Saab Automobile Parts North America is trying to make up for the fact that 2010-11 model Saab vehicles were not covered by a manufacturer warranty because of the automaker's bankruptcy filing in December 2011.
The parts distributor, which supplies factory replacement parts to Saab service providers, is offering Saab owners subsidized extended-service contracts and encouraging retailers to sell them at cost.
Tim Colbeck, CEO of Saab Automobile Parts N.A., said last week that about 14,000 owners of 2010 and 2011 Saabs are affected. Colbeck formerly was COO of Saab Cars North America.
Saab Automobile Parts N.A., of suburban Detroit, purchased the remaining parts inventory from the Saab bankruptcy estate in spring 2012. It is a unit of Saab Automobile Parts AB in Sweden, whose shares are owned by the Swedish government. The parts operation stayed out of bankruptcy, Colbeck said.
General Motors, Saab Automobile's former parent, has continued to honor new-car warranties for 2009 models and earlier. According to Saab Automobile Parts N.A., there are about 500,000 Saabs still on the road in the United States.
Saab Automobile Parts N.A.'s 179 service points, mostly former Saab dealerships, set retail prices for the extended-service contracts, Colbeck said. But the company is encouraging retailers to stick to a suggested retail price approximating dealer cost, which, he said, was "under $500" for powertrain-only service contracts or up to $1,500 for more comprehensive wraparound coverage for 36 months or 36,000 miles.
Pablo Creek Services Inc., part of Allstate Dealer Services in Jacksonville, Fla., administers the contracts, Colbeck said. He said Saab Automobile Parts N.A. isn't aiming to make any profit from the contracts.
To motivate customers to visit dealerships and hear a pitch for the new extended-service contracts, Colbeck said Saab Automobile Parts N.A. is also paying for a free oil change. The oil change comes with a so-called additive warranty, from BG Products Inc. of Wichita, Kan.
Owners have to accept the additive along with their engine oil to initiate the warranty coverage. Strictly speaking, the warranty is for the additive only and for the internal engine components it touches, Colbeck said.
Additive warranties can be controversial, thanks to the former U.S. Fidelis of Wentzville, Mo., which was accused of selling additive warranties as a way to get around insurance regulations. Several states, including California, regulate extended-service contracts closely, like insurance, but leave product warranties less closely regulated.
Part of the alleged scam at U.S. Fidelis, according to regulators, was that the additive warranty covered the whole car, not just the parts that could reasonably be expected to benefit from an additive in the car's engine oil or radiator coolant. In effect, U.S. Fidelis -- which went bankrupt in 2010 -- was selling an extended-service contract but calling it a warranty, according to state officials in California and Missouri.
Colbeck said the additive warranty from BG Products only covers internal engine components. In addition, to keep the warranty effective, the customer has to get maintenance performed at prescribed intervals and only at an authorized Saab service center, he said.
"We picked very reputable companies for this program," Colbeck said. "That's one of the key things we wanted."
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