Most extended service contracts are still sold at the same time a new car is sold. But now dealerships are finding a new place to market service contracts - and a way to cut down on possible buyers' remorse and cancellations.
In selling extended service contracts, F&I managers are going beyond vehicle buyers to service customers. And to bolster their business, they've made peace with credit unions, which formerly were often at odds with the F&I department.
"There's a real opportunity on the service drive. That's where we pick up a lot of business," said Bob Hymen, president of Service Payment Plan Inc. of Chicago. He said the company's business grew 30 percent last year while service contract sales fell overall.
Remberto Del Real, director of sales and marketing for Service Payment Plan, said service customers are in a receptive frame of mind to buy a service contract in part because people are keeping their cars longer.
"The economics have changed," Del Real said. "Leasing is down; people are flipping cars less often. They don't want big repair bills, but it gets expensive because things on cars today get replaced. They don't get fixed.