Car Dealership Swears by Prepaid Maintenance Plans

Town Center Nissan of suburban Atlanta sells a dealer-branded prepaid maintenance program that excites its service advisers and customers alike. 

An incentive built into the program can put up to $400 in additional compensation a month in an adviser’s pocket, so they’re eager to discuss prepaid maintenance plan advantages with service customers.

The plans on average result in a $70 increase per repair order upsell per service visit, and consumers who participate typically stay loyal to the dealership service department, data indicates.

“Customers love the plan,” says Rick Mathis, Town Center Nissan’s parts and service director. “About 90% of plan holders renew at expiration. Advisers don’t embrace a lot, but they truly enjoy selling this program.”

For typical Town Center Nissan customers, whose average annual income is north of $120,000, pre-paid maintenance appeals to prudence and convenience. For dealers serving a less-affluent market, the plans can help customers preemptively avoid costly repairs.

Town Center Nissan sells a basic 1-year plan that features synthetic oil changes, tire rotations, multipoint inspections and car washes. 

The dealership’s six advisers sell on average 160 plans a month. The dealership sells about 250 new and used vehicles a month, for which F&I provides each buyer a complimentary one-year PPM plan.

Mathis says 75% of plan holders renew at their one-year expiration and that 90% of higher mileage customers renew.

The dealership brands its PPM the VIP Service. The dealership has promoted it for about two years and has more than 2,000 plans in effect.

“Prepaid maintenance continues to be the most effective retention-building solution for new and used car dealers, and the experience reported by Town Center Nissan further confirms this,” says Ryan Williams, president of Fidelis PPM, a leading dealer-branded program provider.

A survey by DMEautomotive says three of five customers who receive prepaid or complimentary maintenance plans from dealerships “are likely to continue servicing their cars at the dealership after their plans expire.”