manufacturer maintenance coverage

Manufacturer Maintenance Coverage Will Be Reduced in 2019 — Here’s How Auto Dealers Can Take Advantage

Over the past several years, some auto manufacturers have reduced the amount of manufacturer maintenance coverage they provide on new vehicles. We’ve seen some manufacturers such as Chevrolet reduce their maintenance coverage in model years 2016 to 2018 from two visits down to just one visit for 2019.

That creates just one visit and one opportunity for dealerships operating under manufacturer maintenance coverage to bring customers back in and build a repertoire with them. This relationship-building is essential to creating repeat customers who will return for non-warranty repair work, maintenance work that spans beyond the complimentary period, and in time, their next new vehicle.

Why have some manufacturers made the decision to reduce the number of complimentary maintenance visits they offer? In a statement issued to F&I and Showroom magazine in 2015, GM said “We talked to our customers and learned that free scheduled maintenance and warranty coverage do not rank high as a reason to purchase a vehicle among buyers of non-luxury brands.”

The Benefits of Complimentary Certified Maintenance

The statement released by GM runs counter to findings from a J.D. Power U.S. Customer Service Index (CSI) Study from just one year before. The CSI Study found that complimentary maintenance helps build brand loyalty and boosts customer retention.

”Maintenance packages — whether they’re complimentary or paid for by owners — create a long-term relationship between the customer and dealership, which, when coupled with satisfying service experiences during that period, can have a very positive impact on loyalty rates,” said Chris Sutton, the senior director of the U.S. Automotive Retail Practice at J.D. Power.

At Performance Administration Corp., we believe in the connection between complimentary maintenance and customer retention. Our customers who have created complimentary maintenance programs as long-term asset-building tools have seen their customer retention rates — and thus the value of their dealerships — go up over time. But where can a dealership start if they’d like to begin moving beyond short-lived manufacturer maintenance coverage?

Moving Beyond Manufacturer Maintenance Coverage

Many dealerships who feel they’ve been left in the cold by their manufacturer maintenance coverage have started creating multi-visit packages to help encourage customers to return for preventative maintenance items. They might create a three-visit or four-visit wrap for the 2019 model year. In a three-visit wrap, this means that the manufacturer pays for the first visit and the dealership sets up a complimentary maintenance program through Performance Administration Corp. to cover visits two and three. The dealer’s message to customers should be: “If you’re thinking of purchasing from X manufacturer, buy from us! While the manufacturer will only cover one visit if you purchase from another dealership, if you buy from us, we’ll throw in the next two visits!”

Many dealerships have found it disappointing that manufacturers have chosen to cut down on the amount of manufacturer maintenance coverage that’s being offered to their customers. After all, this takes away a steady flow of customers that have been returning to dealership service departments — and also taking time to peruse the showroom for the latest offerings — for the past few years.

A reduction in manufacturer-backed maintenance doesn’t have to be the end of the world, however. In fact, with a complimentary maintenance plan built through Performance Administration Corp., dealerships can continue on with the same maintenance plan than they had before. This gives them the opportunity to continue bringing customers back into their service departments, building relationships, and — as J.D. Power pointed out — building loyalty to your dealership’s brand.