When acquiring a dealership, buyers conduct extensive due diligence, reviewing financials, operations, real estate, customer retention and manufacturer performance. Yet one of the most overlooked opportunities for increasing long-term profitability is retail warranty reimbursement.

As dealership acquisition activity continues to accelerate, buyers should prioritize a retail warranty reimbursement review within the first 60 days of ownership. According to the latest Haig Report, 139 dealership rooftops changed hands during the first quarter of 2026 — a 39% increase over the same period in 2025 — with private buyers completing 96% of acquisitions. At the same time, Kerrigan Advisors reports continued strength in dealership buy-sell activity, driven by confidence in the long-term profitability of franchised dealerships.

Today’s buyers are asking not only what they’re purchasing, but also what revenue opportunities the previous owner failed to capture.

With front-end vehicle margins returning to historical levels, fixed operations has become one of the most valuable drivers of dealership profitability. Warranty reimbursement plays a critical role in that equation because it allows dealers to recover compensation that more accurately reflects their retail labor rates and parts pricing. Unlike increasing vehicle sales or expanding service capacity, improving reimbursement requires no additional customers, technicians, service bays or advertising.

Unfortunately, many dealerships delay submitting reimbursement claims or continue operating under outdated labor and parts rates established years ago. Rising technician wages, increasing retail labor rates and changing state statutes often create significant opportunities for new ownership groups to improve reimbursement almost immediately.

A comprehensive review should answer several important questions:

• When were labor and parts reimbursement rates last updated?
• Is the dealership eligible for a new submission?
• Have retail labor rates increased substantially?
• Were previous submissions fully optimized?
• Have state law changes created new opportunities?

Unlike many operational improvements that require months to produce results, reimbursement optimization can generate higher warranty revenue shortly after approval.

Timing matters. Every month a dealership operates under outdated reimbursement rates, it loses revenue that can never be recovered. According to Armatus, dealerships lose an average of $8,000 to $12,000 in gross profit every month when reimbursement improvements are delayed.

Improved reimbursement also strengthens fixed operations by supporting technician compensation, training, equipment investments and service absorption. As manufacturers introduce increasingly sophisticated vehicles requiring advanced diagnostics and specialized repairs, recovering appropriate reimbursement becomes even more important to maintaining a profitable service department.

Because warranty reimbursement laws, submission requirements, and OEM procedures vary by state and manufacturer, many dealership groups rely on specialists. A company like Armatus can quickly evaluate reimbursement performance after an acquisition, identify unrealized revenue opportunities, and manage the submission process through proven technology and proprietary methodologies.

The purchase agreement is only the beginning of value creation. A retail warranty reimbursement review should become a standard post-acquisition best practice, helping new owners uncover hidden revenue, strengthen fixed operations and maximize the return on every dealership acquisition.