Wow, you hit me with several good questions. If I answer all these questions and I disappear soon, you'll know a disgruntled dealer who believes in deception picked me off.
GMAC is a separate division and stands on their own from GM. As you said very correctly, nothing is free. When GMAC or any other finance company offers 0% financing, the manufacturer is obviously subsidizing that deal. Usually there is a pre-arranged minimum interest rate or amount GMAC (or whoever) is willing to accept. Usually it's a percentage because it would be hard to set a specific amount because of the wide range of the dollar amounts financed. So, say GMAC tells GM that they will sell their money for a minimum of, say, 3%. While the customer in fact pays 0% interest on the loan, GM pays GMAC that 3% (or whatever is negotiated). So, obviously, you are paying something in interest but it is buried into the price of the vehicle. If you notice, generally there is an offer of 0% interest or some specified dollar rebate, like $4000 or something. So, if you take the 0% interest in that situation you are basically paying $4000 in interest by giving up that rebate. We have programs in all of our computers that will accurately show the customer which option would be best for them.
As mentioned in the article, that rebate payment to the dealers are MIA right now. Many are concerned that it's only a matter of time before their holdback money becomes problematic to collect. Trust me, many dealers will fall like dominos if that rebate money and holdback money is not paid to them as owed by the manufacturers.
Now on the warranty issue, the dealer is not contractually obligated to pay for the manufacturers warranty costs in their franchise agreement. The good dealers just bite the bullet and do the right thing when they feel their customer is getting screwed. It will hurt really bad, and there is nothing forcing them to do so, but the best dealers likely will make good on the manufacturers warranties if it comes to that. The fact of the matter is that the customer purchased from the dealer, placed their trust in the dealer, and has the option to either buy their future vehicles from that dealer or not. By stepping up and making good when they don't have to they are making a business decision besides a moral decision. They wouldn't be wrong to just say "sorry", but most customers don't want to hear that and, although technically wrong, would take their anger out on the dealer who sold them the vehicle. Some dealers who may want to do the right thing,
if if comes to that but may not be able to do so. A medium sized franchised dealership can easily lose 30k to 50k a month in today's economy. It takes deep pockets to ride that out.
Dealers do make money on warranty work, even factory warranty work. However, both the parts and labor rates paid for factory warranty work is less than the customer pay (posted retail rates) rate. But, that gets into another completely different issue; how service techs are paid and how labor is paid. It's generally NOT the actual time it takes to do the repair, but rather what the book time says it takes to do that repair. Other than factory time, dealers basically choose between three different labor rate books; Mitchell, Motors, or Chiltons. Some books pay more for some repairs than others but they are generally a wash in the end. What you don't want is a dealer who doesn't declare what book they use and shop between the books to find which pays the most for any particular repair. A really good tech in service always 'beats the book'. I know some ASE Master techs who frequently turn 80 hours or more in a 40 or 50 hour work week. That's not cheating, that's just a good tech. Dealers kill to get those techs working in their service department. The more hours they turn in a week the more vehicles the dealer can fix in a week and the more they earn in a week. Then you have the service writers...but that's yet another story.
Just remember, like manufacturers, there are really good dealers and there are some bad ones. Profit isn't a dirty word and you want your dealer to be profitable. You want him to be there to serve you in the future. You just don't want him to try to make all his profit on you!
Oh, the parts link. That's also a touchy subject. Factory warranty work does come through on the parts statement in general. The problem is that the fine print in the contracts from some factories say that the dealership agrees to retain the broken or damaged part for 3 years for the factory to review if the dealership is on an auto-approval setup, which most are. Think about it. There's no way a dealer can keep all these broken parts for inspection by factory auditors. If the dealer doesn't have the parts, the factory can, and will, charge the dealer back for that repair made under warranty. A Ford dealer friend of mine got hit for just over $40k in warranty chargebacks a few months ago. There's no challange or negotiation to the chargeback and it's simply taken off the parts statement. That is why quite a few dealers don't use the factory for their service contracts; sometimes called extended warranties. If a dealer uses a non-factory company that is well insured and reputable, the dealer has one less thing to worry about. Once they pay for a claim they have no recourse. Once it's paid, it's paid. Clear, or just confusing? It really is a rather complicated business. There is so many different tax issues and strategies for dealers, taxes on earnings that are subject to chargebacks that leave the dealer with a negative cash flow where he has to apply on the next year's taxes to recoup the overpayment. And, etc., etc., etc.
