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Old 03-10-2003, 10:52   #1 (permalink)
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Volvo strengthens warranty on used vehicles

By Arlena Sawyers
Automotive News / March 10, 2003

Volvo Cars of North America Inc. has strengthened its certified used-vehicle program with optional additional warranty coverage for consumers.

The company also dropped a requirement that tied some dealer cash incentives with off-lease purchases and is creating a Web site for dealers to post their certified inventory.

Jeff Pugliese, commercial sales manager in charge of the program, believes the initiatives will help Volvo meet its certified vehicle sales goal of a minimum of 35,000 units this year, about even with the 34,850 vehicles it sold in 2002. The program enhancements began Jan. 1; the Web function will begin this month.

"It's not significantly above 2002, but it's still a respectable goal," says Pugliese of the company's sales goal. "We had an excellent year. We want to keep it going in 2003."

Volvo certified vehicles are covered by a six-year, 100,000-mile warranty. Consumers have the opportunity to purchase an additional year of coverage for seven years/100,000 miles. Pugliese thinks the extended coverage will be attractive to consumers who are certain they won't reach 100,000 miles within six years. The additional year costs dealers $380 per vehicle; the sticker price is $595. Dealers pay $895 to certify a Volvo vehicle.

To sweeten the pot, Volvo is paying dealers merchandising assistance of $350 per vehicle for such things as local advertising or to subsidize the used-vehicle finance rate. The company also is offering dealers floorplanning assistance of $100 per vehicle sold. "It's aggressive," Pugliese says of the cash incentives. "It's enough of an incentive to assist dealers in growing their business."

The company dropped a requirement enacted in 2002 that dealers purchase 35 percent of their off-lease portfolio in order to receive free floorplanning and cash incentives, Pugliese says.

Michael Long, general manager of Suburban Volvo in Troy, Mich., says he likes that change. He says many Ford employees in the Detroit area, eligible for discounts, could purchase some Volvo models for the same price or less than a certified one. So it was costly to keep a high percentage of off-lease vehicles in stock.

"It was a high challenge; we're absolutely delighted they dropped it," he says.

Volvo's new Web search function will link consumers who visit Volvocars.com to a local retailer. Once there, consumers will be able to a search for specific vehicles and obtain information about the program.

While the industry is expecting fewer off-lease vehicles this year, Pugliese expects roughly 30,000 to 32,000 Volvos to come off-lease in 2003, about the same number as in 2002.
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