Peace of mind for the customer, business for the dealership: extended warranties
29 Feb 2024
Extended warranties for vehicles are an increasingly important topic for both customers and dealers. They offer peace of mind to buyers of new and used cars, while representing a business opportunity for companies in the automotive sector, provided they have the tools to offer them correctly. In this article, we will analyze this type of warranty in detail: what they are, their differences with legal warranties, the benefits they offer, and how to implement them successfully in a dealership.
1. The Importance of Warranty in Vehicle Purchase
When a person acquires a new vehicle, one of the aspects they value most is having the protection of a warranty against possible defects or technical failures. Legally, all new cars come with a warranty from the manufacturer for the first 2 years, but many buyers seek to extend this coverage to feel more secure.
In the case of used vehicles, the warranty is also a decisive factor in the purchase. Since these are not new cars, the risk of breakdowns is greater, so having support for repairs is essential for the client.
This is where extended warranties come into play: additional coverages that extend protection beyond the legal period and provide peace of mind to car owners.
2. Differences Between Legal Warranty and Extended Warranty in Cars
The main difference between the legal warranty and an extended warranty lies in the coverage and duration. The legal warranty only covers manufacturing defects during the first years of use (generally 2 years), while an extended warranty provides broader coverage for a longer time.
Some points to consider:
Coverage: The legal warranty covers defects attributable to the incorrect assembly of parts or material defects. The extended warranty usually includes failures due to normal wear of parts.
Duration: The legal warranty lasts 2 years from the purchase for new vehicles. The extended warranty can extend this period from 2 to 5 years.
Cost: The legal warranty is free, while you must pay extra for the extended warranty.
In summary, the extended warranty provides greater protection (in terms of coverage and duration) against unforeseen events, but it involves an additional outlay.
3. The Role of CoberClick in the Warranty Market
CoberClick is a company specializing in warranties for the vehicle sales sector. Its working method focuses on meeting the real protection needs of professionals in this market. It is a young company, a pioneer, eager to change the rules of the game.
This company offers mechanical warranties tailored to each type of vehicle, with better coverage, resource availability, and an innovative capital return system based on the level of claims. Its great effectiveness and problem-solving ability have not only captivated its clients, but Angel Gaitán has also dedicated an article to them in his motor magazine ChasisCero.com.
Moreover, CoberClick provides dealers with a complete network of workshops and its mobile app to efficiently manage repair and maintenance processes.
Without a doubt, this company positions itself as a great ally for professionals in the sector when it comes to implementing successful extended warranties. That is why Dealcar has created an alliance with CoberClick, and together they are revolutionizing the sale of used cars, offering greater margins to dealers, more sales arguments, and more confidence to their customers.
4. New Warranty Law for Used Vehicles
A new legislation recently came into force in Spain that modifies the timeframes and conditions of warranties for used vehicles. The main changes are:
For operations between professionals, the warranty coverage changes from 1 year to 2 years, which can be limited to 1 year only if expressly agreed upon.
Coverages for "hidden defects" are included. That is, the seller must be responsible if there were defects in the vehicle prior to the sale, even if they did not inform the buyer.
The seller is responsible for defects occurring during the first 12 months following the sale, assuming they are due to hidden defects.
After 1 year, the buyer must prove that the breakdown is not due to use, but to a previously existing defect at the time of purchase.
This law aims to provide more guarantees and protect buyers of used vehicles. For sellers, it means assuming more responsibilities and risks.
5. Advantages of Extended Warranties for the Customer
For buyers of vehicles, contracting an extension of the warranty brings important benefits:
Peace of mind: the extra coverage protects you against severe mechanical failures that could represent high repair costs.
Saving: By having repairs covered, you avoid unexpected expenditures for defects in future years when the prices of parts and labor are higher.
Convenience: Most include towing service and a replacement vehicle in case of breakdowns that prevent driving.
Higher resale value: transferring the current warranty to a new owner increases the vehicle's value. Just be careful that the warranty is not nominal.
As you can see, the additional investment in an extended warranty makes sense because it provides peace of mind and can represent long-term savings.
6. Benefits of Extended Warranties for the Dealer
In addition to the benefits for customers, as a company specializing in used vehicle sales, offering extended warranties on your cars has great advantages:
Differential value: It positions you above the competition, as you provide more warranties than others, which is one of the variables customers value most when making a purchase.
Higher vehicle turnover: being more attractive to buyers accelerates sales.
Customer loyalty: by feeling supported, it is more likely that they will return to buy a car from you in the future.
Profitability: selling warranties represents recurring income with an interesting profit margin.
Better reputation: satisfied customers improve "word of mouth" and attract more buyers.
In short, you not only benefit your customers but also enhance the profitability and reputation of your vehicle dealership business.
7. How to Know if My Car Has an Extended Warranty
If you have already purchased a vehicle and want to know if it has any type of extended warranty beyond the legal one, you can easily check it with the following steps:
Review all the documentation provided during the purchase and look for the extended warranty contract if there is one. There you will find the timeframes, coverage, and conditions.
Check the purchase invoice to see if there is any detail about payment for an extended warranty.
Contact the dealership where you purchased the car and ask if you contracted any type of extended warranty. They will be able to inform you about it.
Many times, extended warranties are delivered on a physical card like a credit card. Check if you have one in your possession.
8. Extended Warranties and Software for Automotive Dealerships
The implementation of extended warranties in a dealership can be facilitated by the use of specific software for managing these services. These programs allow for detailed control of the warranties offered, as well as the repairs made and the associated costs.
Some of the advantages of using software for automotive dealerships in managing extended warranties are:
Improving the sales process: By fully digitizing the payment process, we obtain the warranty price instantly and the customer can apply for it with a click at the same moment they reserve the car.
Process automation: The software allows the automation of tasks such as generating warranty contracts, tracking repairs, and invoicing.
Inventory control: The program can keep track of the parts used in repairs, facilitating stock management and preventing losses.
Improved customer service: By having updated and accessible information about warranties and repairs, the dealership can provide faster and more efficient service to its customers.
Data analysis: The software allows analyzing information about the warranties offered and the repairs made, which can help identify areas for improvement and business opportunities.
9. Conclusions
Extended warranties represent a business opportunity for vehicle dealerships and a source of peace of mind for buyers. By offering broader and longer-lasting coverage than the legal warranty, these warranties can enhance the buying experience and retain customers.
Ultimately, extended warranties are a smart investment for both vehicle buyers and dealerships, as they provide peace of mind, security, and economic benefits in the short and long term.
