Dealer doesn't charge for powertrain warranty for now

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Rick Case Automotive Group is offering a 10-year/100,000-mile powertrain warranty on some used cars and trucks, excluding those covered by manufacturer certification. But it is not charging a premium for those vehicles -- at least not yet, CEO Rick Case says.

“I don’t know what value the customer is going to put on that warranty as it relates to dollars,” Case says. “On June 1 of next year, we’ll evaluate what the program has done. We’ll see if there’s any way we can justify a higher price than the competition.”

The group’s Nationwide Powertrain Warranty program began June 3. It covers designated 2007 and newer used cars and trucks with up to 80,000 miles on their odometers.

The warranty-covered vehicles are reconditioned by the dealership group and insured by a third-party insurance company, Case says.

Service contracts, too

The group also sells extended service contracts that will expand coverage on the vehicles to bumper-to-bumper for up to 10 years/100,000 miles. Case says service contract prices vary depending on the vehicle make, model, contract length and terms. “The insurance company determines that,” he adds.

The powertrain warranty starts when a covered vehicle is purchased from one of Case’s 14 new-car dealerships in the South Florida, Atlanta and Cleveland markets. Domestic- and Asian-brand used vehicles are included in the program, plus those from Audi, Fiat, Mini, Volkswagen and Volvo. The warranty covers the vehicles nationwide and includes 24-hour roadside assistance.

For the time being, the group is not adding a premium to the vehicles’ prices. The vehicles are priced to compete with like makes and models in their local markets that do not have longer-than-typical powertrain warranties.

Ad campaign

Rick Case Automotive is touting the vehicles and their warranty with an aggressive advertising campaign that is designed to educate consumers about the warranty’s value and benefits.

Case believes that consumers who understand what the warranty offers will be willing to pay more for cars with it, allowing the group to charge a premium eventually.

Rick Case Automotive is No. 27 on the Automotive News list of the top 125 dealership groups based in the United States, as ranked by 2013 new-vehicle retail sales units. The group ranks No. 15 in used-vehicle retail sales, based on 2012 sales. The latest used-sales ranking will be released July 21.

You can reach Arlena Sawyers at asawyers@crain.com.

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