Independents growing even in tough times

A myth existed amongst car buyers that if they took their new vehicles, while under warranty, to an independent shop, somehow the second the technician popped the hood the warranty was voided. It is a myth that has a surprising amount of staying power.

A bit of news crossed my desk recently that probably passed under the radar for most. In mid-August, General Motors announced it was extending its warranty offer on certified used cars and trucks. Starting this September, General Motors will offer a 12-month, 12,000- mile ‘bumper-to-bumper’ warranty on all used cars and trucks certified as eligible for repair coverage.

What caught my attention about this were the remarks Jamie Hresko made at the announcement for this new offering. As the company’s vice-president of quality, Hresko said General Motors has seen a drop of 40 per cent in warranty-funded repairs over the past two years, and this year alone the company saw a 14 per cent drop. This announcement came in the wake of other announcements, such as when Chrysler offered a ‘lifetime’ warranty on the powertrain on almost all of their new vehicles.

While General Motors is saying this plan is to increase the resale value of its vehicles, I suspect something else is going on: people looking to get their cars repaired and maintained are moving in greater numbers to the independent sector.

For the longest time, a myth existed amongst car buyers that if they took their new vehicles, while under warranty, to an independent shop, somehow the second the technician popped the hood the warranty was voided. It is a myth that has a surprising amount of staying power. Only last month, I had a friend ask me whether it was safe for him to take his new car to an independent shop. The work needed to be done was pretty standard and one that any good shop would have been able to do without any difficulty. Still, he was very concerned that doing so would void his warranty, even after I had told him that was not the case at all.

What this announcement from General Motors tells me is people are coming to the realization that a professional and expert service provider is as good as or better in some cases than the dealer operations the auto makers provide. And the automakers are starting to realize this. Ask any auto executive and they will tell you the greatest profit value today does not come from the actual sale of the vehicle; instead, the real profits come from the after-sale repair and maintenance. This seems the likely explanation of why General Motors is offering this warranty plan. If more people take their vehicles to the independent service sector during the after-warranty years, and even more when the vehicle is covered by the warranty, the General Motors will feel the effects on the bottom line. So if they can convince people to buy into the extended warranty plan, they can direct people to the dealer operations for a longer period of time and garner the profits.

The automakers are not the only ones who know this. Buy anything today and someone invariably tries to sell an extended warranty plan. When I recently purchased some batteries for my home’s garage radio key, I was asked if I wanted a two-year extended warranty for the batteries.

The independent sector, even with these tough economic times, has a real opportunity to build on their strengths and grow their business. The automakers realize this and are fighting to keep that from happening.

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