and becoming comfortable with the process will all pay dividends when a denial is confronted. In this particular case, knowledge really is power.

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To provide another perspective on the issue of warranties and aftermarket parts, Performance Business spoke with Michael White of Lehmer’s Concord Pontiac GMC in Concord, Calif. White has been working for dealerships for over 30 years. He is also an enthusiast of modified vehicles, and in his world, those two go well with one another.

At the dealerships where he has worked, White has brought in customization. The reasons? There are many. But the bottom line is that White says displaying a vehicle with performance and appearance enhancing aftermarket parts helps sell cars.

To start with, White notes that it can serve as a marketing tool, attracting customers drawn to the vehicle’s appearance, which leads to questions, which lead to vehicles sales. Those car and SUV sales are then increased when aftermarket parts are financed with the vehicle, and for White, those sales get up into the millions. Those clients, says White, are also the most loyal. The come back for further modification and future purchases. Part of that is driven by the dealership branding that White gives to those vehicles, another benefit.

With those benefits, the question arises as to why more dealerships don’t modify vehicles. According to White, a lot of dealerships have no familiarization with aftermarket parts, and that’s why they want nothing to do with it.

Even for White, with his decades of experience working in dealerships, incorporating aftermarket parts sales isn’t always an easy task. People at the OEM [who still honor the warranties] and service managers can be hesitant and reluctant at times to work with the aftermarket. Fortunately for White, he has the ability to bring them all together on the benefits aftermarket parts bring to the dealership.

However, White is also very careful on which parts he’ll install. He always makes sure every part is tested on the vehicle, often driving the vehicles himself, to make sure it will not compromise any aspect of the warranty. He is forced to be very selective of the manufacturers he’ll work with, and those that do work with him often go above and beyond.

For example, White uses Pedders for suspension components. He says that in addition to them being excellent products, Pedders also comes out to train the techs and demonstrate the parts’ proper installation.

Those are the type of steps White takes to ensure the world of new car sales and the world of aftermarket parts are in harmony at his dealership. However, he is aware that many dealerships are not as accepting of vehicle personalization as he is.

He notes, “I’ve heard of service managers who have told people that modified their struts that because they modified their car, their vehicle warranty is void. That’s not true.”

Providing advise on how to avoid those types of problems for your customers, White says, “What I would do if I owned a speed shop in an area with a lot of dealerships, I would do product demos. I would invite service managers down to let them see the careful steps that you do. Let them be part of it, touch it, feel it, road test it and be open to it,” says White.

The bottom line is that communication is critical, and the message you want to communicate is that you and your staff know what you’re doing. Many service writers may not know how meticulous most aftermarket techs are. Convey that you are careful, competent and responsible. Communicating can only help your case.