The Road to ROI with F&I

How to Position Vehicle Service Agreements to Sell

Posted by Vanguard Dealer Services on Jan 14, 2016 10:00:00 AM

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When you Google vehicle service agreements, the overwhelming majority of the results pages are littered with articles and posts telling consumers to stay as far away from them as they possibly can.

You can just about guarantee that any customer who walks through your doors has read more than a few of these articles and has already told themselves they're not buying an extended warranty or vehicle service agreement. 

This puts your dealership at an immediate disadvantage at the negotiating table, which is why understanding how to properly position your vehicle service agreements to car buyers is so important. 

Rule #1 

Tell your customers you've seen the articles and that you know they've been told not to get an extended warranty. 

This immediately disarms the power of all of those words your customers read. If you've read them too and can explain why they're wrong, you've just moved from hugely disadvantaged to regaining control of the conversation.

Now, of course you need to make sure your team is educated on the arguments against service agreements and able to craft rebuttals against them ahead of time. 

Rule #2 

Engage your buyers. 

Ask your customers questions throughout the sales process like "what would you say to someone who was buying a car without a warranty?", "how long do you think your car will hold up before it needs repairs?", "how much do you think the average repair costs are for this vehicle?" or "how long are you planning on keeping this car?" 

By asking well thought out questions that frame the conversation with "when" your car needs repairs down the line versus "if" your car will need repairs down the line, the benefits of the vehicle service agreement will now jump out to the customer instead of being buried under a mountain doubt and negative beliefs. 

Rule #3 

Use statistics to your advantage. 

People are keeping their cars longer and longer these days. Whether it's due to a bad economy, better quality engineering or other circumstances, the facts are clear. In a survey by AutoMD.com, 78% of drivers said that they planned on keeping their car for 10 years or more after purchase. In that same survey 54% of respondents say that they plan on replacing a car only when they have to or when their current car is completely dead. 

To the average driver their car is a tool and they have a utilitarian view of their vehicle rather than a luxury item or a comfort item.

Focus on the fact that if you NEED your car and if it is an important tool, then you should be taking care of that tool for as long as possible in order for it to be worth the initial investment. 

You can also focus on the fact that because drivers are keeping their cars for longer periods of time, drivers who don't get extended warranties are lining the pockets of auto repairmen. In a 2015 industry report from IBISWorld, the auto repair industry's profits hit $56 Billion, that's up from $36 Billion in 2010. 

The point here is to emphasize to your customers that they're going to be paying for car repairs eventually. They can either plan for the future and be covered with reliable service that they can depend on now or be in a position where they need their car fixed and are at the mercy of a mechanic down the road. 

Vanguard Dealer Services offers a wide variety of vehicle service agreement coverage levels and options to fit your customer's needs. Plus, we're an auto warranty company that is fully insured by “A” rated insurance carriers and we're approved by all lenders.

If you have questions about we can help your dealership raise profits and keep customers happy, feel free to contact us.

Topics: vehicle service agreements