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Originally Posted by F32Fleet
For some reason I thought I already knew this.
So in my example BMW would pay for everything except for new plugs. Would BMW then bill Bosch for the repair work? .
So how do the OEM's protect themselves from counterfeit/3rd shift/non-oe spec parts?
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The dealer pays for everything (really just parts) and sends a bill to the OEM. The OEM then pays for everything (parts + labor) and bills the supplier. The supplier also has to pay for 3rd party inspection and other increased quality measures until the issue is resolved. The rule of thumb is always to rectify the issue as quickly as possible, then find root cause later and sort out the financial portion in the background. Ideally the dealer/customer should never be left hanging waiting for approval to fix the car.
Now If the OEM reads a service write up that indicates the car was modified in a way that voids the warranty, then they will deny the claim. We typically requested parts be returned to us for analysis so we can verify it is an approved part and see if it was modified. Or in the OP's case, they often send field techs to review the vehicle before paying out the claim since the cost is so high.
If the OEM bills a supplier and the supplier say it's a design issue or installation issue at the factory that isn't their responsibility, they can deny the claim as well. For example, if the returned part shows signs of damage indicating that it was installed with improper tools, or the dealer comments that the part wasn't screwed in/clipped in properly. Then it's up to the OEM to either prove that the supplier is at fault or fix the issue with other measures. The supplier then does a chargeback for all incurred expenses due to the claim.
Ultimately the suppliers get the worst end of the deal. it's guilty until proven innocent at that point. And especially frustrating when engineers aren't cooperating or doing their due diligence in the investigation. A lot of times you can't tell if a part was damaged during manufacturing, installation or removal. So you really rely on the dealer's wording to understand what happened. But an easy one is if we didn't see the right supplier code/part number on the part, it wasn't ours. and it's the OEM's responsibility to chase the right one. that was rare, but it happened.
In the case of the filter example, you can't always tell (especially if the part was destroyed during the failure). But virtually every OEM part drawing includes an area for an OEM part number and/or some marking indicating compatibility. If, for example, an intake manifold was returned with no markings then we'd know it's not approved. But if it is sold under the OEM part number like what you see on ECS, RockAuto, etc., then it is approved.
The reason why some dealers are "mod-friendly" is because they're not stupid. They know they will get paid for service as long as they don't put in the service writeup that they replaced parts on a modified car. And usually those are the dealers that are honest about what caused the repair because they actually check into what happened and find the root cause of the issue.