Is the Manufacturer LAZY or very, very SMART?

Dateline–October 2018


Is the manufacturer LAZY or very Smart? We will answer that question in a moment.   Most dealers are familiar with the different types, different levels of manufacturer’s audits but here is a quick summary:


Level 1—Self Audit.   These are conducted routinely, and the GAO has verbalized that they can do up to 100 of these monthly.

Level 2—Fax / Scan Audit.  Unlike what most dealers are told, these are not random.  There has been some red flag to cause the manufacturer to look closely at your deals/documentation.

Level 3—Onsite Audit.  Again, while dealers have been told it was simply “their time”, without exception, the GAO only conducts onsite audits if they reason and the probability that they have the dealer “red handed”.  Multiple red flags, multiple issues with a program that they can see on their end.  The manufacturer will not devote a week or two, and thousands of dollars to simply conduct a random, onsite audit unless they are confident that it will financially benefit them…aka….they will be able to charge back A LOT of $ from you.

Today, we have the newest tool from the manufacturer—the “I GOTCHA” audit.  This is a new hybrid type of audit where they have designed a program where most dealers will fail the majority of times that they participate.  Tweak a program that dealerships are accustomed to using by inserting a new rule that dealers won’t see, and thusly won’t know they have to comply with the new rule, and PRESTO, the new I GOTCHA audit.

I GOTCHA audit is now the Level 2 ½ –the dealer gets an audit letter asking specifically for documentation on this new version program that got changed without dealers paying attention.  They know that the majority of dealers failed, but the GAO is too lazy to come in and get their money, so they simply are asking for you to provide the documentation that you failed without them having to come get their money back.

When the manufacturer wants to pull ahead sales, and launches a program where you sell a vehicle to yourself, get a large DEALER CASH incentives to do so, thusly being able to give your customer an incredible deal when they later purchase the vehicle, it’s a WIN-WIN, right?  No, realistically, it’s a WIN-LOSE.  The manufacturer gets their sale card, the dealer gets a temporary rebate that he later has to give back because he didn’t see a new stipulation of the program.  The dealer loses—and loses big—while the manufacturer gets what they want.  Hey, at least the ultimate End User got a good deal, right?

If you need help trying to identify your exposure, call us—we will be happy to help you fix your errors if it isn’t too late.  At a minimum, we will help you understand what the manufacturer is doing to you, so you won’t have exposure the next time you try to help them with a similar program.

PS—the answer to the question is both—they are lazy and they are smart.


Signed—true friend of the dealers!