When it comes to optimizing auto dealership productivity, one of the most poignant advantages available is to work with a dealer-owned warranty company. Here’s a breakdown of what dealer-owned warranty companies can do for those of you.
What Is a Dealer Owned Warranty Company?
A dealer-owned warranty company is created when a dealer forms a completely separate c-corporation structure. It is made away from the dealership, for the purpose of writing service contracts. Being owned by the dealership, it becomes the obligated provider. In most cases, warranty dealers take care of the back parts of everything, including taking out the admin fees for each contract. Depending on each provider, the fees and taxes from each reinsurance program can differ.
The Advantages, More Control Over Service Contracts, Coverage, and Rates
Dealers gain control of every part of the service contract, along with how much coverage is offered, and how the rates are set. They should try to make the value better than the factory warranty. By offering extended rental terms, or first day rentals, dealers can improve the value and increase the dealership’s profits.
Instead of having outside parties control the profits, the dealership can ultimately control every part of the income and choose where it’s invested. Other things like dent and ding, or prepaid maintenance can be added into the c-corporation structure as well.
By giving auto dealerships more control over service contracts, rates, and coverage, you can use that added flexibility to give customers a better deal. Not only that, but you can also work with them to make it more custom. Tailoring deals around customer needs is becoming more of an expectation than a luxury as competition intensifies. Someone feels limited by the service contract you are offering can go across the street to another dealership or worse still, buy from a competitor online.
Get the Most Out of a Dealer Owned Warranty Company with ACE
Automotive Consulting Enterprises is the smart choice for advice on working with dealer-owned warranty companies. Partnering with a consulting firm like ACE is one of the smartest ways to get ahead and succeed with dealer-owned warranty companies. Give your customers the flexibility that dealer-owned warranty companies afford, with a little help from the industry experts at ACE.
Thinking about working with a dealer-owned warranty company? Have a chat with ACE first and do it right.