Honda Clamps Down On Internet Warranty Sales
It seems that quite a few Honda and Acura dealers have been making some extra money by selling Honda/Acura warranties over the internet. Consumers love the idea of this since the sale of extended warranties tend to be a large profit center for a dealer, with markups as much as 100%. Plus, consumers often feel pressured to buy these warranties on the spot, without waiting to do research. So this gives the consumer a chance to save some money buy purchasing a discounted warranty and the selling dealer makes some easy money...
It is a win win for everyone, right?
Well, Honda doesn't see it that way. A notice was recently sent out to all Honda and Acura dealers stating that, "After careful consideration, American Honda has determined that Internet selling of Honda Care® and Acura Care® Vehicle Service Contracts* (AHM VSCs) undermines the Honda Care® and Acura Care® brands among both Dealers and customers and should be prohibited. A further rationale for prohibiting Internet VSC sales is to align the policy regarding such sales with that for sales of Honda vehicles from unauthorized locations, which the Honda Automobile Dealer Sales and Service Agreement ("Dealer Agreement") prohibits. Effective April 1, 2008, the sale of AHM VSCs over the Internet is therefore prohibited."
The document goes on further to state that internet sales of these warranties "tarnishes" the brand, "From the customer's perspective, Internet selling of AHM VSCs tarnishes the carefully cultivated "personal service" image of Honda-brand products. Over the years, American Honda and many of its more than 1,200 authorized Honda and Acura Dealers have invested substantial resources to make the Honda experience a one-on-one personal commitment to quality. Internet sales of the AHM VSC (a premium plan whose advantages can be most effectively explained by Dealers to customers in person at the dealership) undermine the Honda and Acura brands and reputations. "
Somehow, I doubt that anyone shopping online for an extended warranty, or any other product (from DVD players to watches) sees any real value in what a local brick and mortar store can offer. Most of these buyers have already done the research and know what they want and are simply searching for the best possible price.
By this same rationale, shouldn't a dealership be prohibited from advertising any kind of discounted price of a vehicle on the internet, newspaper, TV or radio, since such actions also take away for that "one-on-one" personal commitment to quality and the effective explanation of the advantages of their vehicles?
Frankly, I think this is less about a manufacturer's tarnished image (how exactly is the image tarnished by this?) and more about the dealers complaining about what their fellow dealers are doing over the internet and taking sales away from them, and Honda caving in to these complaints.
Could not agree more. Honda just keeps giving me more and more reasons to end my loyalty with them. To bad a national TV audience could not see this. I am sure Honda would feel some pressure.
what a load of crap
This is great news. Customer's don't need to know the profit margin of warranties. None of their business really. If they don't like the price they don't have to buy the warranty. I don't go into the supermarket and ask what the store paid for a can of soup. Every product in any business is marked up so y'all just chill.
Yeah sometimes we make boatloads of money off of extended warranties, so what? Most of the time it's not as much as you'd think. We have to sell something, the dealer demands it, we're not making enough money off the financing anymore so we have to make it up somewhere. We got families to feed.
so does the buy cardawg. Supermarkets work on thin margins.car dealers work on trying to rip as much money out of you as possible. From your posts here, you are one of the scum bucket sales guys everyone hates.
and its not like a honda dealer wasnt selling this warrenty... so you just want all the money for yourself... so anothe dealer that wants to sell the warrenty and make 20 bucks of it, but sell a few hundred due to volume, is now not allowed, just so you carsdawg can make a few hundred off the fears of a buyer.
Right after you tell them oh its a honda it will last forever... BUT you do know that if it does break you could be out thosands of dollars, so why not buy some piece of mind.
Go pound sand you blood sucker
After buying 2 Hondas and 2 Honda warranties in the past one and a half years (the first one being a hugely marked-up one from the dealer and the second one being a much more reasonably-priced one from the internet), it looks like my next car will be a Toyota (at least until they do the same thing)!!!
Extended warranties are a waste of money. You are pre- paying repairs that may never be needed.
If you are really worried about the future, put the money in an account and leave it there. If something breaks, you've got the cash.... if not, take the money and buy yourself something special.
first: some of these online warrenties, being first party were very reasonable priced. I've seen some cars, for abotu 600 dollars to extend the warrenty from like 3 yrs out to about 6, from 36k miles to 100k miles.
So it wasn't a huge outlay in money...
the same warrenty now will cost you 3x times. which I agree with you, put the money aside and you'll be good to go.