Overheard: EV warranty work a revenue opportunity for fixed ops

“Let me put it in a bigger context, where we’re looking at what’s happening in the industry going forward. And I say this with a smile — last week, about 17,000 dealers walked out the front door of the dealership, looked up and said, ‘Hey, it’s not raining money anymore.’ Of course, everybody looks to fixed operations; fixed ops is always the backstop, right? There are two primary revenue streams in fixed ops — customer pay and warranty. We’re in a rising interest rate [so] people pull back on expenditures; that has a [customer pay] effect. Warranty — my company, Warrcloud [is forecasting] — a 19 percent increase in warranty dollars between now and the end of 2025. Two things impact that. We’re going to start selling more new cars [so] we’re going to see millions more warranty-covered vehicles on the road. That’s the obvious reason. The not-obvious reason is, according to JD Power, we predict the average warranty costs on an electric vehicle are 300 percent higher — you heard us right, 300 percent higher — than an internal combustion engine. And there’s going to be 156 new EVs and hybrids introduced in the next three years.” — Jim Roche, CEO of warranty processing platform WarrCloud, on the “FixedOps Chops with Dave Boyle” podcast. The episode was recorded during the NADA Show in January and aired July 18.

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