Auto Extended Warranties:
Dealership Sales & Customer Peace of Mind
In the ever-evolving automotive market, extended warranties are emerging as a powerful tool for dealerships to enhance customer retention and generate additional revenue. According to the new 2023 CADA Data Report and the latest Canada Customer Service Index—Long-Term (CSI-LT) Study, the automotive industry is witnessing trends that favor the auto extended warranty market. Whether you’re a dealership owner or a customer, these reports reveal promising opportunities for both parties.
Market Growth and Stability
The 2023 CADA Data Report confirms that the automotive market in Canada is stabilizing after a tumultuous period. In 2023, 1.66 million new vehicles were sold across the country through 3,457 dealerships, marking an 11.8% increase compared to the previous year. With dealerships writing 8,556 repair orders on average, it’s clear that service and repair remain a critical part of dealership operations. The latest Canada Customer Service Index—Long-Term (CSI-LT) Study reports that dealerships continue to hold a 48% share of the auto service and repair market, with independent shops and quick lube locations capturing 27% and 11%, respectively.
For dealerships, offering extended warranties is an excellent way to capitalize on this strong foothold. Not only do they create a reliable revenue stream through service and repairs, but they also enhance customer loyalty by offering peace of mind through coverage on costly repairs.
Extended Warranties as a Competitive Advantage
As vehicles become more complex and advanced, the costs of repairs and maintenance are increasing. The latest Canada Customer Service Index—Long-Term (CSI-LT) report shows that the average cost of a visit to the dealership has risen to $465, compared to $273 at independent shops. Customers are increasingly looking for ways to manage these costs, and extended warranties provide them with a solution.
A Thriving Market with Minimal Risk
The 2023 CADA Data Report illustrates how dealerships are performing well financially, with service and parts sales accounting for 22% of the dealership’s gross revenue, second only to new vehicle sales. By offering extended warranties, dealerships can further increase their share of this market. This adds another layer of revenue while providing a value-added service to customers, ensuring they return for future repairs and services.
Seize the Moment
The insights from the 2023 CADA Data Report and the latest CSI-LT report make it clear that the current market conditions are favorable for dealerships to leverage extended warranties as a growth strategy. Whether you’re looking to attract new customers or retain existing ones, extended warranties offer a low-risk, high-reward opportunity to enhance your dealership’s performance.
And if you’re looking for a reliable extended warranty provider to help boost your dealership’s revenue and protect your customers from unexpected out-of-pocket expenses when their vehicles need repair, consider Peoples Choice Warranty, a company with over 25 years of experience in the automotive extended warranty market. For more information, send us an email at info@pcwwarranty.com.
For more detailed insights, check out the CADA report here and the Canada Customer Service Index—Long-Term (CSI-LT) Study here
Feel free to contact us at info@pcwwarranty.com to learn more about our plans
Gerry Cloutier
With an illustrious career spanning over three decades in the Automotive Industry, Gerry Cloutier brings a wealth of expertise and knowledge to his role as the National Training Manager at People’s Choice Warranty. His extensive experience positions him as a trusted advisor, enabling the company to proactively anticipate and adapt to the ever-evolving market landscape. His invaluable contributions play a pivotal role in driving the company's success and cementing its position as a leader in an industry characterized by constant change and innovation.
SOURCES:
[1] Data Report. Canadian Association of Defence and Security (CADA), 10 Apr. 2023.
[2] Canada Customer Service Index (CSI) Long-Term Study. J.D. Power, 15 Jan. 2024.
