A leading vehicle service-contract administrator said dealers are helped, not hurt, by companies that sell service contracts directly to consumers over the Internet.
Interstate National Dealer Services Inc. of Mitchel Field, N.Y., said most customers prefer to buy the contracts from dealers.
'If they go to the dealer, the dealer can roll the price into the financing for the car,' said Larry Altman, senior vice president of Interstate.
And most of the people who shop on the Internet are looking for information; they're not ready to buy. So when Internet surfers shop the warranty Web sites, they often wind up buying a contract from a dealer. Roughly 40 percent of the consumers who visit these sites are in the market for another car, Altman said.
'The Web site educates the consumer,' he said. 'We see the Internet as a great tool to convince consumers that a vehicle service contract is a good value.'
Interstate administers contracts for three Web sites that sell contracts directly to consumers: Budgetwarranty.com, Warranty-gold.com and Warrantydirect.com. And business is booming.
Altman said online extended-warranty sales have tripled during the past year. The Web sites are generating sales of about $10 million a year, he said.
However, few dealers are promoting service contracts on their Web sites, he said.
Altman said dealers should use their Web sites to sell customers on the idea of buying a service contract before they enter the dealership.
