Automakers and lenders are increasing the pressure on dealerships to sell their proprietary service contracts, prompting some dealers and general agents who sell independent products to push back.
The tension has touched off court battles and prompted legislation and could lead to more of both.
In recent years, some factories and lenders have used their clout to get dealers to sell the products that make the automakers and lenders extra money. But dealers and agents say the pressure has grown after the credit crisis of 2008 and 2009. In an informal online Automotive News F&I survey in June, 74 percent of dealership respondents said they felt some pressure to do business with captive finance companies. A few examples of captive and lender product programs:
Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20110912/RETAIL07/309129970/1400#ixzz1Xsu7gXD0
I guess if it was bad before, it’s only gonna get worse. I can see a lot more dealerships doing the extended warranty scam, where they say you’ll only be able to qualify for the loan if you buy the $3000 factory extended warranty.
The pressure to sell extended warranties has been the norm for many years in the RV sales world. The customers for new motorhomes are usually middle to upper middle class retirees who jump on the chance to save money on a large RV repair bill. The truth is that the extended warranties are almost worthless and the factory warranty for new motorhomes is protection enough in most cases. Whenever sales are slumping in one area savvy sales managers will try just about anything to make up the shortfall.
What some of us call an “extended warranty scam” the auto industry calls an “extended warranty PRODUCT”. Extended warrantys IMHO are in the same “product category” as most induction system cleaning, magic protective finishes, rustproofing (on modern cars), and nitrogen fiilled tires. They’re the needless fluff used to enhance revenue once the basic product has been sold.
Unfortunately, the standard F&I means of selling them (thanx Texases) is laid on heavily. I miss the old days when car manufacturers actually focused on selling cars.
I walked out of a deal once because the salesman and then the finance officer and then the manager all ganged up on me to buy the extended service plan…I told them “Since your product is so poor that I need this plan…I’m going to buy something else.” Got up and walked out.
We had already made the deal and was ready to sign the papers…The following day I went to another dealer (same manufacturer) and bought the same vehicle at the same price. Salesman explained their "Extra packages (paint sealant, extended warranty…ect). Then I said…“Not Interested”…That was it…end of discussion.
I’ve walked away too. They really got upset when I picked up the paperwork and destroyed it. Hey, my signature was on it, I figure I have as much right to destroy it at that point as they have to process it!
“…you’ll only be able to qualify for the loan if you buy the $3000 factory extended warranty.”
Is that legal? I doubt it. And almost everyone qualifies for alternate financing. That won’t stop some salesmen from saying it, nor some uninformed consumers from buying it. I guess you still need to do your homework.
carbuyingtips.com actually lists it as one of the scams some dealerships play on unsuspecting buyers, mostly lower credit score buyers, who are more likely to use the buy here pay here places that are most likely the ones who pull the scam.
Mountainbike, I did the same thing in a dealership. Took the papers with me and shredded it on the way to my car. I wanted to close the deal before X-mas eve and this salesperson kept shoving credit papers (I was paying all cash) and warranty papers on the desk. I told him you have 20 minutes, he didn’t listen. They told me I can’t shred their papers, I told them since my name is on it, I can do anything I want. They lost a deal and a costumer.
I never had that problem. Maybe it’s because I don’t but the most popular cars, or I get some young up that can’t direct the conversation in his direction. A few times the sales manager has taken over when he saw how well prepared I was. I guess it’s just dumb luck. I’m sure that you can negotiate as well as I can.
When a customer says no and the dealer keeps pushing then they deserve what happens afterwards. I’d have liked to have seen the paper shredding.
Heck, when I worked for Nissan the service manager lipped off to me and this led to my planting a size 11 boot into the castered chair he was sitting in and slamming him back into the wall.
Sometimes you have to stiffen your resolve a bit…
Heck, when I worked for Nissan the service manager lipped off to me and this led to my planting a size 11 boot into the castered chair he was sitting in and slamming him back into the wall.
And at my company…that would have landed you in jail…Do Not Pass Go…Do Not Collect $200.