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Old 04-01-2009, 20:26   #1 (permalink)
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Question Dealers base cost for extended warranties?

What does a Ford dealer pay wholesale for an extended warranty? There are various ones offered; powertrain, basic etc. Years ago when I worked one summer at a GM dealership they were paying about $100.00 to $200.00 for an extended warranty, there were only a few availiable at that time. Any thing they sold above their cost, to the customer was pure profit. I am involved with negotiations for a warranty, on a 1/2 cost basis, but is 1/2 cost or full? Not that I don't trust dealers, but one can't be overly cautious!
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Old 04-26-2009, 15:27   #2 (permalink)
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Re: Dealers base cost for extended warranties?

Personally I wouldn't bother with extended warranties. They're overrated as most vehicles last well past their warranty period. I've never had any major issues with my vehicles until well past 200,000kms or roughly 140,000miles.

I'm not sure about the profit margin but I'm sure it's close to 70%-75% in favour of the dealer. A full comprehensive warranty to 200,000kms for a new Toyota is nearly $3000. That's steep for any type of warranty. If a major problem does occur, it's generally within the first 20K of ownership, or during the break in period when you find out that Joe Blow didn't tighten the bellhousing bolts according to spec.

As you mentioned, "there are only a few available at that time" is another marketing scheme if you believe it or not. Dealers have an extended warranty per vehicle, they don't sell 100 vehicles with only 20 ext warranties available. If 100 buyers want a warranty each they're all entitled to pay extra for it.

Sales men are just that, sales, they rarely know more about the vehicle they're selling you other than the fact it's on four wheels. When push comes to shove you could also haggle for a lower interest rate if you finance or lease, or if you pay cash you can easily get a lot more off the top.

Another strategy that I use a lot, is to take their offer and deliver it to another dealer to see if they can better it. I'm sure they'll at least try!
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