Buyers are already spending a lot of money on their new vehicle, so they may not understand why they’ll want to spend a little bit more to also purchase a vehicle service contract. After all, the vehicle is new, so it should work as intended, and they shouldn’t have to face any problems for quite a while. Unfortunately, it doesn’t always work out that way. When buyers are hesitant to purchase a vehicle service contract, it may be a good idea to explain just how they can benefit from one.
Show the Vehicle’s Reliability
How reliable is the vehicle? Manufacturers and dealers aren’t going to offer an auto service contract if they believe they’ll need to pay out on it often. It’s like with insurance – companies offer insurance in the hope that the buyer doesn’t ever need to use it. A vehicle service contract isn’t going to bring in money if it’s used a lot to repair the vehicle. So why would the dealership offer one if they thought they’d lose money on it?
Offering a service contract helps to show just how reliable the vehicle is to buyers. They know the dealership isn’t going to want to waste money by offering a contract and then paying out for service time and again on a vehicle that isn’t reliable and needs a lot of repairs. For buyers, just the offer of a service contract can help show that the dealership is confident that the vehicle is going to remain in good shape long enough to run out the auto service contract, which means the buyer isn’t going to spend a lot of time having their new vehicle repaired.
Unexpected Issues Can Happen
Vehicles will require basic services to help keep them in good condition – and as long as these services are done on time, the vehicle should continue to run properly. The problem is, unexpected issues can still come up. There are tons of working parts in every vehicle, and parts can wear out early or end up breaking when least expected. Even the most reliable vehicle is going to suffer from some unexpected issues occasionally, even if the owner takes excellent care of it throughout the time they have it. That’s where a vehicle service contract can come in handy.
Though the goal for a dealership is to minimize how often the contract is used, for buyers, it’s important to make sure the vehicle works properly and prevent small issues from becoming a lot worse. The vehicle service warrant provides this for buyers, as it allows them to have the vehicle services whenever it needs them, without worrying about covering the cost of repairs. This helps buyers keep their vehicle in better condition in the long run and can make sure it doesn’t stop running completely when they need it the most.
Can Help Save Money
When unexpected repairs do come up, there is a problem of figuring out how to pay for them. If the money isn’t there, it can take a long time for buyers to save up for it, especially if they need to find alternative transportation methods while they save the money. On top of this, the longer the issue is ignored, the worse (and more expensive to fix) it’s going to get. Many buyers, even though they can afford the monthly payments for the vehicle, won’t have enough money in their savings to pay for unexpected repairs, especially if they have two or more issues in a short amount of time.
By purchasing a vehicle service contract, even though it’s a small amount of money added to the cost of the vehicle, buyers don’t have to worry about how they’re going to pay for repairs. When an unexpected issue does come up, they can drop the vehicle off at the dealership and have it repaired. They won’t have to worry about the issue getting worse and more expensive to fix while they save money to cover the repairs or depleting their savings, leaving them unable to handle the next emergency, by taking the vehicle in for repairs.
Can Increase the Resale Value
Long the gold standard for vehicle value, the Kelley Blue Book offers pricing for vehicles based on the make, model, type, and age. Vehicle owners can take a look at any vehicle from the past to find out what its resale value would be. Though this might not be the exact sale price, it does provide a starting point. When looking into the potential value, the pricing is split up into different categories based on the condition of the vehicle. A vehicle in excellent condition will always sell more than one that has potential issues and will need repairs.
Though a buyer is just purchasing a vehicle and likely won’t think about selling for at least a couple of years, it is something they’ll end up doing eventually. When they do, they’ll want to get as much money as possible from the vehicle, which means they’ll need to take care of it properly in the meantime. Purchasing and using a vehicle service contract makes this possible – buyers won’t have to worry about surprise issues that cause problems with the vehicle because they can be repaired right away. The vehicle will remain in good shape much longer, allowing it to be sold for a much higher price when the buyer is ready for something new.
Bonus Benefit: Peace of Mind
The one thing all of these benefits have in common is that they provide the buyer with peace of mind. Buyers won’t have to worry about whether the vehicle runs properly or how they’ll pay for any repairs that are needed because they’ll have a service contract that covers the issues they might encounter. The peace of mind provided by a vehicle service contract can help buyers feel more comfortable with their new purchase, help them feel like they have nothing to worry about if anything does happen and help them see that the vehicle is definitely worth purchasing.
Though the vehicle service contract does cost some money, it’s going to be well worth the cost for buyers just because they have less to worry about. How much is a worry-free experience with the new vehicle worth? Most buyers will say it’s worth far more than the cost of the vehicle service contract, and they’d be right. It’s not easy to put a value on peace of mind, but by buying the vehicle service contract, that’s exactly what buyers will get.
After already considering the full cost of a new vehicle, it’s no surprise that many buyers will balk at adding anything else to the price. However, these benefits are some of the top reasons why buyers should go ahead and purchase the vehicle service contract when they buy the vehicle. Buyers will know they’re buying something reliable, won’t have to worry if anything unexpected happens, can keep the vehicle in good shape, and can have peace of mind that they can handle the problem without a high cost if anything does happen. When selling vehicles, explain these benefits of a vehicle service contract to buyers, and they’ll be able to easily see why it’s a good idea to purchase one.
Are you looking for ways to generate recurring revenue for your dealership? Reach out to us here at the ACE Group. We offer a free analysis to help you maximize your dealership’s earning potential.