Vehicle Service Contracts: Countering Customer Objections

Vehicle Service Contracts: Countering Customer Objections


It is common for automotive dealers to offer service contracts to their customers buying new cars. These service contracts bring total peace of mind to the minds of customers as they need not worry about costly repairs in the event of a major accident on road. According to a survey by AAA, a whopping 63 million buyers of new cars in America cannot afford major repairs necessitated by road mishaps. By paying a little extra money at the time of buying a new car, these customers can overcome their worries through extended service contracts.


This is where F&I department at a car dealership can induce fear in the minds of car buyers and encourage them to buy extended service contracts. They can elaborate upon the perceived benefits of these service contracts and compel customers to buy them. It is imperative to first talk about the scenario where their car has been badly damaged and needs costly repairs before talking about payments. Painting a grim scenario makes most customers take a decision in favor of these service contracts.


It is the job of the F&I managers to turn customer’s No into a Yes. They come across objections raised by customers as they believe that they either don’t need the product or its value is more than it costs. Here are some of the most common objections raised by customers to decline the offer of a service contract.


I don’t need this coverage as company is providing warranty

As an F&I manager, you should focus on the distance driven by the customer in a year or the duration of financing if it exceeds company warranty. Point it out that warranty is not applicable as he drives more than 12000 miles per year. You can also point out that warranty expires after 1 year and he still must pay the EMI’s for the mortgage loan.


Your coverage is too costly for me

Money is very important for some customers. You should point out the labor cost, in addition, to spare parts in case of a mishap to prove how your coverage proves cheap. Break the cost monthly to show how cheap it is to get service contract in comparison to just 1 day at the garage for repairs.


The car is very high quality, so I don’t need the contract

You must agree with the customer that the car is high quality and it won’t break down. However, you can point out that even a minor repair could prove very costly outside the warranty period.

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