Extended Warranties and F&I Products enhance the Customer Experience and improve the Dealership’s Bottom Line

News
4 min read
At Mach10, we are often being asked to provide insight on the importance of F&I products and services, what they mean for the overall profitability of a dealership, and what impact they may have on the customer experience. I am going to discuss how extended warranties and ancillary F&I products can significantly enhance a dealership’s revenue streams and customer satisfaction. I will outline a few reasons why incorporating these offerings into your portfolio is strategically sound.

The Revenue Opportunity

Fueled by the consumer affordability crisis, we are experiencing an increase in leasing. As leasing grows, finance managers will have a harder time retaining the kind of gross margins per vehicle seen during the inventory shortage. Leases still offer a chance to sell finance and insurance products, which are more than just an add-on; they represent a substantial revenue opportunity.

Offering a comprehensive suite of ancillary F&I products and services such as GAP insurance, extended warranty, tire and wheel protection, paint protection, and maintenance plans, to name a few, can significantly boost a dealer’s profitability. By bundling these products, dealers can increase profitability on each sales transaction as well as improve overall customer satisfaction, and loyalty.

Complementing OEM Warranties

While OEM warranties provide basic coverage, they often leave gaps that extended warranties and ancillary services can fill. These additional products offer peace of mind to customers, covering aspects that the standard factory warranty does not, such as wear and tear, roadside assistance, and more extensive powertrain protection. By filling these gaps, dealers can position themselves as comprehensive service providers, enhancing customer trust and satisfaction.

It is important to point out that working with specialist product providers does not mean that the dealership would choose not to work with the OEM in offering their warranty products. Quite the contrary. One of Mach10’s strategic alliance partners is Portfolio. The products and services offered by companies like Portfolio are designed to enhance and complement those provided by the OEMs.

Portfolio’s Ryan Hanlon provides some perspective: “Extended warranties and other aftermarket products provide a variety of benefits to both dealers and the consumers who purchase them. Most consumers keep their vehicles longer than the factory warranty; and these products address the most common ownership expenses which relate to mechanical breakdown, theft, and vehicle depreciation. Beyond the benefits the consumer experiences, aftermarket participation programs can create significant additional long term wealth for dealership owners. Often, these programs are structured in a way that provides significant tax advantages for dealership owners and can be a useful tool for tax efficient estate planning purposes”.

Meeting Customer Needs

Today’s consumers are keeping their vehicles longer and driving more miles than ever before. This trend increases the likelihood of mechanical failures as vehicles age. Offering extended warranties allows dealers to meet these evolving needs, ensuring customers are covered long after the factory warranty expires. High-mileage drivers will find value in extended warranties, making them a key target audience for these products.

Enhancing Customer Loyalty

Providing extended warranties and ancillary products can lead to higher customer retention rates. When customers feel protected against unexpected repair costs, their satisfaction with the dealership increases. Protection means peace of mind, eliminating or minimizing any unexpected expense. This positive experience makes them more likely to return for future vehicle purchases and refer others to your dealership. Furthermore, regular interactions for maintenance and service under warranty plans keep your dealership top of mind, fostering long-term relationships.

Differentiation in a Competitive Market

In a highly competitive automotive market, differentiating your dealership is crucial. Offering a robust portfolio of extended warranties and ancillary products can set you apart from competitors who only offer the basic OEM warranty. This differentiation can be a deciding factor for customers when choosing where to purchase their next vehicle, especially those who value comprehensive coverage and long-term protection.

Professional Insight and Customization

Dealers have the unique advantage of providing professional insights tailored to each customer’s needs. By understanding the specific requirements of your clientele, you can recommend the most suitable extended warranty and ancillary products. This personalized approach not only enhances the customer experience but also maximizes the likelihood of a sale. Your expertise in these products can be a powerful tool in building trust and closing deals.

Incorporating extended warranties and ancillary products into your dealership’s offerings can increase revenue and profitability, enhance customer satisfaction, and set you apart in a competitive market. By addressing the gaps left by OEM warranties and meeting the evolving needs of your customers, you can create a compelling value proposition that enhances loyalty and repeat business for your dealership management.

Author: Becca Villegas

Chief Operating Officer at Mach10 Automotive. Prior to joining Mach10, Becca held key roles in Inventory Management, Sales Operations, and Dealer Relations Management for Mercedes-Benz USA & Mercedes-Benz Financial Services (MBFS). Most recently, Becca served as the Operations Director for a prominent dealership group encompassing 14 new car franchises.

Denyn Pysz

Sales Director

Denyn is a dynamic automotive sales leader with over 20 years of experience, recognized for his expertise in technical certifications, retail sales, and service. With a proven record of driving growth, Denyn has excelled in key management roles across dealership operations, equipping him with a comprehensive understanding of dealership needs at every level. Known for his ability to build high-performing teams and deliver revenue growth, his innovation-driven approach and industry insight make him a trusted authority in automotive sales and service. At Mach10, Denyn advises our clients in Sales, Service, F&I, and Operations, guiding them toward optimized performance and success.

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Kathi Kruse

Financial Operations Analyst

Kathi Kruse is a uniquely qualified and accomplished automotive retail advisor. Recognized as a dealership profitability specialist, digital strategist, trainer/coach, podcaster, and author, Kathi is the creator of the Kruse Control Newsletter, and Founder/CEO of Automotive CFO-To-Go, and Kruse Control Inc.  Born in the heart of Los Angeles to a family of “car people”, Kathi’s passion for the car business spans a 25-year automotive retail career, managing wildly successful $100M+ stores in Southern California. Her exceptional experience, combined with her innovative methods, has led to transformational outcomes and increased profits for over 1,000 clients to date.

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Chris Pero

Managing Director

Chris’ automotive experience spans over a decade in both retail and wholesale. Chris has provided support by growing an auction company at the management level in southern California, and most recently, he was a part of the management team at a Ford and Lincoln dealership.Through his unique experience and determination, he has a proven track record of growth and success and understands the unique needs of the dealership at every level.

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George Pero

President & CEO

Extremely accomplished leader in the automotive industry recognized for his success in retail and remarketing. George’s career achievements include successfully launching and running Auctions In Motion (“AIM”), a regional “mobile” auction company that brings the auction to the dealer. George also holds a wealth of knowledge & expertise in mergers & acquisitions in the automotive sector. He recently served as the Vice President of a national brokerage firm where he was one of the top producers. His experience in the M&A industry brings a keen sense of the due diligence process as well as the art of negotiating while representing both seller and buyer.

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Michael Yanke

Vice President Marketing, M&A

Michael has demonstrated success in expanding multimillion-dollar sales and fostering growth while providing sales leadership in highly competitive global markets. Michael brings decades of marketing management with a proven record of achievement. For over 25 years, he has been successful at building new businesses, securing client loyalty and forging strong relationships with external business partners. His extensive knowledge of marketing strategies, channels, and branding has helped companies achieve success through his leadership, communication, and collaboration abilities.

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Jon Karasek

Vice President

Having recently held the position of Regional Director of Digital Strategy and Innovation for the industry’s largest independent auto auction group, Jon’s skills range from mechanical/technical certifications to wholesale and retail sales. Jon was recognized for leadership accomplishments when honored with the 2021 Automotive Remarketing 40 Under 40 Award. He is an accomplished auctioneer with over 20 years of experience in the automotive industry. Jon graduated from the World Wide College of Auctioneering, and then excelled as the GM of one of Southern California’s premier wholesale auto auctions.

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Chris Pero

Director, M&A

Chris’ automotive experience spans over a decade in both retail and wholesale. Chris has provided support by growing an auction company at the management level in southern California, and most recently, he was a part of the management team at a Ford and Lincoln dealership.Through his unique experience and determination, he has a proven track record of growth and success and understands the unique needs of the dealership at every level.

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David Foley

Director, Dealer Operations

David is a seasoned automotive executive with over twenty years of industry experience. As a results-driven Sales Manager, he consistently delivers impressive revenue growth and prioritizes customer satisfaction. Renowned for his ability to build and lead high-performing teams, David’s visionary approach and innovation-driven mindset keep him at the forefront of the automotive sector. His unwavering integrity and keen eye for industry trends position him as a trusted leader actively shaping the future of automotive sales.

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Sam Abergel

Director, Fixed Operations

With over four decades of automotive industry experience, Sam’s impressive career began in sales at a Chrysler Plymouth dealership, where he was promoted to Service Manager within 18 months. Noteworthy achievements include leadership roles as the President of the Parts and Service Managers Guild in Los Angeles and representation on the Porsche North America Round Table. Sam’s extensive experience and track record of performance improvements includes orchestrating successful dealership transitions, managing and growing service and fixed operations as a transformative leader at Chrysler-Dodge, Audi, Lexus, and Porsche dealers. At Mach10, our clients benefit from Sam’s expert knowledge in driving dealership profitability through strategic guidance, coaching, and creating tailored client solutions.

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Shasta Pellegrino

Executive Administrator

Shasta is a dynamic professional who excels at identifying and implementing effective solutions to complex problems. Her dedication to Mach10’s administrative needs and her commitment to excellence make her an invaluable asset. Shasta's passion for working closely with people and ability to collaborate seamlessly with colleagues and stakeholders alike makes her a perfect fit for the Mach10 team. With her blend of administrative expertise, people skills, and proactive approach to problem-solving, Shasta is poised to contribute significantly to the success and growth of our team and our client partners.

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Carsten Preisz

Chief Marketing Officer

Carsten’s extensive achievements includes introducing and establishing Dutch Supercar Spyker in the Americas and holding senior management/executive positions with esteemed and iconic automotive OEMs to include Rolls-Royce, Bentley, Peugeot, and Fisker Automotive. Most recently, Carsten’s contributions with Market Scan Information Systems, Inc., were key to the company being acquired by S&P Global Mobility.

Whether the challenge calls for creating the customer standards for Bentley/Rolls-Royce or being responsible for the Los Angeles Marathon TV-broadcast, which led to an Emmy nomination, Carsten is instinctually entrepreneurial and an out of the box thinker who enjoys solving strategic challenges to elevate the client experience and maximize profitability.

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