Quote:
Originally Posted by Dadhawk
In my experience, if you are having 1 issue per year with a modern car with under 100,000 miles on it, you will want to dump the car, warranty or not. In all the cars I've owned, in the last 25 years (new and used) I have not had more than one major service issue under 100K miles on any car. In fact, I've had a half dozen or so with well over 200K miles on them and none have a major repair every year.
I'm not saying taking the "risk" is for everyone, but I can say that I have NEVER owned a car (since 1975) where the extended warranty would have been a good decision. Maybe I've just been lucky.
Are you willing to share what the actual cost of the Extended Warranty is after you subtract the sales cost (commissions/etc)? Like with any insurance (which is really all an extended warranty is) the cost to the consumer has to exceed the average risk + cost of sales minus any growth of the money over time for the insurer. Therefore, again on average, the product costs the consumer more than it will pay out.
Admittedly, there are people where the piece of mind of having the coverage is worth the money, and I'm OK with that. For me though, I'd rather put the money in the bank and self-insure.
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As you probably saw in his response, he's not going to tell you. The "back end" tends to be where most of the money is (at least in my dealership). The reason I'm able to show invoice (selling it to you at invoice is another story since Pure Pricing for Scion, and for Toyota/Subaru/wherever, the dealership has to make a little bit of income to not only pay me and the rest of the staff to ensure continuing exceptional service, but to pay for utilities and other business bills) without batting an eye or putting up a fight is because I'm paid a specific amount, therefore it just becomes more of the more vehicles I sell, the better. The only way I'll be paid a certain percentage of gross that's above the minimum is if I either sell a really expensive ($60,000+ expensive) vehicle or a used vehicle at full price. For him, he's still paid by a certain percentage, so if he was to knock down the price of the warranties to just a little over "invoice," he'd have little to no income for his commission. Warranties and other back end sales are their bread and butter, and it's how they get paid. If they don't sell those, they make nothing. (in a sense) Now, most customers will bring up extended warranties into the discussion at the front end. (my side) What his previous responses to me tell me is that he doesn't want the sales consultants to help the back end out by talking up warranties and extended maintenances (as well as rustproofing and other forms of protection for the vehicle) that would fit the customer's lifestyle/requirements. He just wants the front end to play dumb. Fortunately, at my dealership, it's the opposite. They appreciate it when we talk up warranties and extended maintenances that we know would suit the customer. They also understand that if we see that the warranties and extended maintenances are not advantageous to the customer, we won't talk it up, which is very rare and uncommon. Whatever seems best for the customer, we discuss it with the finance person who our customer will be dealing with so that there doesn't seem to be a disconnect or conflicting information from the front end and the back end. We function as a team as a whole.