Fleet Execs Confront Dealers on Padded Bills, Estimates

By Frederick Kiel, Staff Reporter

This story appears in the Feb. 16 print edition of Transport Topics.

ORLANDO, Fla. — Fleet executives complained bluntly about what they said were padded bills for repair services, unreliable

estimates and failures by service operators to offer realistic completion times.

“What we want to hear is a realistic time frame from when dealers will finish repairs. Don’t tell me you’re going to do it today, and then never even start working on it for four days,” Douglas White, director of fleet maintenance for Dunbar Armored Inc., said here during a session on fleet service-dealer relationships during the Technical & Maintenance Council’s conference that included truck manufacturers and fleet executives.

White said success for his business depended upon getting loads to customers on time, but the inaccurate completion estimates were hurting his company just as much as padded bills.

“I need to know the real truth,” he said.

Michele Calbi, vice president of procurement and shop operations for Swift Transportation, agreed.

“Sometimes a truck will sit in a service dealer for five or six days before repairs even start, with no explanations as to why,” Calbi said. “We need realistic deadlines so that we can deal with the driver and load.” Frank Nicholson, maintenance director at TransAm Trucking Co. had a similar complaint.

“All we have to offer is on-time delivery and if you don’t tell us the truth, we can’t do that,” Nicholson said.  “Getting our loads on-time to customers is all that distinguishes us from our competition.”

White said that estimated times for repairs were constantly inaccurate.

“It’s just become normal that we get a call from the service sector that some part didn’t come in for a truck ahead of us in line for repairs, and so they can’t get to us in the time given in the estimate,” White said. “It just goes on and on.”

Brad Fauvre, president of Velocity Vehicle Group and Los Angeles Freightliner, Whittier, Calif., said service dealers linked to truck manufacturers usually faced the most complex repairs, which accounted for the inaccurate estimates.

“When we get trucks, it is more like sending some to the intensive care ward of a hospital,” Fauvre said. “We have no idea what could be wrong with the tractor.”

The serious cases his dealership received often involved malfunctions in one of three different equipment systems, such as the engine, transmission and wiring, he said.

“We have much more difficulty finding all the problems when multiple systems are broken down and we have to find out what’s provided under three completely different warranties,” Fauvre said. “It may take a while to figure all this out before we can even begin to start repairs, unlike if you take it to an independent dealer with a specific problem.”

Robert Sutton Jr. of Kenworth of Central Florida agreed that the bad economic times forced some dealers to try squeezing profits from their service dealers.

“Even in the best times in recent years, dealers linked with manufacturers have done little better than break even on their new truck sales,” Sutton said.

“Dealers should be seeking to make 25% to 35% of their income from their service departments, but it is true that some places have raised that to 65%,” he said.

Most dealers stayed away from this “shortsighted” approach, he said, despite the current recession and were absorbing extra service costs.

Swift’s Calbi did not see the problem in the same way.

“We agree that dealers have to make a profit, but we see a difference between ‘good’ profits and ‘bad’ profits,” she said. “When we see service dealers high-fiving each other when they see a Swift truck that’s out of warranty pull into one of their service areas, that breaks trust and leads to bad profits.”

If a truck has enough miles beyond its warranty, dealer repair shops don’t have to follow strict guidelines from manufacturers on costs but can charge what the market will bear, fleet representatives said.

White said service bills “have become obscene at times,” forcing his company to renegotiate to reduce those charges.

“But this is not the way to do business,” White said. “The issue has become confrontational now, because we waste time with these overly high bills that prevent us from rolling our trucks each and every day to make the income we need.”

Dealers said that both factory and extended warranties presented problems that rolled over to their customers.

“Manufacturers’ warranties are always difficult to follow, where you have to complete a rigid set of required diagnoses and often have to repeat them,” Navistar’s Jack Saum said. “It’s not a straightforward process, as in the days before electronic engines.”

Sutton said that “there is truly a disconnect between what a warranty offers dealers and the expenses that we must bear to carry them out.”

He said extended warranties were much more complicated than factory warranties, so “many dealers just won’t work on trucks that have extended warranties, because they’re just too much hassle.”