Car Dealership Guy Podcast Apr 30, 2026

“Warranty is Exploding!” How Dealerships Are Capturing the $32B Revenue Surge + Winning Strategies | Jim Roche, CEO of Warrcloud

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Concept

retention

Dealers use “retention” to mean keeping customers coming back. If you get people in for service after they buy a car, they’re more likely to buy again later.

Concept

Warranty revenue is the money a dealership earns for repairs covered under the vehicle manufacturer’s warranty. In this segment, the host emphasizes that warranty work is growing fast and is becoming a larger share of dealership profit.

Concept

fixed operations

Dealerships are usually split into two money areas: selling cars and running the service/parts side. “Fixed operations” is the service and parts side that keeps making money after the sale.

Concept

independent shops

Independent shops are regular repair businesses that aren’t tied to a specific car brand dealership. The episode is saying some dealership practices may be driving customers away from the dealership.

Concept

customer pay

“Customer pay” refers to repairs and service work that the customer pays for out of pocket, rather than being covered by warranty. Comparing customer-pay growth to warranty growth helps show where dealership service revenue is shifting.

Company

NADA

NADA is a group that tracks and reports industry data for car dealers. In this episode, the host is using NADA numbers to support the warranty-growth claims.

Concept

core OEM warranty

“Core OEM warranty” means the warranty that the car maker includes when you buy the vehicle. It’s different from an extended warranty that you might purchase later.

Concept

recalls year over year

“Recalls year over year” means looking at whether the number of recalls is going up or down each year. In this segment, they’re saying recalls aren’t increasing much, so warranty growth must be coming from something else.

Term

warranty covered

“Warranty covered” means the car’s repairs are eligible to be paid for under the warranty. If lots of cars are still within their warranty period, there are more warranty repairs to do.

Concept

dealer service departments

A dealer’s service department is where the shop does maintenance and repairs. Warranty work can bring in a lot of business for that department, so if warranty grows, service departments can benefit.

Concept

third party independence

This is about non-dealer repair shops—independent garages—that do car service. The host is wondering if more customers are choosing them instead of dealerships after the warranty period.

Concept

after warranty service opportunities

“After warranty service opportunities” are repair and maintenance jobs that happen once the factory warranty coverage ends. The speaker is concerned that dealers are getting a smaller share of those jobs, which affects ongoing service revenue.

Concept

death spiral

A “death spiral” is a situation where one problem makes the next problem worse. Here, higher prices drive customers away, so dealers lose business and feel pressured to raise prices again.

Term

aftermarket

The “aftermarket” is everything outside the car brand’s own dealer system. It usually means independent repair shops and non-dealer parts.

Term

warranty work

“Warranty work” is when repairs are paid for under the car’s warranty. The dealer does the work, and the warranty coverage is what pays for it.

Term

tech dissatisfaction

Tech dissatisfaction means technicians aren’t happy with how things are going at work. With warranty repairs, problems with how the shop gets paid back can make technicians feel shortchanged.

Term

warranty claim

A warranty claim is the paperwork the dealership sends in to get paid for a warranty repair. If the claim isn’t filled out correctly, the shop may not get reimbursed enough.

Concept

efficiency

Here, “efficiency” means getting warranty repairs done quickly and without lots of delays. It’s about making the shop’s workflow run smoothly.

Term

warranty RO count

An “RO” is a repair order—basically the paperwork that starts a repair job. “Warranty RO count” means how many warranty repair jobs the shop is doing. If that number goes up, the shop is handling more warranty work overall.

Term

repair order

A repair order is the shop’s official work ticket for a car repair. It records what the car needs, what the technician finds, what gets fixed, and how it gets billed—sometimes through warranty.

Concept

increased complexity of vehicles

Newer cars have more computers and sensors than older ones. That can make it take longer to figure out what’s wrong and can also mean more steps and paperwork when you’re trying to get the repair covered by warranty.

Company

WarCloud

WarCloud is mentioned as a tool or service that dealers can use for warranty work. The host is basically asking how AI and automation would change what dealers do when submitting warranty claims.

Concept

AI impact this entire process

The segment discusses how AI could affect the warranty workflow—especially how claims are prepared, submitted, and managed. The dealer’s question is whether AI could effectively “do the warranty claim” over a time period, implying automation of parts of the process rather than just assisting technicians.

Term

DMS

DMS is the dealer’s computer system for managing service work. When a warranty claim is filed, the dealer pulls the claim details from this system.

Term

RO

An RO (repair order) is the paperwork the shop writes when it works on a car. It includes what the problem was and what the shop did, and that information is used for warranty decisions.

Brand

podium

Podium is a tool dealers use, and the speaker says it’s actually helping rather than just being marketing hype. The point is that dealers are finding it useful for their day-to-day needs.

Term

voice

Here, “voice” means the AI can handle phone calls—like answering, routing, and escalating requests—so customers reach the right place faster. It’s meant to improve how calls turn into booked appointments and completed service.

Company

NCM

NCM is mentioned as one of the organizations that releases data about how dealerships are performing. The hosts use that data to talk about trends in dealership revenue.

Company

Presidio

Presidio is mentioned as a company that shares dealership performance information. The podcast uses that information to show how much service-related revenue matters.

Term

F&I

F&I is the part of a dealership that handles financing and insurance products. It’s where things like loans and add-on coverage are sold, and it can contribute to dealership profit.

Concept

margin compression

Margin compression means dealerships keep less profit from each sale. Costs and pricing pressures squeeze the amount of money they earn on selling cars.

Concept

net

Net is the final profit (or loss) after you pay the dealership’s bills. The concern is that warranty revenue might not be enough to cover rising expenses.

Concept

gross

Gross is the money a dealership makes before counting all the expenses. Net is what’s left after expenses, so gross can rise while net stays flat.

Concept

leaky bucket syndrome

It’s a way to describe a situation where money comes in, but something is “leaking” it out—like rising costs or inefficiencies. So the dealership doesn’t end up better off even if sales look stronger.

Concept

warranty rate reimbursement

When a car is under warranty, the dealer does the repair and then gets reimbursed. Warranty rate reimbursement is the amount the dealer is paid for that work, especially for labor and parts.

Term

labor rate

Labor rate is what the dealership gets paid (or charges) for technician time. If the warranty labor rate is low, warranty work can be less profitable.

Term

parts markup

Parts markup is the extra amount a dealer makes on parts used for repairs. If warranty reimbursement doesn’t allow enough markup, the dealer may not earn much on warranty jobs.

Term

open recalls

An open recall is a car that still needs a manufacturer-mandated fix. If the dealer finds these cars early, they can get the repairs done under warranty.

Term

recall work

A recall is when a carmaker says a problem needs fixing on certain cars. Dealers do that repair for the customer, and it can bring in business because it’s handled through the manufacturer’s process.

Term

economies of scale

Economies of scale means bigger operations can often do things cheaper because they spread costs across more work. Larger dealer groups may process more warranty claims with less cost per claim.

Term

schedule hygiene

Schedule hygiene refers to keeping the service schedule accurate and well-managed—minimizing no-shows, correcting appointment details, and ensuring the right work is booked and ready for technicians. In warranty-heavy operations, better schedule hygiene can improve throughput and reduce wasted labor time.

Term

warranty receivable

When a dealership fixes a car under warranty, the dealership usually gets reimbursed later. That expected reimbursement is called a warranty receivable, and getting it paid quickly helps the dealership’s cash flow.

Term

war schedule

“War schedule” is a software tool for tracking warranty reimbursements. It helps dealers look at one specific repair claim or see overall patterns over time.

Term

zero to 30, 30 to 60, 60 to 90

They’re grouping unpaid warranty reimbursements by how many days they’ve been waiting. If more money sits in the older buckets, it usually means the dealership isn’t getting reimbursed as fast as it should.

Term

cash flow

Cash flow is how quickly money comes into the dealership versus how quickly it goes out. Getting warranty reimbursements paid faster means the dealership has more cash to keep operations running.

Concept

treasury

Here, “treasury” just means the company’s cash reserves. The point is that better warranty payment timing can reduce the need to dip into those reserves.

Concept

freed up capital

It means the dealership finds money it can use elsewhere because it’s getting paid sooner. The podcast uses warranty collections as the reason that cash becomes available.

Concept

thousand dealers

They’re saying their solution is now used by a lot of car dealerships—over a thousand. It’s meant to show the approach is gaining traction.

Concept

Bob and Gladys factor

It sounds like a nickname for the power of relationships. If someone (Bob) has been around a long time and people trust him, the dealership tries to keep him happy and involved rather than replacing him.

Concept

open wrecks or open jobs

This is basically saying the dealership always has cars in the shop that are still being repaired. Those unfinished repair orders are what they mean by “open jobs.”

Company

CDG Recruiting

CDG Recruiting is a service that helps car dealerships hire key managers. They focus on leadership roles like general managers and people who run finance and the service department.

Term

F and I talent

“F and I” stands for Finance and Insurance—the department and staff responsible for selling financing, warranties, and insurance products at the dealership. These roles are central to warranty-related revenue because warranty products are often sold or managed through the F&I process.

Concept

acquisition

An acquisition is when one business buys another business. In the car-dealership world, it usually means bigger companies are growing by purchasing other dealerships or dealership groups.

Term

warranty reimbursements

Warranty reimbursements are the payments a dealer receives after submitting approved warranty claims for labor and parts. The timing and approval rate of reimbursements can strongly affect a dealership’s margins and service department operations.

Term

AI

Here, “AI” means computer tools that can learn patterns and help with tasks—like answering questions or analyzing information. The host is saying dealerships should understand the different types of AI, not treat it like one single thing.

Term

GPT

GPT is a kind of AI that can write and respond in a human-like way. Dealerships can use it to help generate messages or answers faster, especially for customer communication.

Term

natural language processing

Natural language processing is how AI understands what people are saying or writing. In a dealership setting, it can help software read customer messages and figure out what the customer needs.

Term

data lakes

A data lake is like a big storage area where a company keeps lots of information. Instead of organizing it right away, it stores it so later tools can analyze it and find patterns.

Term

customer data platforms

A customer data platform is a system that gathers customer info from different places and puts it into one profile. Dealerships use it to better understand customers and tailor outreach instead of treating every lead the same.

Concept

used vehicle sales

Used vehicle sales are sales of cars that were owned before. Dealers watch this closely because it can be a big part of their revenue, especially when new cars are harder to sell.

Concept

new vehicle sales

New vehicle sales means selling brand-new cars. The episode is saying that dealers are facing tighter profits even in this category.

Concept

tariffs

Tariffs are extra taxes on imported products. If cars or parts are imported, tariffs can make them more expensive, which can ripple through pricing at dealerships.

Concept

EV

EV means electric vehicle—cars powered by electricity instead of gasoline. The episode is saying dealers aren’t sure how the EV market will change next.

Concept

operational efficiencies

Operational efficiencies are improvements that help a business do the same work faster or with fewer resources. In a dealership, that could mean reducing paperwork, speeding up follow-ups, or improving how teams handle leads.

Concept

AI summit

An AI summit here is basically a focused training session for dealership leaders. The goal is to learn how to use AI tools in real day-to-day work, not just talk about them.

Company

Walser Auto Group

Walser Auto Group is a car dealership company. In this episode, they’re used as an example of investing time to train managers on AI tools.

Concept

workflows

Workflows are the usual steps someone follows to get a job done. Here, the idea is to share practical ways AI fits into those daily steps at a dealership.

Concept

AI tutorial

An “AI tutorial” here is training content generated or delivered with artificial intelligence to educate dealership staff or customers. The idea is to speed up onboarding and improve how the industry understands and implements warranty-related offerings.

Company

Warrcloud

Warrcloud is the company the guest is with. They’re talking about tools and training that dealerships can use around warranty programs.

LIVE

Retention is the lifeblood of any dealership because, you know, you get service and then that sells the next vehicle.

The fewer of those at bats we get, the harder it is to maintain brisk vehicle sales.

But the way that dealership service departments are making up that gap is we're just raising prices.

So we are pricing ourselves out of the retention market to maintain revenue.

Today, I'm joined again by Jim Roche, CEO of WarCloud.

Fixed operations now drives over 53% of total dealership gross, fueled by a 33% explosion in warranty revenue.

Jim breaks down why this shift is happening, how dealerships are accidentally driving customers to independent shops,

and the specific technology needed to capture every dollar your store is entitled to.

A big thank you to our sponsors for making this episode possible.

Podium, CDG Recruiting, and of course WarCloud, and now let's get into the show.

Jim Roche on the CDG podcast.

Jim, welcome back.

You'll see it's great to see you.

Good to see you as well.

You know, Jim, last time you were on, we had discussed warranties and just the state of the Dealship Service Department.

You had shared a lot of important insights.

One thing that I jotted here was that total warranty business at franchise dealerships was 29 billion.

This was from our conversation last year and that was growing about 19% per year.

Compare that to customer pay growth, which was growing at about 2%.

So first question, I'm curious, where are we at today?

Are we still seeing this trend accelerate or have things changed?

Yeah, that's a timely question.

So all of these stats that I cite are from NADA and they released last year's figures just recently.

And the results, frankly, are amazing.

So last year warranty and when I say warranty, we're talking about core OEM warranty, not extended warranty.

Core OEM warranty grew again by 13.9%.

So two year warranty growth was 33.8% to over $32 billion, which is just remarkable.

Why is this growing so significantly?

I know that, and by the way, I was referring to 2024, when I met it last year from our

conversation, you're referring to 2025, much more recent figures.

Why is warranty growing so quickly and how does that stack up historically to what was the standard?

Yeah, that's really the fundamental question, isn't it?

So it seems so recalls.

If you look at recalls year over year, the volume of recalls was flat.

And if you look at warranty rate reimbursement, that's three to four percent per year.

So I think what it is fundamentally is we're selling plenty of cars, right?

So we're seeing, you know, 15, 60 million new cars on the road every year.

And those are all warranty covered.

But I think the real thing that's driving it is the cost of the components.

We're putting more technology in the vehicles.

It's expensive.

So I think that really it's the cost of those parts that is driving that higher

warranty revenue year over year.

OK, and what do you expect as far as the trend moving forward?

Do you expect us to plateau?

Do you see warranty continue to make up a bigger chunk of dealer service departments?

I do. Yeah.

And I think there's two parts of that.

One, we're projecting warranty,

core warranty to grow about another 12 percent over the next two years.

So I think the growth slows down.

Now, to be fair, I said that last year and I got egg all over my face.

So, you know, but but we think we see a slight decrease in the growth.

But what's also happening is that customer pay growth is decelerating.

So we had 33, almost 34 percent growth in warranty last two years.

During the same time, customer pay grew 9 percent.

So 359 percent more growth from a from a warranty perspective than a customer pay

perspective. And I think we're going to see that trend.

Both of those trends continue.

If you look back, if you go back 20 years,

the rule of thumb was warranty was about a quarter of what customer pay was.

And then 10 years ago was about a third.

Now it's about a half.

So that gap has significantly closed.

So with customer pay, with the growth

decelerating, right, it's not declining yet, or at least now, but it is decelerating.

Why is that happening?

Are we just the industry losing customers to third party independence at a greater

clip? Or what am I missing?

What's driving that?

That's exactly it.

You know, we are we are getting a smaller and smaller percentage of after warranty

service opportunities.

The thing that concerns me the most about that, number one, obviously retention is

the lifeblood of any dealership because you get service and then that sells the next

vehicle, the fewer of those at bats we get, the harder it is to maintain brisk

vehicle sales.

But the way that dealership service departments are making up that gap is we're

just raising prices.

So we are pricing ourselves out of the retention market to maintain revenue.

We've got to get prices under control.

And and I think that helps dealers overall with retention.

So you're saying broad brush.

Industry is losing market share to third parties and customer pay.

Industry is looking for solutions.

What what happens?

Well, they raise prices to make up for the delta.

Yeah, that drives more customers away and then we're in this like death spiral.

How prevalent is this?

Like are we talking about pockets of the country?

Are we talking about this issue impacting dealers everywhere?

Certain brands more than others?

Like how often are you seeing this?

I see it across the board and it shows up in the numbers.

You know, year over year, we're getting a declining percent of customer pay visits.

We're seeing more of it go to the aftermarket.

I'm sure there are pockets where people are aware of this, but I think broadly

speaking, that is the trend and it is alarming and dealers need to take a hard

look at reversing that.

OK, so on the bright side here, warranty work is rising.

But there's one area that you noted last time where it's not so hot, which was

there's lots of dissatisfaction amongst tax with warranty work.

Have you seen any change there?

Like why are tax today dissatisfied with warranty work?

What's driving that?

Well, I'm aware of that anecdotally, but there's also a wrench way study

that revealed that in the top five reasons for tech dissatisfaction,

warranty work was one of the top five.

And it's pretty straightforward.

What happens is the tax feel they get underpaid for warranty work because when

you go through and you process the claim, you may not pick up two tenths here or

three tenths there or this $25 fee and the tax feel that they're being underpaid.

And it's really it's no more no more complicated than that.

You've got to make sure that when you're

processing the warranty claim, you are getting every tenth that you are legitimately

entitled to so that the store gets paid and the tech gets paid.

OK, and then just actionably.

If today, if I parachuted you into a broken service department, right?

What are you doing first besides replacing leadership?

How are you?

How are you handling everything you just mentioned?

Right? How are you navigating through warranty work?

You know, fast claims, all this efficiency.

What are you actually doing there?

So look, I don't want to do a commercial.

So I'll keep it I'll keep it neutral.

I think the problem with warranty is

if you look at, OK, it's grown almost 34 percent over the last two years.

And that's both the dollar value of the claim and the warranty RO count.

Warranty RO count for two years is up 12 percent.

So it's not just that the size of the RO is going up.

It's that we are doing more warranty ROs.

If you're relying on that single person in the store to handle that much more

volume and the increased complexity of vehicles so the warranty claiming

process is more complex, I just don't think that's the smart thing that you want to do.

You want to outsource to an organization or a technology that has the

capacity and the sophistication to handle those two things.

It's it's too much too important of a revenue stream

to give it to somebody who you paying twenty or twenty five dollars an hour.

That's a I think that's a fundamental

mistake in how today's service departments are managed.

I have a question that came in here.

We I wrote in circles that to all the dealers that were recording and you said,

hey, who's a WarCloud user who has questions?

So one one dealer asked and I'm paraphrasing here, but

what how does AI impact this entire process?

Does AI do the warranty claim for me over the next month's year?

What actually happens here?

This specific dealer has been I see involved in many conversations.

I've seen a rise in dealers who are actually kind of tinkering with their tools

and really getting into to the weeds of the capabilities of AI.

But how does AI play into this as you think about

just warranty claims and just operating as efficiently as possible?

AI today and in the foreseeable future will replace mundane intellectual tasks.

It's very, very good at that.

It's very, very good at answering questions.

But when it but processing a warranty claim has several aspects to it.

One is the specialized knowledge regarding that.

But two is data transportation.

You have to be in the DMS, get the claim out of the DMS and get it to the OEM.

Well, those are all highly secure systems.

AI can't help with that.

So and I'm kind of generalizing here because it's a little bit more complex.

But AI can't really reliably process or answer

a warranty claim today because of the variable nature of how the RO is written

up and the fact that a lot of that information is behind a wall.

And secondly, it can't help at all with data transportation.

So, you know, in the near term, I don't I don't think it's it's a it's a supplement,

but it's not an overall solution.

This episode is brought to you by podium.

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The real question is it actually doing the work or just answering

with generic messages in our CDG circles groups.

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What makes them different is they're not just another add on.

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And let's be real, the phone is still where a lot of money is won or lost.

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Check out podium.com CDG or click the link in the show notes below.

Tell us more about just the overall trend of the service department,

the growth of the service department.

Where are we at today?

Well, yeah, so in Q1, our friends from NCM and Presidio,

you know, they published dealer performance data.

They showed that they in Q1 fixed operations contributed

fifty three point eight percent of total dealership gross.

The rest of it was divided up between new vehicle, used vehicle and F&I.

You know, previously the high had been fifty point two percent.

So to see fixed operations contribution jump that much.

I think that just highlights the once again, this the incredible importance

of fixed operations to a healthy dealership operation.

And what's driving that specific growth?

Number one, it's the growth of fixed ops.

And as we've said, warranty is growing much faster than customer pay.

But the other is that that's being balanced against, I think,

the margin compression that we're seeing in both new vehicle sales and used

vehicle sales, you know, we're making less money selling cars.

So we're making, you know, we got to make more money in service.

I see what you're saying.

Is there any scenario where you see someone who's leaning into warranty

and maybe their gross is growing, but their net is staying flat or possibly

declining? Like is there are there dealerships you've observed that have

this like leaky bucket syndrome where their expenses are creeping or for some

reason, while their gross is growing, their net is not from the warranty specifically?

Oh, sure. Well, in warranty, there's a couple of things that I consider best

practices in addition to automating warranty claims processing.

One, obviously dealers should be regularly doing a warranty rate reimbursement,

whether petitioning the factory to raise the labor rate and parts markup to retail.

Pretty much everybody does that now.

So that doesn't make up a big part of a rising service department.

The other, and I know you and I have talked in the past about our friends at

Busycar, but you should be really being doing everything you can to identify open

recalls in your market area, in your inventory, even in your service lane,

and make sure those are coming in.

Now, those are 100 percent covered by warranty.

So that's another way to lift warranty.

But the inefficiency of warranty claims processing comes, in my opinion,

when you're hiring people to do this work, because people can't move as fast

as technology can, and they're very expensive.

The typical warranty admin gets paid seven year or 80 grand a year,

including benefits, and you can get the same thing or a better service for

less than half the price.

So I think that's one of the areas where you see profitability leak is in that arena.

So if I had to say, hey, James, show me the top performing dealers you've seen

on the fixed upside when it comes to warranty, you're saying bring in the recall

work that's going to grow your warranty business,

rely as much as possible on technology to actually do your claims a third.

Anything I'm missing?

Just make sure that you're doing warranty rate reimbursement so that you optimize

your warranty rate reimbursement.

Those are the three stools of a healthy warranty operation.

You know, optimize warranty claims processing, make sure you're getting all of

your recalls and make sure that the labor rate and the parts markup is the highest

it can be for your market area with factory permission.

Yeah.

And are you seeing any process difference between the two to three store group

and the 40 to 80 store group?

Right.

When it comes to leveraging technology to process claims,

is there a big just difference in the actual way it's done at these different

at these stores?

Yeah, you know, the one thing that I see, and again, I'm generalizing,

is that the larger stores, one there, they can get economies of scale.

But the other is that there seems to be a much higher focus on schedule hygiene.

You know, the warranty receivable is the dealership's second largest receivable

after new vehicle inventory.

So it is very important that you be paying attention to the schedule and your

warranty receivables.

And there seems to be higher sophistication there in the larger dealer groups.

In response to that, we've developed a series of tools, something we call war

schedule, that essentially gives the dealer the ability to drill down to a single

warranty RO or pull back and look at the trends for a zero to 30, 30 to 60,

60 to 90.

We support that, you know, the dealer should have, you know, near zero

a warranty receivable over 60 days and, you know, 10 percent or less between 30

and 60 days, but you've got to have visibility into that to manage that.

So we provide a series of tools so that dealership can see how they need to

manage those. And we're seeing that that's the larger groups are doing a pretty

tight job of that.

So you're saying don't rely just on the Excel spreadsheet?

That is what I'm saying.

That's a great summary.

We've all been there.

Yeah.

But in terms of optimizing that, so is there any best practice?

I mean, it's obviously cash flow and you want to get it in this because you get

it as quickly as possible.

So is a when you mentioned war schedule, which is your specific tool, how are you

actually optimizing that receivable?

So without naming names, we have a large public as one of our customers.

And what they determine is that they can free up significant capital to deploy

against other practices versus dipping into the treasury just by making sure that

you're increasing the velocity of your warranty receivables.

You know, the number that they threw out was about $6 million in freed up capital

that they can use for investment into other areas of operations versus having

to dip into treasury.

I mean, who the heck wouldn't want to do that, right?

You had mentioned to me as well before this podcast that you have now crossed a

thousand dealers, which is remarkable progress since we are first conversation

probably two years ago at this point, maybe more.

I am curious, let's turn that over, right?

For the dealers that haven't reached out to you that haven't adopted this type

of technology in your stores, like what's the excuse?

What's the objection?

So I have never and I have never heard of us talking to any dealer about what we do.

And the dealer said no.

The dealer always says one of two things.

They say yes or not right now.

But no one's ever said bad idea, automate warranty claims processing.

What are you crazy?

Let's keep it with the pencil and the date entry.

So the not right now is I know, right?

The not right now is amazingly the the the biggest reason is because they have a

warranty clerk that they have an emotional attachment to.

You know, we call it the Bob and Gladys factor.

You know, I have more dealers and I can count who say the Bob and Gladys factor.

I like that.

You know, Bob's been working with us for 25 years and we love Bob.

So we'll come to you eventually, but you know, I can't fire Bob.

Now, the thing is, is that the typical dealership has at least three open

wrecks or open jobs.

So what we always say is we don't want you to fire Bob.

Let's give Bob something else to do so that he can spend more time with his

grandchildren and the 45 minutes a week we need help.

Bob can help us and touch all these other areas of the dealership.

So that's that's the I think the biggest one.

But the other one I've come to notice, you'll see.

So last week I was at an event in a merit sponsored event in Southern California

with about 100 automotive people, including dealers.

And I was amazed at the number of people who had never heard of War Cloud.

So I think some of the the lack of uptake is on us.

We just haven't done as big a job as to get the word out,

which is one of the reasons why you and I are talking today.

It makes sense, especially when it's a pain point that every dealer faces.

So it makes total sense.

How was that event?

By the way, I did hear about that.

Oh, it was fantastic.

It was it was that the content was fabulous.

Was Steve Greenfield was one of the keynotes speakers.

You know, Steve, being a mutual friend of ours was well attended.

Just just really a great event.

And merits puts on a world class event.

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What are you seeing now?

Like that's surprising you when you just look at the broader trends and what's

happening, the landscape is going to be an acquisition that's announced tomorrow.

There was one couple of acquisitions announced a couple of weeks ago.

I mean, things are moving, right?

Change is happening.

What's surprising you right now in the industry from a technology perspective?

Yeah.

Well, the first thing that's non-technology, but they're linked that amazes me is,

you know, just announced fixed operations makes up 54% of total dealership

gross. Does fixed operations get 54% of dealership executive time?

No. And it's just I can't I can't wrap my head around that.

You know, I mean, that's certainly in my

business or in your business, that wouldn't be the case.

So the fact that we're not paying as much attention as we should be,

either from a financial investment or a time investment standpoint is amazing.

And the follow on to that is the investment in technology

that drives 54% of our total dealership profit.

You know, I saw some stats recently that, you know, 60% of dealers had dabbled in AI

and that, you know, a like number was satisfied with the results.

But given where AI has come,

the fact that we're not seeing more of it in service is amazing to me.

I mean, just think for a second.

And I know you know this, but this is more for the audience.

In 2018, AI was essentially brand new.

You know, it struggled with basic reasoning and coherence.

Is there something anything else dealers are missing here?

If you're a dealer listening like what's the actionable takeaways for you from

this conversation, of course, we talked about

streamlining all warranty claims and you mentioned warranty reimbursements,

recalls, these are great just pieces of advice that everyone can do to increase

their margin, improve their customer experience, bring more customers in the door

that you didn't have previously.

Is there anything else that's top of mind that dealers are missing today?

Well, where I would start and this might be one of the reasons why we're seeing

slower uptake, you'll see is if I'm a dealer principal,

if I'm an executive in a dealer group, the first thing I would do is I would go out

and just take a primer on AI because people tend to talk to say AI like it's just this

thing and it's not AI is many things that fall under the AI umbrella, right?

You've got GPT, you have natural language processing, you have a genetic AI.

Once you understand the different the different disciplines of AI and what's

available, develop your game plan and then implement that, but lean into it.

Those would be the two things.

If I was a dealer operator, that would be step one and step two for me.

Yeah, and like I mentioned, I'm very pleasantly surprised at just the level

of in depth of many dealers who are not technical.

But the question that I brought up earlier was from our AI Builders channel

in circles and you just really deep conversations where dealers are embracing

it, leaning in, and I just I wouldn't have expected that.

Like I said, I always talk about the definition of being a dealer has just

completely changed and you see just the ability to go listen to Ryan Rohrman talk

about customer data platforms and data lakes.

It's like you think you're talking to the CTO of like a private tech company.

So it's pretty remarkable.

Yeah, I agree.

And but you know your audience, maybe you'd agree or disagree.

But I think those interactions are probably a couple of standard deviations

from the norm and I'm talking to the norm.

I said the 15,000 dealers who haven't dabbled into AI yet.

I mean, it really is something that is the business gets harder and harder.

I mean, look at what we've got, margin compression and new vehicle sales,

margin compression and used vehicle sales.

F and I growth is down a bit.

You know, who knows what's going to happen with tariffs?

Who knows what's going to happen with EV?

You know, finding operational efficiencies in your business is paramount.

And the low hanging fruit there is with is is an AI.

So, you know, I urge dealers to to lean into that here in the near term.

Jim, we just had a general manager from

Walser Auto Group in Minnesota on the platform and they were saying that Walser

just did a two day or recently they did a two day like AI summit for the team

where they brought everyone, all their GMs to one place.

You know, I don't know exactly what they did those two days, but they just,

you know, like a bootcamp or something.

They really dug into we're doing something similar at our company

in a couple of weeks where, you know, we're doing like an AI session all in person

altogether. I think that's a great way just to, you know, dig in and just try

different things. And the way we're structuring it is we're taking

everyone is sharing their workflows that are applicable and tactical that others

can use. So, like a dealer's perspective, right?

If you're looking at another GM or it's like, hey, how are you using it in your

day to day? What are applications you've

embedded and integrated into your dealership, right?

We spoke, obviously, about warranty and all these other things, but there's many,

many great ways to just implement it and get the advantages.

So, I love that you were doing that.

And you'll see, I now that I think about

they're not doing it with us.

Walter did it separate, but I'm saying.

But we should. I mean, there is a clear need out there.

And CDG would be great to fill that need.

You know, you guys come up with a with a one hour, two hour, you know, AI tutorial

or primer for the industry or they'd be lined up outside the door.

Stay tuned.

OK.

Jim Roche, War Cloud, Jim, thanks for coming on.

Always a pleasure.

Oh, this is great. Thanks.

All right. Hope you enjoyed that episode.

Please give the podcast a rating.

Consider subscribing to the show and check the show notes for links to what we talked

about. Thanks for tuning in.

I'll see you guys next time.

About this episode

Jim Roche makes the case that warranty work is becoming a bigger profit engine for dealers even as customer-pay service slows. He points to rapid warranty growth, shrinking after-warranty retention, and the cash tied up in receivables. The discussion also pushes dealers to tighten claims processing, capture recalls, and rethink staffing with automation. Roche closes by arguing that fixed ops deserves more executive attention and that AI should be part of the operating playbook.

acquisition aftermarket after warranty service opportunities AI impact this entire process AI summit cash flow CDG Recruiting core OEM warranty customer data platforms customer pay

Original notes

Today I'm joined by Jim Roche, CEO of Warrcloud. This conversation breaks down the massive $32 billion surge in warranty work, why customer pay is decelerating, and how dealers can use technology to fix "leaky" receivables and technician dissatisfaction. Jim reveals the tactical steps needed to modernize the service lane before the "death spiral" of rising prices drives your customers away. This episode is brought to you by: 1. Podium - the AI platform trusted by one in three dealerships. Podium helps dealers consolidate sales, service, messaging, and voice into one connected system that actually runs the work. If your AI isn’t driving real outcomes, it’s time to take a closer look @ here 2. CDG Recruiting – Hire top dealership talent, fast. From sales managers to GMs and C-suite execs, we’ve placed over 1,000 roles across auto retail. Ready to scale without the hassle? Visit @ here to get started. 3. WarrCloud - Your warranty claims process shouldn’t drain your profits—or your people. Dealers reduce costs, speed up reimbursements, and uncover new revenue opportunities—while consistently improving OEM claim scores. The future of fixed ops belongs to those who adapt. Let’s talk about automating your warranty processing today. Visit @ here Check out Car Dealership Guy’s stuff: For dealers: CDG Circles ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://cdgcircles.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Industry job board ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://jobs.dealershipguy.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Dealership recruiting ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://www.cdgrecruiting.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Fix your dealership’s social media ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://www.trynomad.co⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Request to be a podcast guest ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://www.cdgguest.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ For industry vendors: Advertise with Car Dealership Guy ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://www.cdgpartner.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Industry job board ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://jobs.dealershipguy.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Request to be a podcast guest ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://www.cdgguest.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Topics: 04:20 The Death Spiral Pricing Out Customers 06:50 Why Techs Feel Underpaid for Warranty 08:50 Why Your $25 Clerk Can’t Handle Warranty 12:25 Fixed Ops Now Drives 54% 14:40 The $6 Million in Warranty Receivables 18:45 The Bob and Gladys Factor Killing Profits 22:10 Why 54% of Gross Gets 0% Time 24:15 The Two-Step AI Primer for Dealers 26:25 The Two-Day AI Summit That Changed Walzer Car Dealership Guy Socials: X ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠x.com/GuyDealership⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Instagram ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠instagram.com/cardealershipguy/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TikTok ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠tiktok.com/@guydealership⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠linkedin.com/company/cardealershipguy⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Threads ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠threads.net/@cardealershipguy⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Facebook ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠facebook.com/profile.php?id=100077402857683⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Everything else ➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠dealershipguy.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠

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