Buying a car is one of the happiest moments in your family’s life, yet Autotrader and Cox’s 2018 Car Buyer Journey study found only 46% of new and used car buyers are satisfied with the process. Making things worse, 65% of those buyers aren’t even aware their cars qualify for vehicle service contracts. This could be a major driver of unhappiness since a car’s performance has a direct correlation to happiness.
Providing service contracts and properly explaining them during the F&I process can be instrumental in building a strong customer relationship and increasing the lifetime value of each customer.
What Do Car Warranties Cover?
Every new car comes with a factory warranty, which covers the car for major engine troubles, typically for three years or 36,000 miles. Hyundai, Kia, and Mitsubishi are known for having the best standard manufacturer warranties at 5 years/60,000 miles or 10 years/100,0000 miles. The car manufacturer ultimately determines what a warranty covers, so they vary wildly between brands.
Drivetrain coverage is the most common, which covers the engine, transaxle parts, and transmission for regular wear and tear. Even for the brands above, these coverages usually last the longest, as they’re core to the car’s functionality. Coverage for other factory-installed parts cut off early, and there’s no coverage ever provided for any and all aftermarket parts. In addition, damage from accidents, neglect, and other issues won’t be covered.
This often leaves car buyers paying for costly repair and maintenance bills, many times without even realizing the parts are out of factory warranty. This is where vehicle service contracts come into play.
Why Are Vehicle Service Contracts Better?
Vehicle service contracts are offered separately to extend the terms and conditions of the standard car warranty and provide comprehensive coverage to meet any owner’s needs. They can also be added to used cars and cars with aftermarket parts installed, neither of which are covered by the factory warranty. It provides a host of benefits for both dealers and customers, including:
1. More Buyer Confidence
Customers buy and drive with more confidence knowing that car repairs are covered. If you offer a more comprehensive service than the manufacturer, they get to worry less.
2. Stronger Relationships
Service contracts all but guarantee a customer will return to you for a car repair at some point in the future. They’re even more likely to come for routine maintenance.
3. Happier Customers
Customers with vehicle service contracts are happier and more likely to return to buy their next car from you. They’ll even become brand advocates for your dealership to friends and family.
Get Customized Vehicle Service Contracts Today
Car warranties only go so far, and an extended vehicle service contract is vital to making the customer happy.