General Motors has rolled out a new tool to help shore up customer loyalty and dealerships. The automaker will now offer extended add-on warranties for Chevrolet, GMC, Buick and Cadillac vehicles.
According to a Sunday Automotive News (subscription require) report, the optional warranty coverage sees a Chevrolet and GMC standard bumper-to-bumper 3-year/36,000-mile warranty climb to 5 years/60,000 miles. For Buick and Cadillac vehicles, the optional coverage raises the warranty from 4 years/50,000 miles to 6 years/70,000 miles.
There is no set price on the extra warranty coverage, and GM will leave the cost to dealers’ discretion. However, the automaker suggests a $1,000 to $2,000 premium based on the vehicle in question. The final cost is added to the vehicle’s sale price and can be rolled into a monthly finance payment.
Ken Mac, director of Chevrolet-Buick-GMC and Cadillac Protection, said the new program helps keep the GM customer experience “pure,” and it’s the latest tool GM is dishing out to dealers for increased customer retention. It should also help dealers increase operational profits.
However, some dealers believe the program will only help GM itself and not dealers. One dealer speaking anonymously said, “I don’t think they like that dealers can make money on other extended warranties. It’s a way to make more money for them.”
GM didn’t disclose how it will share profits with dealers, but Mac said GM will “very fairly and generously” share revenue from the optional add-on coverage. The automaker also plans to provide incentives to dealers to push the extra coverage, but it’s up to dealers to decide when and how they pitch the warranty.
But, other dealers believe it’s one of GM’s best ideas in a long time, especially as independent shops increase competition and overall vehicle quality continues to improve. Another dealer told the publication the added warranty coverage will likely help the business sell more cars.
The average car buyer in the United States keeps his or her vehicle for 6.8 years. GM’s optional extended coverage would nearly cover the entire timeframe for Chevy and GMC vehicles and entirely cover Buick and Cadillac buyers, save for breaching the mileage figure first.