The Sunday Times believes it has discovered evidence that Toyota were telling their dealer network not to fix problems in customer’s new cars if the customer hadn’t spotted the problem or the problem itself did not pose a threat to safety.
The Sunday Times has also discovered evidence that the Pope is a Catholic and also that there is a drastic shortage of modern rest-room facilities for bears who live in woodland areas.
The Sunday Times article made me feel a sense of despair inside. Was this “investigative journalism” at its best? No. Were Toyota being singled out for doing only what every other mass production car manufacturer does? Yes. Was this news? Hardly. Is there a three ton elephant standing in the corner of the living room that The Sunday Times cannot see? Maybe.
I would like you all all to meet Kaylee. Kaylee is an intelligent and sweet eight year old girl. She is normal and healthy and today I am taking her to a Dealer Franchise.
Kaylee: Is this where cars are made?
Me: No, Kaylee. This is where cars are sold to people and where cars are fixed if they go wrong.
Kaylee: So, the car maker owns this big building and employs all the people?
Me: No, the car maker would rather nail himself to the mast of a sinking ship than do that. He just has his name over the door, like McDogburgers or Putrid Pizza.
Kaylee: So, this is a franchise operation, an administrative and business ‘firewall’ between the manufacturer and the end-customer, acting as a quasi-independent provider of car financing loans, spare parts, service facilities and a drop-in centre for owners with warranty issues?
Me: Yes. Now, get me a coffee from that machine next to the lady with the white blouse.
Kaylee: I got you a FairTrade double latte with extra sugar but you need to put your own vodka into it.
Me: Thank you.
Kaylee: So, the people here make their money buy selling spare parts to the people who bring their cars in for service and also charging them for the time spent to fit the parts, sundry items used in that process and selling them service packages?
Me; Yes. Kaylee, this is tomato soup.
Kaylee. Deal with it. So, surely the franchise dealer is motivated to increase profit by maximising the amount of work that can be carried out on each car that comes in?
Me: Yes.
Kaylee: Ideally, that would necessitate separating the honest mechanic from the ‘front-of-house’ sales team, who are then heavily incentivised to use their highly developed interpersonal skills to maximise the commitment of the car owner, encouraging them to pay for necessary and/or advisable and/or arbitrary work. For this system to be perfected, surely the franchise should nominate a Service Manager and that individual will then instruct the mechanic on what work needs to be carried out on behalf of the customer?
Me: Yes. Kaylee, did you put sugar in this tomato soup?
Kaylee. Sweetener. You need to lose weight. So, if I was the owner of a dealer franchise and I wanted to make extra bucks, I would get the most persuasive, devious and manipulative person I knew and make them my Service Manager. I’d cut a secret cash incentive scheme with them, based on the increased net sales of services added to existing customer’s data. I’d tell the mechanics to carry out work without questioning the Service Manager’s authority and I’d make sure that the customer never gets to talk to anyone but me or the Service Manager.
Me: I bet you would.
Kaylee: However, At the same time, I can ingratiate myself towards the customer I am currently milking to death by suggesting that we invoice the manufacturer for any defects that might reasonably be covered by the terms of the warranty? Either way, as a franchise, we get payed by one party or the other, don’t we?
Me: That’s right Kaylee. That is why manufacturers fight hard to control warranty claims made by customers who find faults in their cars. The manufacturer is always paranoid that the Service manager is playing both ends for his own benefit.
Kaylee: But surely, there is always evidence of a clear failure or defect in a part and that would have to be presented either to the manufacturer or the customer as evidence of work needing to be done? I mean, people aren’t stupid and there are such things as laws to protect against blatant fraud?
Me: The manufacturer always asks to see the part and can usually tell if it is a legitimate claim. But 99.9% of the time, you can hold up any broken part, one you’ve taken from another car, and the customer will assume that you are not lying. The deception is almost impossible to prove and the customer rarely if ever, disputes the integrity of the Service Manager.
Kaylee: But surely, the scam must go belly-up every now and then? I mean, one day, the Service Manager goes too far with the wrong person?
Me: Yes, but then he has covered all his bases. He has dismantled the customer’s car, has the parts stacked neatly all over the workshop, he holds his ground and he knows that the customer desperately needs his car back. If the customer accuses him of lying, he folds his arms and drags the franchise owner back from the golf course. The customer soon gets the message. Beyond ‘rigging’ a car with hidden cameras, many scams are impossible to prove.
Kaylee: But surely, if the Service Manager is pulling outrageous scams, the service data returning to the manufacturer will show disproportionate levels of component failure on cars serviced at that franchise?
Me: Yes, if the Service Manager is stupid but normally they are clever. They ‘cluster’ faults, attributing them to certain customers or cars where either the customer is an ass or the car is actually a ‘turkey’ which the manufacturer already knows about. That way, it makes it almost impossible for the manufacturer to prove anything either, regardless of their suspicions. If the manufacturer loves the sales figures for the franchise overall, the manufacturer would be shooting himself in the foot by getting involved.
Kaylee: So, every time we put our car in to be serviced, we stand to get ripped off?
Me: Not every time, not every dealer. Focus on how the scam works and you will see that it pays to pick and choose your dealer and not come across like an ass with plenty of money and no knowledge of modern cars.
Kaylee: But hundreds of thousands of customers must be being ripped off for millions each year by unscrupulous Service Managers and dealerships. Why don’t big investigative newsgroups ever cover this outrageous scam?
Me: Good question.
Kaylee: How old do I have to be before I can buy myself a dealer franchise and learn to play golf?
© 2012 Loop Withers Roadwax.com
roadwax 
Simultaneously hilarious and repulsive. Sigh……
Thank you, Mr Festa.
Apologies for my late reply. I got my head caught in the wheel arch.
Interesting to note that Toyota,despite spending hundreds of thousands fighting the PCC they lost their case with the PCC ruling in favor of the Sunday Times…..was their an element of truth in the article?
You raise a tantalising point, Petrol head.
High-volume manufacturers like *pick a name* live in dread of financially catastrophic recalls and ‘free’ warranty fixes and repairs – many of which serve to effectively wipe out all profits on their ‘bread-and-butter’ models.
My own view (which I tried to make in my post) was that The Times could have easily nailed many other manufacturers as well and, in so doing, revealed a far greater consumer scandal. They didn’t. I wonder why.
As a tiny fish who swims with whales, I have to watch what I write and how I write it.
I hope you understand. 😉