Maintenance Contracts: The Solution to Your Customers’ Deflating Vehicle Value

Does your dealership have a process for selling maintenance contracts post-vehicle sale? If not, have you considered implementing a direct marketing campaign or service drive initiative to increase the sale of maintenance contracts?

It’s well known among dealerships that post-vehicle sale opportunities, like vehicle service contracts (VSCs), can be an excellent way to boost revenue. And in many cases, sales people head straight for the mechanical contract sale (insurance breakdown) because typically, it’s the more expensive type of VSC.

But, if your sales team and F&I managers are underestimating the potential of a maintenance contract, your dealership may be missing out on additional sales, revenue and repeat customers. Here’s a look at why mechanical contracts may be the way to go when it comes to increasing VSC sales.

Maintenance Contracts Slow Down Depreciation

Fact: The moment a new vehicle is driven off the lot, it automatically decreases in value by 11%. And over the course of five years of ownership, vehicle value may depreciate even faster than customers realize.

Vehicle Depreciation Over Time

Purchase Price = $30,000

Years of Vehicle Ownership

Deprecation Vehicle Value


11% $26,700
1 25%


3 46%


5 63%


(Source: Trusted Choice)

It can be tough for customers to watch the value of their vehicle decrease in such a short amount of time. However, when dealerships offer customers a maintenance contract, they’re providing a solution to help ensure that the vehicle value remains high when it comes time to sell or trade-in their car on a new purchase.

Many customers don’t understand how buying maintenance coverage can be beneficial, even critical, for them in the long run. It’s up to the F&I manager, at the time of vehicle purchase, to explain that a maintenance contract encourages new car buyers to be more diligent in keeping their vehicles in great shape for the long-term, which can significantly increase resale value.

Plus, when customers return to your dealership for regularly scheduled preventative maintenance, they can be sure that only factory-certified technicians are servicing their vehicle. This higher quality service can extend the life of their vehicle and improve performance.

It All Comes Back to the Dealership

Don’t forget: When customers regularly return to your service lane for maintenance, you have the opportunity to build a stronger relationship, creating a higher likelihood of returning for all of their vehicle needs. That’s why post-vehicle sale initiatives should be considered for selling incremental maintenance contracts. Having point of sale materials available on the service drive, along with a process for service advisors to sell or refer customers back to the F&I office, can be a simple solution for generating more profit for your dealership.

Post-Purchase Financing Available

It’s so easy to sign up for a maintenance contract, there’s really no reason for your customers to pass it by, that is, unless financing is an issue. For post-vehicle sale customers, Budco Financial makes it easy and affordable to purchase a contract with installment payment plans (IPPs).

Whether your customers are about to drive off the lot in a luxury car or a more economical everyday vehicle, it’s important for you to help them understand the value of purchasing a maintenance contract. Depreciation is inevitable, but a maintenance contract can help your customers recoup greater value down the road.

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