Topic: How much profit in a manufacturers extended warranty?

[johngenx]

MB is picky about their warranty, one can only buy it if the vehicle was purchased from a MB dealer...otherwise you are on your own...

They are, but the flip side is that, in my experience, their coverage is incredible.  Dealers are paid full retail for the work so they have no incentive to shirk on it.  MB Canada was very liberal in authorizing repairs that extended well beyond the minimum required.   They often replaced entire assemblies when a repair would have remedied the problem - even as far as replacing an entire transmission and ECU to the tune of over $8K when a several hundred dollar repair would have solved the issue.  But, they were concerned with the long term life of the trans as mine was an early build and it had been updated considerably in the meantime.

Our E300 was a troublesome car that had many unscheduled visits to the dealer.  It meant that the service loaners were usually all out - so they'd take a late-model car from the used lot for us.  The set of glowplugs were backordered from Germany and it looked like it would be weeks before the car could be fixed.  They overnighted a set from Europe - that cost a lot!

I might not be keen to own another MB at this time - but I can't say enough about the amazing service I always received from MB Canada and the dealers.

[Ex-airbalancer]

But John how long since you had a MB?
Things may have change since then

[sailor723]

Well, service from our local MB dealer has been 1st rate over the last nearly 4 years. Service loaners  (always for warranty visits and even often given for scheduled maintenance appointments),  parts flown in when needed, car always washed and vacuumed when returned etc etc

[rrocket]

Well, service from our local MB dealer has been 1st rate over the last nearly 4 years.

That's why you bought your MB...because you liked visiting the dealer so much, eh?   

[Rupert]

Trade your car before the tires wear out. Should do it.

[johngenx]

But John how long since you had a MB?
Things may have change since then

Yeah, we haven't had an MB at home since 2008 - so things might have changed.  Though MB still has a rep for great warranty service.

Well, service from our local MB dealer has been 1st rate over the last nearly 4 years. Service loaners  (always for warranty visits and even often given for scheduled maintenance appointments),  parts flown in when needed, car always washed and vacuumed when returned etc etc

Not once was my car not returned looking like new.

[tooscoops]

sorry for the delay erik.... chrysler at list price (including any of the add-ons [hemi, 4x4, etc) is a bit higher %...

but most dealers would opt to not sell it at low margin (for some reason) figure the car needs to get fixed i guess.

if you have specific questions, let me know and i'll price anything out for you. same goes for anyone... i'll happily sell a warranty on a chrysler, even if i don't sell the car.

[Benhaze]

if you have specific questions, let me know and i'll price anything out for you. same goes for anyone... i'll happily sell a warranty on a chrysler, even if i don't sell the car.

Nice!!

[tooscoops]

heh... it's not like i'm doing it just to be nice.... we'll make a bit of money anyways! a little money from something we'd never expect is better than nothing!

plus, then people will talk with me and realize just how much they want to buy their next car from me!

[neil]

$1000 margin is typical on a mfgr warranty, looking at numbers quoted above I'd say that's about right from my experience for the Germans.  Asians new warranties run about $2000-2300 with the margin.

As an aside, I also think there is good value in certain 3rd party plans in certain situations, SAL and First Canadian to be specific.  Pricing is similar to manufacturer, and if you don't happen to live near a dealer warranty work can be done just about anywhere.  I recently sold a few SAL on new sales, for customers who live 4-5 hours away from the nearest dealer here in SK.  7 year plans retail around $2200, and if you make no claims on the extended policy over the term they refund $1500.  A hundred bucks a year is cheap peace of mind if you keep your vehicles long term.

[Benhaze]

heh... it's not like i'm doing it just to be nice.... we'll make a bit of money anyways! a little money from something we'd never expect is better than nothing!

plus, then people will talk with me and realize just how much they want to buy their next car from me!

Problem is that you don't work in the right province (for me)   It would be ok to buy the warranty from you but a vehicle would be a bit more complicated unfortunately.

[2JDM]

$1000 margin is typical on a mfgr warranty, looking at numbers quoted above I'd say that's about right from my experience for the Germans.  Asians new warranties run about $2000-2300 with the margin.

As an aside, I also think there is good value in certain 3rd party plans in certain situations, SAL and First Canadian to be specific.  Pricing is similar to manufacturer, and if you don't happen to live near a dealer warranty work can be done just about anywhere.  I recently sold a few SAL on new sales, for customers who live 4-5 hours away from the nearest dealer here in SK.  7 year plans retail around $2200, and if you make no claims on the extended policy over the term they refund $1500.  A hundred bucks a year is cheap peace of mind if you keep your vehicles long term.

I have always found those 3rd party warranties sketchy.

[tooscoops]

after working a service desk for a while.. i agree... pain in the butt to get work approved. i sit on hold and wait for a call back while a car is in the air taking up a hoist....

[mmret]

after working a service desk for a while.. i agree... pain in the butt to get work approved. i sit on hold and wait for a call back while a car is in the air taking up a hoist....

Hmm, indeed. So I did a bit more digging on the Volvo ext warranty we bought. Its the "real" Volvo one, comes with the brochure and a contract paper that says "VOLVO" in big blue letters right at the top.

However, it is technically "administrated" by some third party. Not sure if they're also underwritten by the third party. A few questions come to mind.

1. Why would they need a 3rd party administrator? Don't they already have their own warranty program with people authorizing or not authorizing repairs?

2. If its indeed a 3rd party warranty masquerading as an OEM one, how close am I going to get to OEM service? Is it going to be Mercedes-esque walk in and you're treated like a king, car washed and everything? Or is this a bit "First Canadian Warranty"? When talking to the dealer they assured me that it would be fully transparent... the dealership will deal with the claim and all that stuff.


On the bright side the warranty is prorated refundable at any point for only a $50 admin fee, even if you've already made claims. So I can get back almost all of the $ between here and January 2019. Lots of time to decide.

[ArticSteve]

2. If its indeed a 3rd party warranty masquerading as an OEM one, how close am I going to get to OEM service? Is it going to be Mercedes-esque walk in and you're treated like a king, car washed and everything?


VIP Plan is insured by Industrial Alliance Pacific General Insurance Corporation

Or is this a bit "First Canadian Warranty"? When talking to the dealer they assured me that it would be fully transparent... the dealership will deal with the claim and all that stuff.


Dealer will make the PHONE call, but in the end it's still a "third party warranty".  Their contract with Volvo Canada will be one of a hundred such affiliations.  IAP underwrite Toyota Canada's "job loss" protection plan which is generally cut and dry in terms of a payout, where as claims made on a giant mobile computer are a little more nebulous. 

Me, myself and I, have chosen to lease the high tech stuff.   

[mmret]

Interesting. So is this "third party OEM warranty" thing common? Or is it unique to Volvo due to relatively low sales volumes?

If I am getting noise on a claim from these guys its starting to feel doubtful that Volvo would do much about it from a customer loyalty perspective.

[ArticSteve]

Interesting. So is this "third party OEM warranty" thing common? Or is it unique to Volvo due to relatively low sales volumes?



It's very uncommon and obviously there is a message there.

[neil]

I have always found those 3rd party warranties sketchy.

I've sold thousands of them.  SAL is also IA General underwritten.  Number of issues I've had with customers getting claims approved I could count without having to take my socks off.  Most common issue is lack of maintenance, followed by modifications that void the warranty.  EG lifted truck or chipped/Exhaust mods on Turbos.