Pre-Paid Maintenance

[CaryC]

We are considering selling pre-paid maintenance plans. Does anyone have any examples, success stories? Thx. for the reply.. We want to develop our own.

[This message has been edited by CaryC (edited 12-10-2002).]

[robc]

Do you mean making your own contract/plans or selling a third party's contract??



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** Rob, Editor WD&S **
Help is only a message post away!
robc@dealersedge.com

[Bill Stueckemann]

Hi, We have had sucess in selling a "Limited Lifetime Oil Change". We sell our plans for $199.99 plus tax. This entintles the byer oil changes every 3000 miles for a specific vehicle as long as they own that vehicle. In the last six months we have sold about 60 of these plans. Our plan is that the customer is paying retail for his oil changes for 2 1/2 years at an average of 1000 miles per month, we will see the vehicle for that time and have the opertunity to upsell, and a majority will trade their vehilce in that length of time. We look forward to this being a long term program. We do not sell the plans to owners of commercial vehicles or to diesel vehicles.

[robc]

I think that really doesn't scratch the surface of profitability. The average redemption rate for pre-paid maintenace for the after-market companies is somehwere around 50%. You can afford to be overly generous and still make money on the initial sale. Plus you've got their money for two years and you've got them tied to your dealership for that time. If it works like crazy for Blockbuster then it should work for nearly everyone.



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** Rob, Editor WD&S **
Help is only a message post away!
robc@dealersedge.com

[CroweChizek]

Bill,

Just out of curiosity when do you recognize income for tax purposes? Do you recognize income when the plan is sold or do you set up a liability that is offset when the oil changes are done?