Extended service contracts are best sellers at most auto dealership finance and insurance departments, but selling them can be tricky. Here's why:
First, the car salesperson touts the quality of a vehicle. Then, the F&I manager tells the same customer a purchased extended service agreement covers repairs.
How can a dealership reconcile painting one picture of a car's reliability and another of its infallibility? And how do you sell warranties for vehicles with reputations for not breaking down?
Andrew Blazsanyik has answers. He is Resource Automotive's senior vice president-training, a licensed clinical psychologist and an F&I veteran. He says this:
“What do you say at a place like a Honda dealership when a customer says he or she doesn't want an extended warranty because Hondas don't break down?
“You say, ‘Of course it's a good car. That's why we sell them. But usually it is not the powertrain that breaks down, it's the computer chips. They are small, very expensive and some are going to break down.’
“‘If you are betting one of those won't be on your car, fine, the odds are in your favor. But if you lose the bet, it will potentially cost you $2,000 to $3,000.’
“That leaves it to the customer. That's the direction you want to take the customer.”
A customer who plans to keep a vehicle for a long time is a perfect candidate for an extended warranty contract, Blazsanyik says.
“Why do manufacturers offer factory warranties at the beginning rather than the end?” he says. “Because cars are likely to break down as they age.
“Even if there is a 99% mathematical probability that a car won't break down, that 1% is still going to come into play.”