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JIM HENRY
Phony service contract appeals hurt legitimate dealers
| |  | Jim Henry is a special correspondent for Automotive News | |
Unscrupulous direct-to-consumer marketers -- with their phony solicitations that tell consumers, "Your warranty is about to expire" -- hurt the extended-service-contracts market for everyone.
Better Business Bureau chapters around the country have warnings about this posted online, not to mention Consumer Reports and the Federal Trade Commission.
Since buying a used car a year ago, I've received several notices in the mail that correctly cite the car's year, make and model. Someone who didn't know better would assume the notices come from the manufacturer or maybe the state motor vehicles department.
In fact, it's a shot in the dark. The sender has no idea whether my warranty is about to expire. According to the fine print, the notices come from an extended-service contract company with a Missouri return address, which is "not affiliated with the DMV, the Dealer or manufacturer."
That disclaimer complies with the letter but not the spirit of a law Missouri passed last year to crack down on the direct marketing of extended-service contracts. Discouraging that sort of deception was a big aspect of the law.
No wonder many customers flinch when they hear the term "service contract," even at the most above-board dealership.
JAMIE LaREAU
Name brands can ease F&I sales
| |  | Jamie LaReau covers auto dealers for Automotive News | |
Name recognition sure helps.
That’s true even in a dealership’s finance and insurance office where the products are often less tangible or familiar to customers than the four-wheeled products sitting in the showroom.
Take paint and fabric protection.
About a year and a half ago, dealership Dryer & Reinbold Inc. in Greenwood, Ind., switched the brand of vehicle protection it offered to Scotchgard from Car Brite, says Mike Conn, business manager at the store, which sells Subaru, Volkswagen, BMW and Infiniti vehicles.
“There was nothing wrong” with Car Brite, Conn says, “just there was no name recognition to it, and it was exterior protection only.”
Conn wanted to offer customers protection for both the interior and exterior of their vehicles. He recalls deciding, “Why not go with something customers already know and trust? They know and trust 3M and Scotchgard.”
The move worked.
Prior to the switch, about 10 percent of Conn’s new-vehicle customers purchased vehicle protection, he says. Today, about one-third of new-vehicle buyers purchase the Scotchgard Vehicle Protection Package, he says.
Conn admits he pushed the sales team harder to sell vehicle-protection plans to customers after the switch. So that may account for some of the increase.
“It’s the one thing you really want the salespeople to pre-sell before the customer gets to the business office. It has to be applied to the car, so we can have it applied while the customer’s doing the paperwork,” Conn says.
To be sure, name recognition isn’t everything. Unknown products can compete in the market. Not that long ago, American car buyers had never heard of Hyundai or Kia.
Car Brite is working hard to build its brand. And a good presentation by the F&I staffer is critical to selling any product, regardless of brand.
But, Conn says, a well-known name of a fairly common household product makes a salesperson’s job that much easier.
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