Car Warrenties

As Auto Fleet Ages, Aftermarket Warranties Make More Sense

At one time, aftermarket vehicle warranties were an expensive add-on that seemed more come-on than real. However, things have turned around and the aftermarket/aftersale industry has begun to take off.

The reason is as obvious as it is real, the downturn in new-car sales. Until about two years ago, when things were a lot brighter in the new-car industry, if a person had a major problem with a car, rather than keep it and deal with it, the easy out was to head to the new-car dealers and negotiate a deal. After all, credit was plentiful and prices were reasonable.

That there was a credit problem brewing at this time in the car business was not yet apparent, as credit was readily available on the secondary market to anyone who could prove he or she had an income or a reasonable co-signer. When the credit crunch hit and the subprime market tanked a couple of years ago, this precipitated the downturn that has rattled the auto industry.

Think about this, three years ago, the U.S. car industry sold about 15 million vehicles. That figure dropped by about 20 percent in the 2007-2008 year to roughly 12 million and this year sales will likely finish up about 30 percent below figure or about 8.5 million. The sales information is based on statistics compiled by Automotive News. So, in the space of three years, the new-car industry has been hosed. It's a hosing that a lot of folks in the industry are not coping with very well.

Look at it this way, at its peak; the U.S. auto economy absorbed about 17.5 million new cars per year. This meant there were a number of relatively new preowned vehicles available for buyers who couldn't or, for whatever reason, wouldn't buy new. That there wasn't too much wrong with the later model preowned vehicles was pretty much a given as they proved quite popular with buyers who snapped them up in brisk numbers.

Seeing an opportunity - while the business was streaking - the auto industry came up with the certification program. It was an effort to ensure buyers or preowned vehicles that they would live up to the standard established by the factory. In Honda's case, the Certified Preowned program conducted a 150-point inspection and tried to make the preowned vehicles as close to new as possible. In many cases, dealerships invested as much as $1, 500 per vehicle to make sure that happened. In these cases, it also meant that the buyers were getting great cars at really reasonable prices.

The Certified Program became even more important as new-car sales started to slip and preowned car sales began to move ahead. They were also down, too, as was the rest of the industry, but, they weren't down quite as much. And, in the case of Honda, until quite recently, they weren't down at all because of the confidence people had in this particular line of cars. Add the Certified Preowned (CPO) program, and you had a combination that couldn't be beaten.

Other automakers, seeing an opportunity to market their wares better, also latched onto the CPO program and the result was that the vehicles chosen for certification were really like new (one Ford Explorer that was a CPO SUV) stood out from the rest of the vehicles on the preowned line because of the great condition it was in and when you had a chance to look a the other vehicles that were also certified, they were in equally as good condition.

By Marc Stern - An writer, who has specialized in things automotive and technological, among other topics, for more than 30 years, I have been published in the traditional media (eg. magazines, newspapers), where I spent mo...

Chrysler&GM Owners what do you think about the Government not backing our New Car Warrenties?
Hi i first heard abut this on the evening news but could'nt belive my ears so i done some quick research on the internet. The way things are stated is in the event Chrysler&GM goes bankrupt we are left out in the cold when it comes to our new car warrenty. The only way the Government will back a Chrysler&GM warrenty is if we bought our new vehicles durring the restructureing period that began yesterday March 30th 2009. I personaly own two Chrysler products a Dodge Grnad Caravan and a 2007 PT Crusier....i have taken out the extended 7 years or 70,000 miles ones and it does'nt look like they will be any good either if this Bankruptsy happens....This is so absurdbut read this article and post your throughts..scroo about 1/2 down the page untill you see the question....am i covered i just bought my car last week....and the answer is NO..... Thanx.............10 points for the best answer http://finance.yahoo.com/news/Meltdown-101-Governmentbacked-apf-14789802.html

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are these extended car warrenties real or a rip off?
i keep seeing extended warrenties offered on tv for cars by companies like us fidelis and others. does anyone have these and are they a scam or reputable companies? thanks

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Auto Repair Shop Fears (Marietta GA)

26 Mar 2010 at 11:09am

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