Keystone Warranty?

[Montana_1550]

Attn: Keystone RV


After reviewing your Priority Notice dated 10/23/2003, I would like to comment on Keystone RV’s suggested improvement concerning warranty and parts issues. At the same time, per the closing statement of this notice, opening the door for comment, I would also like to forward my concerns regarding the direction you apparently are heading with some of your policies.

Currently dealerships are being asked to absorb various costs associated with what has been labeled “warranty” repair. In reality, the majority of “warranty” issues addressed is prior to retail sale and consists of repairing poor workmanship supported by a lack of QC, not component failure. Some of the issues addressed are passed off as industry standard. It is without question Keystone RV along with a large portion of the RV industry suffers from the same genetic philosophy.

While there are exceptions, Keystone RV along with many of their competitors have not addressed, or have ignored, the cost of warranty expense incurred by dealers. This apparently is what you label in your Priority Notice “the dealership’s investment in warranty work”. Dealerships would prefer to call this finishing the manufacturer’s job at dealership expense. Manufacturers also, so it seems, have tried to gain acceptance from dealers that units purchased may, or may not, be in saleable condition. Units pass through seemingly fictitious QC departments theoretically meeting self-proclaimed industry standards and what doesn’t meet standard becomes dealer responsibility. However, it should be noted that nowhere to be found is there any industry standard falling under the auspices of poor workmanship and a lack of QC. It appears dealerships have given way and operated under this premise, forgetting they are equally as much of a consumer as their retail customers, and/or have opted to develop systems of trumping warranty claims to offset losses to make new units deliverable. This brings the question as to how much money is a dealer supposed to invest in your product above and beyond the purchase price to make a unit saleable?

Per your notice, apparently you are instigating changes to better manage certain high cost items. Monitoring, not managing, these costs may be your only achievement since the cure to minimize these costs on all fronts are to be found at the origin. This becomes quite obvious when your notice boasts of 13,711 calls received for the month of September and you are maintaining 35 plus personnel to support your customer service and parts departments. Voicing from previous experience, my management teams responsible for numbers like these would have to have immediate answers and immediate solutions to keep the door from hitting them in the butt. Then again, your team management could possibly be wallowing in a non-functional entity consisting of warranty and QC in the same department.

Conservative cost projections, based on these numbers, places combined dealership expenses well into six figure expenses for the month of September. Assuming that 50% of these calls required a parts order to be placed, an $850,000 dollar expense, based on national average, is incurred just to process purchase orders. Obviously the costs of purchase order expenses is just a small beginning. Phone time, time to move units into service, evaluate problems, fill out and submit pre-authorization forms, move units out of service to wait authorization and/or parts, move units back into service, perform repairs and to fill out and process warranty forms using a Keystone warranty manual or computerized deviation of the same (an embarrassing compilation presumably derived from a 4th grade homework assignment) far exceeds the previously identified expense. If a unit returns for further warranty repair during its warranty life, the costs can obviously double. Revenue is also lost while dealerships are performing warranty work since labor times are often critically reduced and parts margins are lost. Simply stated; performing warranty work on your product lines computes to a dead loss to dealerships and the consumer in time and expense.

Since the national average for manufacturers warranty expense is generally around 1.95%, I can only imagine your General Manager’s report maintains dollar figures well within those parameters. However, the actual truth in warranty percentages would look considerably different if computed by calls per unit or calculated against a basic PDI check sheet. While you strive to maintain warranty expense at or below national average, it should not be forgotten that dealers, after warranty reimbursement, are hard pressed to maintain the same average on purchases of your product. Include combined warranty expenses between the dealership and factory in the General Manager’s report and just maybe someone will actually comprehend the scope of warranty expenses that could, and should, be resolved before units cross the finish line.

Your current policy is now denying warranty claims because repairs were made prior to sale to the customer. I have to assume by your policy that we as dealers are to pay to repair your inability to consistently provide quality finished product, or, to deliver your product to customers and let them deal with the inconveniences and disappointments.

Currently your product lines, particularly Montana / Mountaineer / Everest and Cougar, suffers from a lack of QC, fit and finish, axle and wheel alignment problems and perhaps the worst agenda of glide room problems in the industry. This list of items can be greatly expanded because your updated warranty manual has now clearly defined limited warranty on numerous items, including glide room adjustments, to the first 90 days.

As a service manager I continually have to make choices to balance quality and expense issues with sales staff, customers and the manufacturer. While RV manufacturers continue to place marketing dollars in trade publication advertising to lure dealerships to sell product, as a service orientated dealership we have not forgotten the end user is our most powerful marketing tool. Understanding word of mouth is our strongest ally; our service department strives to maintain credibility even when manufacturers fail to do so.

As you continue to produce a bells and whistle product at presumably lower retail prices and at a high cost to your dealers, it should be no surprise that service oriented dealers are either going to have to ask higher prices for your product or change product lines. In the long run, the customers who purchase your products will define your share of the marketplace. Dealers will wise up and sell product lines offering full factory support enabling them to provide value added services to their customers.

In the meantime, dealers and consumers continue to wait patiently for a quality RV that says made in USA.

Sincerely,

Customer Oriented
RV Service Manager