I've always had a deep interest in economics and at a basic level you think, supply/demand will just sort this out. I learned a bit about the way the dealership side works, and I'm shocked anyone at all will work in the field. It's fairly well known the dealers make their money on maintenance, not the sale. It's less understood that warranties are equivalent to healthcare insurance. It's probably even less well known how the mechanics get paid. And if you know these 3 things, you'd be surprised anyone is left in the mechanic trade outside the armed forces.
#1 Mechanics get paid flat rate for a repair based on a book rate time estimated by the manufacturer's engineers.
#2 They get paid half this rate for warranty work (mfg warranty, not 3rd party).
#3 When the mechanics consistently get faster at the warranty work, the mfg cuts the book rate time down to this new time. And the downward spiral continues.
Then throw in a rusty example. Or some other annomaly. Those of us who wrench on our own jeeps know sometime things don't go to plan. Remember they say the dealers are making their money on maintenance. You don't see many mechanics roll up in new Maserattis or Grand Wagoneers.
Then consider the moral hazard and additional paperwork/administrative costs the aftermarket warranty creates, just like the doctors office. And they're negotiating down what they'll pay off a discount from rack rates. Which is cutting into the dealer's margin. So how does the dealer react? They hike the rack rates up on the uninsured average Joe to preserve their margin on the increased business going to warrany claims, that increasingly they're pushing to customers who don't have $1k in an emergency funds. The downward spiral continues.
So have you become your own doctor yet? Setting your own bones? Doing your own colonoscopy? Self-service appendectomy?
These businesses are looking more and more alike.
That’s why all the good mechanics work at private shops where they don’t accept warranty work, etc.
Same thing with the good doctors too. I do work for a number of doctors and most of the good owns have left to start their own practices (Direct Primary Care) where they do not accept insurance, only cash. They all rave about how much of a breath of fresh air it is not being tied to insurance and the whole system that is just a gigantic grift.
I didn’t know dealers worked that way, but it makes perfect sense. They’ve adopted that same model as the medical industry which is completely failing.
