Survey Says Auto Dealership Customers See Value in Service Contracts

About four out of 10 car buyers who purchase extended-service agreements say they ended up saving an average of $1,000 to $2,000 in repairs and parts replacements.

That’s according to a survey by Protective Asset Protection, a provider of F&I programs, services and dealer-owned warranty programs.

The survey results indicate service contracts – that kick in when factory warranties expire – and related products show value, especially on specific vehicle-service work.

The top areas most likely covered under a vehicle-service contract include steering (47.2%), technology feature service (44.4%), brakes (44.4%), electrical components (41.7%), and drive axles (41.7%). Transmission- and suspension-related repairs showed the smallest responses (27.8%) from drivers using protection plans.

Nearly half of those surveyed (51%) said they have purchased a protection plan for their vehicle. Of those opting for a vehicle-service contract, over half (53%) said they ended up making a claim on their current vehicle. Most cite general repairs (58%); another 22%, parts replacements.

 “Vehicle service contracts can be extremely valuable to drivers, especially since there are so many reasons out of the driver’s control that cause them to go into effect,” says Rick Kurtz, Protective Asset Protection’s senior vice president-distribution.

“With high-performance tires more sensitive to road hazards, and increasingly complex vehicle technology, there are a bevy of reasons why extra protection can equate to thousands in savings over the life of a vehicle,” he says.

It’s a win-win for both customers and dealers who rely on F&I profits to counterbalance shrinking margins on vehicle sales, Kurtz adds. Extended warranties typically are dealerships’ best-selling F&I product.