With new cars lasting much longer the service contract business is on
a decline. Dealers are finding more creative products to make up the
loss. But, why can't service contracts regain there status as a serious
revenue generator?
The product is being removed from
the finance office and into BDC (business development centers) where
several staff can focus on not only service contracts but several other
profitable products as well.
Is there a need for
service contracts since cars are built much better, car companies
provide better warranties and cars perform better with fewer breakdowns?
They are like insurance, you don't want it, hope you don't need it, but
if you do, glad you had it.
On of the reasons for the
slow down in service contact sales is costs. Depending upon the type car
you drive and what you want covered the cost could be several thousands
of dollars. Most lenders will include in the auto financing. The other
is lack of presentation of the product to all customers and explaining
the details of coverage. That's why the BDC will get better sales
results.
Have you bought a service contract along with a new car purchase? Why did or didn't you?