"Ask your mechanic to review coverage, limits and exclusions and to recommend the best value." That's part of the advice that Consumer Reports gives it readers who are considering an extended warranty for a new car. Although Consumer Reports usually offers its readers sound advice on thousands of products and services and the best way to buy them, its editors blew this one. In fact, let's call it what it is: absurd.
As if you have the time to provide your customers with an analysis of a new car extended warranty. As if you've been schooled to analyze a document that a team of lawyers created for the purpose of protecting its company from spending one extra dime. As if you want to open yourself to that liability. As if you should be motivated to give a customer advice that will take him/her from your shop. As if they'll come back to your shop after the 100,000 mile warranty runs out.
But as absurd as it is for a customer to ask you about an extended warranty for a new car, you should welcome the question with open arms, because it gives you a chance to build your credibility with the customer — not by trying to answer complicated questions, but by explaining that nobody shy of an attorney is qualified to offer a learned opinion on an extended warranty. Even better is if you have a simple, straightforward extended warranty program of your own that you can offer, which would be good if your customer buys a new or used car, or if he/she stays with their current car.
What could be crippling for independent service providers are the broader new vehicle warranties offered by an increasing number of OEMs. Moreover, they have stepped up their efforts significantly to sell extended warranties. Who would have ever thought that Chrysler would have offered an unlimited warranty on anything more than a cup holder? Extended warranties, which rarely pay for themselves, are not only marketing ploys to sell new cars, but a means to capture future service business. Some would say to lock up a customer's business from showroom to scrap.
To help thwart the effect of these warranties, I think you have three choices. First, and at the very least, you should set up a formal maintenance schedule and secure your customers' participation by sending them reminder e-mails. Second, you could become a formal member of the aftermarket warranty companies so that you become a recommended shop. There are several reputable ones that need you as badly as you need them.
Third, you could have your lawyers draft an extended warranty program specific to your business so that you have more control. You could have various levels of warranties subject to the condition of individual vehicles.
And I think it goes without saying that if the second and third choices are going to have a positive impact on your business, they need to be marketed aggressively.
There actually may be a fourth choice that may be the most effective one but is the least likely. That is, a national extended warranty program specifically developed for independent repair shops nationwide. The downside, of course, is that if we get serious about this, it could turn into another political fiasco called the Right to Warranty.
