As the automotive industry braces for the financial ripple effect of U.S. tariffs on Chinese goods, Len Bellavia, founding partner of Bellavia Blatt and a prominent attorney for dealers, is urging retailers to shift focus from inventory constraints to long-term operations profitability and legal preparedness. During the latest episode of Inside Automotive, Bellavia outlines the growing list of manufacturer tactics, intentional or otherwise, that could cost individual dealers hundreds of thousands, if not millions, in annual gross profit.
According to Bellavia, one issue taking root involves the short payment of dealer reimbursements for warranty repairs and no-cost battery replacements. Although these occurrences may seem isolated, Bellavia emphasizes that the cumulative loss in gross profit can reach $100,000 to $125,000 per store annually. These patterns, he suggests, are not random. “Manufacturers are always thinking three to six months ahead,” he said. “There’s going to be an increase in fixed ops, and dealers are going to become smart about this. So they’re pushing back early by underpaying dealers and hoping it slips under the radar.”
Rather than pursuing manufacturers individually, Bellavia recommends that dealers work through state associations to identify common issues and act collectively. He estimates the industrywide impact could be as much as $1 million per rooftop each year. With retail reimbursement alone, Bellavia argues that many dealers are leaving an additional $250,000 annually on the table due to flawed processes and improper discounting on the customer-pay side, which negatively impacts reimbursement submissions.