Extended Warranties: Consumer Beware

Extended warranties, extended service contracts, maintenance agreements are a huge profit center for car dealerships.  For consumers, however, it is like buying soda and popcorn at the movie theatre to take home: a great way to overpay!  (Keep in mind that you can usually buy the same or similar products elsewhere for FAR less.)  Now, one of the nations largest chains says it is hungry for more consumer overcharges.  According to Automotive News, AutoNation Inc., the nation’s largest dealership group, will push even harder to sell extended-service contracts and prepaid maintenance in 2012, on top of record F&I [Finance and Insurance]revenues per vehicle in 2011.”There’s going to be a continued or an even stronger focus on [F&I] products, and we’ve done a good job on products in the past,” said COO Mike Maroone, to Automotive News. AutoNation averaged $1,223 per vehicle in F&I revenues in the fourth quarter, up about 5 percent from a year ago. The figure represents profits from F&I product sales as well as from finance reserves — the dealer’s share of interest-rate profits. For the full year, AutoNation averaged $1,201 per vehicle in F&I revenues. That was the first time the group topped $1,200 for a full year.