WARRANTY ADMINISTRATION POLICY AND PROCEDURES OUTLINED

In an effort to provide dealers information that will enable them to better administer warranty expense in a fair-and equitable manner by establishing and/or implementing sound internal controls, this DSIB will share recent findings and concerns of the Warranty Analysis Group. The implementation/establishment of sound internal controls and strict adherence to Cadillac Policy and Procedures greatly minimize the effects of chargebacks and warranty audits.

The following observations are being brought to your attention for immediate investigation and corrective action where applicable:

1. As you are aware, Cadillac Policy and Procedures Article 2.1.1 states in part "When receiving a new vehicle, dealer is to inspect it immediately for damage and for obvious missing or incorrect parts and/or options". It continues, "This inspection must be completed and the five-digit damage code entered on the carrier's delivery receipt". Failure to properly and effectively comply often times precludes any recourse Cadillac may have against the carrier and often times generates inappropriate claims submissions to the warranty claims payment system. Additionally, damaged and missing or incorrect parts identified after the vehicle has been delivered to the owner are not warrantable items. We have found that a significant number of dealers have incorrectly charged Cadillac for damage repairs or replacement parts.

2. The Dealer Sales and Service Agreement Reference Article 2.4. 1 (a) states in part "Pre-delivery inspections and adjustments will be performed by Dealer on each new Motor Vehicle prior to delivery" and Cadillac Policy and Procedures Article 1.9.1(c) specifically excludes the removal of squeaks and rattles from warranty coverage during pre-delivery inspection. We have found that a significant number of dealers have incorrectly charged Cadillac for these types of repairs in addition to the allowed pre-delivery inspection credit.

3. Cadillac Policy and Procedures Article 2.3.2(b) states regarding battery care "vehicles not used for an extended period of time are subject to parasitic drains". It continues with, "battery recharging, swapping or replacement due to damage or lack of maintenance are not covered by the vehicle warranty during the period of dealer inventory storage". Although this subject has been the topic in numerous correspondences a significant number of dealers have continued to submit claims of this nature inappropriately.

4. Instances have occurred where part(s) were supplied to dealerships at no charge for vehicle repairs. In some of these instances claims have been submitted for payment and have included parts credit.

5. We are currently reviewing situations where exchange item components are being credited to dealers at the total allowable limit (cost plus 30%).

6. Credits for second Gold Key 1000 Mile Inspections, after such inspections were already performed at another dealership, are being reviewed.

All of the above areas are currently under investigation. In the near future, we anticipate implementing chargebacks in some of these cases to those dealers involved after Zone personnel have had the opportunity to review these situations.

General Motors bulletins are intended for use by professional technicians, not a "do-it-yourselfer". They are written to inform those technicians of conditions that may occur on some vehicles, or to provide information that could assist in the proper service of a vehicle. Properly trained technicians have the equipment, tools, safety instructions and know-how to do a job properly and safely. If a condition is described, do not assume that the bulletin applies to your vehicle, or that your vehicle will have that condition. See a General Motors dealer servicing your brand of General Motors vehicle for information on whether your vehicle may benefit from the information.