EFG launches long-term service contracts aimed at new-car buyers
Service contract administrator EFG Companies has launched an extended service contract for new vehicles that doubles the term of the powertrain portion of a manufacturer’s new-car warranty.
The goal is to help dealerships meet the needs of new-car buyers who hang onto vehicles for a long time.
The new service contract, called Power x2, could extend a 10-year/100,000-mile Hyundai powertrain warranty to 20 years, 200,000 miles, EFG CEO John Pappanastos said last week.
“This isn’t just an F&I product,” he said. “It’s a traffic-generation program” aimed at helping dealerships attract new customers and retain service customers.
EFG’s plan is for dealerships to add the Power x2 service contract to all new vehicles. The cost to the dealer is $200 to $300 per car, Pappanastos said.
He said he expects dealerships to cover the cost of the product and more on the final gross price of the car. EFG says that to help make the new service contracts a differentiator for dealerships, it intends to offer them to only one dealer for a particular brand within a 25-mile radius.
The new Power x2 service contracts are not transferable, Pappanastos said. But car buyers who purchase additional coverage can transfer the upgrade, he said.
GSFS Group, EasyCare and other companies have offered lifetime powertrain-only service contracts, which last for as long as the customer owns the car, for a while.
But Pappanastos says EFG’s new service contracts are different because they’re aimed at new-car customers. He says EFG offers lifetime powertrain contracts, too, but they’re sold mostly to used-car customers.
“Dealers love that program,” he said. “But they didn’t have a program for new vehicles.”
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