Gordio Posted May 20, 2009 Posted May 20, 2009 I dont think so. Okay, maybe not their number 1 cash cow, but the markup on the extended were unreal. The floor plans for the new dealerships I did as surprising as it maybe, there was not a big profit margin on the sale of new cars. Selling the extended warranty was pure profit & IMO one of the biggest scams the dealerships have going.
Steely Dan Posted May 20, 2009 Posted May 20, 2009 ......There is an epidemic of extended automotive warranty scams out there right now.A number of them are based in the St. Louis area. You may want to Google the subject. Buyer beware! http://today.msnbc.msn.com/id/23147777/ Great article I love this part; “Can you guys send me this policy, so I can see all this in writing and I can get back to you?” I asked. Story continues below ↓advertisement | your ad here “We don’t actually send out any paperwork without receiving a down payment,” Corey explained. He said once I paid, the policy would be mailed to me within seven to 10 business days. Needless to say, I did not buy anything. Instead, I called back and identified myself as a reporter, but no one would talk to me. I also saw a "People's Court" where somebody bought an extended warranty when they bought a used car and when they went to make a legitimate claim they found out the warranty company had gone out of business. The company was in no way affiliated with the dealer except for the dealer offering it. To their credit the dealer covered their repair anyway. Obviously the person still bitched or there wouldn't have been a case. http://www.dealermark.com/index.php?Itemid...t&task=view Old article, but pretty good none the less. From the article; This is great news for automakers- however, for dealers that rely on the revenue generated by dealer reserve accounts it poses a threat to already wafer-thin profit margins. My sister works for a dealership that was a Chrysler dealer up til about a year ago. The owner decided to switch to Kia and emptied his dealer reserve account. He's looking really good since Pennsylvania has the highest number of Chrysler dealerships being closed down. Okay, maybe not their number 1 cash cow, but the markup on the extended were unreal. The floor plans for the new dealerships I did as surprising as it maybe, there was not a big profit margin on the sale of new cars. Selling the extended warranty was pure profit & IMO one of the biggest scams the dealerships have going. According to my sister the profits on new cars is razor thin. Dealerships make most of their money from the service departments.
erynthered Posted May 20, 2009 Posted May 20, 2009 According to my sister the profits on new cars is razor thin. Dealerships make most of their money from the service departments. Thats what I had said in an earlier post. WRT new car profits, its been thin for a very long time. The dealer counts on the other profit centers to drive his business, pun intended. The dealer will take a short deal on a new car for a variety of reasons, some being floor plan. Does he get 30, 60, 90 days float? Hold back money? Does he get 1 or 3% from the manufacture. Is there a incentive going on from the manufacture, where as if he sells 50 or 60 of one type of model he could get kicked back retro money for each sale. The trade in can be the reason also. Many many more. Its not just black and white, as some would propose. There's more to it than a Google search, trust me.
Magox Posted May 20, 2009 Posted May 20, 2009 I drive a 2005 Jeep Wrangler and received a notice about extending the bumper-to-bumper factory warranty. My Wrangler is a low mileage vehicle with about 20k miles. The offer was to extend the factory warranty for an additional 6 years or 60k miles for about $3000. There would be a $100 deductible on the warranty. I do plan to keep my Wrangler for at least that long, if not longer. I have never had any experience with extending the warranty on the car. I was wondering if it was worth it to do this type of warranty or if anyone had experiences they wanted to share. you should see if there is an insurance on the warranty, just in case you never use it
stuckincincy Posted May 20, 2009 Posted May 20, 2009 The dealer will take a short deal on a new car for a variety of reasons, some being floor plan. Does he get 30, 60, 90 days float? Hold back money? Does he get 1 or 3% from the manufacture. Is there a incentive going on from the manufacture, where as if he sells 50 or 60 of one type of model he could get kicked back retro money for each sale. The trade in can be the reason also. Many many more. Its not just black and white, as some would propose. There's more to it than a Google search, trust me. A lot of these Chrysler dealers that were shut down are now in deep financial trouble. It seems Obama et al royally screwed them - there will be no returning of vehicles to Chrysler because of the Chapter 11. These guys have bank floats outstanding for what's sitting in the new car lot, and what's a no-charge floor plan these days...5, 6 cars? I can see these dealership owners going into bankruptcy. A dealership pumps big amounts of sales tax money into Counties, States, municipalities.
Arkady Renko Posted May 20, 2009 Posted May 20, 2009 I'd have the cat PUNCH! you if any of that made any real sense. Where did I fail you? Warranties and insurance can both make money for companies and be good for people depending on the person's risk aversion.
stuckincincy Posted May 20, 2009 Posted May 20, 2009 Where did I fail you? Warranties and insurance can both make money for companies and be good for people depending on the person's risk aversion. That's right. My wife and me purchased a top line factory extended warranty for $1,200 on a new vehicle purchased this past December. Full bumper-to-bumper coverage for 10 years/100K, covering virtually all assemblies. Their "Platinum" package. We kept our 1998 Malibu as a beater. We seem to keep a vehicle for 10 years before replacement. The Malibu has 92K on it, but that includes several trips back to Buffalo. That was early on, though - we've not driven up since 2002. This new vehicle is complex, as all are today. ESC, 6 air bags, power this or that. Window motors go for 300+ bucks these days. Alternators - 300, Compressors - just pray. Constant velocity joints, cooling system, engine, tranny, bushings, suspension, steering gear, safety stuff, calipers, brake lines and hoses, emission devices, interior parts, locks, dash, and so forth are covered ...everything but pads, discs, struts, tires, filters, and exhaust piping, excepting the cat converter which is warranted for 10 years. As you mention - risk aversion. It would be a pleasurable surprise if my old bones have 10 more years in them. I want my wife to be assured of having a safe, well-maintained and covered vehicle, without any costly surprises, or having to worry about being ripped off for repairs.
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