When someone buys a car from your dealership, the last thing they probably want to think about is paying for potential future repairs. But, if you really want to keep your customers’ best interests in mind, it’s critical to have the vehicle service contract discussion before they drive off the lot.
Consider these industry statistics; According to a study conducted by the Warranty Chain Management Association, only about 48% of new vehicle buyers purchase a VSC at time of delivery. But here is what’s interesting. 40% of those buyers who do not purchase a VSC, say they are planning to or are seriously considering making the investment. This is a clear indication that most of your customers do have intent to purchase a VSC.
So what’s holding them back? As you know, the added cost of a VSC is often the barrier. Customers want to keep their monthly payment as low as possible and don’t want to roll in the added cost of a VSC into the financing deal. Or, maybe the customer isn’t able to roll that cost into the deal because they’re financing the vehicle on their own or paying in cash. The upfront cost of a VSC can understandably be overwhelming for these buyers.
To make it more affordable these customers, you can always offer a lower cost plan or maybe even discount the retail price of the VSC but these options obviously impact your gross profit. Another easy and flexible solution to help your customer and maintain your margins is to offer an installment payment. An installment payment plan allows customers to finance a VSC interest-free, over a time period that works best for them, without impacting their monthly vehicle payment. Your dealership secures the VSC sale, and maybe more importantly, the customer is able to get the extended coverage they want.
So, if you want to maximize profits and customer value, make sure to offer a VSC to all your new vehicle buyers at the time of delivery and use an installment payment plan when the time is right.