Stories from the Sales Frontlines

cotmc

"The majority of our customers simply don't see any value in a long warranty they know they will probably never use."

Craig, I'm not jumping on the bandwagon against Honda here, as I generally agree with what you are saying. If my memory serves me correctly, Toyota also doesn't provide any Roadside Assistance program. (Unless they recently started?)

However, I wanted to touch upon one specific argument, below:

"They have a basic 3 year, 36,000 mile warranty and a five year 60,000 powertrain warranty"

I recall not so many years ago Honda's Powertrain warranty was only 3 years, 36,000 miles -- even though nearly all the Japanese competition was offering a 50K or 60K Powertrain warranty. I know this was true in the late 90's. We were shopping Honda Accords in 1997 or so, and I was surprised to discover Honda's powertrain warranty was not up to the levels of Toyota and Nissan. Well, lo and behold, a few years later Honda decides to match the competition with their Powertrain warranty. I'm guessing there must have been some perceived value in extending the powertrain warranty -- or if not, why do it?

Hence, I wouldn't be too surprised if Honda eventually adds a Roadside Assistance program. Just like the extended Powertrain warranty, it will likely be low-cost "window dressing" to attract a few more buyers.

Just my $.02

boomchek

In Canada, Honda was the only mainstream manufacturer without a standard Roadside Assistance, up until a few years ago (05 or 06 if I remember correctly). Now it's standard for the term of bumper to bumper warranty.

Many of my customers were surprised about that when I sold Hondas during that time (03-06). Even if you never use it, it's just nice to have that peace of mind.

chikoo

How many of you readers didn't know that, and have cars under warranty, or extended warranty, but you also pay someone else for roadside assistance?

Not me. I know both of my cars have FREE roadside assistance for the next 20,000 miles while they are still under extended warranty....I will worry about AAA when that is over. That is also the reason I don't carry puncture repair kits. Only an air compressor for some quick tire pressure maintenance.

chikoo

Martha Stewart made a sex tape? Where can I find it?

Dang....the mental image has ruined my appetite for you know what, at least for tonight

cotmc

"Even if you never use it, it's just nice to have that peace of mind."

,,, especially if that program provides free towing all the way to the nearest dealership, regardless of the distance involved.

For example, if we were taking a summer vacation trip and our car became disabled out in the boonies near Jipster, Arizona, I don't think AAA would cover the cost of towing our car all the way back to the nearest BMW dealership in Scottsdale. I suspect they either have a mileage limitation, or else they tow to the nearest AAA-approved facility? On the other hand, BMW's program covers the cost to the nearest BMW dealership, and also provides temporary lodging and transportation, if required. I'm hoping this is standard practice with other manufacturers' programs?

dino001

Well, it just happens Honda is either very last or one of the last to improve any of their "free" (i.e. included in price) coverage.

And since as you said, it does cost money, it also provides some added value. Therefore, if all things are equal (which I 'm not implying at all, but let's assume that for the sake of this argument), the competition's offer becomes better overall - at least IF (and only if) customers see an actual value in such offerings (plenty of evidnce they do). I do - as long as the price is right (in case of extended warranties it rarely is, but in case of included price coverage it often is). If I see two products otherwise considered equal, one with longer warranty would win my wallet. Obviously (so far) enough customers see no or little value in such offerings, or do not see lack of them as a fatal setback for the product. Hence Honda's domination in retail (non-fleet) marketplace.

Regarding "getting away": the nature of competitive marketplace is to figure out is what's minimum you can offer (i.e. pay for) and still meet your sales and profit targets. Honda and Toyota are world champions of that (mentioned late introduction of coverage upgrades, but there are some other examples).

I'm not putting down your product. I'm just saying Honda consistently seems to be on the stingy part when it comes to packaging. They must feel really well about rest of the product, which is obviously justified - they meet their goals. I would like to add an observation though - in competitve marketplace consumer's preferences constantly shift, sometimes very fast and what was good today may be insufficient tomorrow.

dino001

It's much worse than that: Regular membership of AAA South covers first 5 miles and provides reasonable rate for the rest. Gold goves you 100 miles.

dino001

I think Toyota has also dragged their feet in powertrain coverage improvement.

fezo

Honda has roadside assistance but you either pay for it by buying the Hondacare warranty or by buying a CPO. I've done both.

In 7 years of vans with the roadside assistance I used it once - for a dead battery that was my own fault. Was in the middle of nowhere in Ontario and help came very quickly.

oldfarmer50

"...have cars under warranty, or extended warranty, but you also pay someone else for roadside assistance?..."

My new Mitsu has a roadside assistance benefit but I still have AAA. Why? Because I also have a 12 year old Chrysler and a 24 year old Ford. Those are MUCH more likely to break down. If I thought the Mitsu would break down during the assistance period I would never have bought it. Therefore that benefit is worthless to me.

I feel that way about most CPO, extended warranties and other such "protection".
There are usually so many conditions to them that they are more trouble than they are worth.

art_perriwinkl

Just bought a new 2008 base model 4 cyl. 2WD in Everglade Metallic (greenish) w/ roof rails, 17" steel wheels, daytime running lights, tonneau & cargo net, mudflaps, cargo & floor mats, and wheel locks for $21k true out the door. All fees, taxes, & tags included in the $21,000. Good or bad?
Thanks,
art

tidester

Toyota RAV4 Prices Paid and Buying Experience would be the place to ask.

tidester, host
SUVs and Smart Shopper

art_perriwinkl

Thanks, I found that forum right after I posted here...new guy here
art

isellhondas

You're right. Prior to 2006, honda only had a 3 year 36,000 mile powertrain. They didn't see the need to add a longer warranty that would seldom be used. I guess they got tired of hearing..." If your cars are so good, why are you afraid to match Toyota's warranty.

I don't know and I'm not speaking for them.

I would guess the bean counters figured it all out and probably raised the price of the cars a bit and went to the longer warranty.

I can't remember ever losing a sale over the length of the warranty prior to 2006 but it may have happened?

" The best warranty is the one you never have to use"

dino001

They didn't see the need to add a longer warranty that would seldom be used

That is REALLY good one, Craig, . If it's so seldom used, why not add it? Costs them next to nothing and creates anothe marketing opportunity. The answer is of course that "no need" was not on part of a customer, it was on part of the Company - as "no need for adding additional cost" (assuming same price) rather than "no need of additional benefit to the customer". As you said - there was no perceived loss of market share so why volunteer?

I'm not knocking it down - to me it's actually a sign of their incredible strength in the marketplace. All I'm asking don't spin it into something that it's not: some kind of benefit for a customer. I'm pretty sure that even if your Hondas "don't need" longer warranty, your F&I guy would be very happy to sell me one, wouldn't he?

Again - no warranty or roadside is purely bottom line behavior. Fine by me - just don't tell me it's something else. Please?

explorerx4

if you ever decide to get out of the car business, i see a future for you in politics.

houdini1

You should see pics of her in her younger days. What a babe. Now where did I leave that time machine.....

isellhondas

I am one of the people who pushed them for years to match Toyota's warranty just for the reasons you mentioned and they finally listened to me!

Most powertain problems will rear their head very early in a car's life. Just like electronics. If nothing go's wrong in the first 10,000 miles or so, it is unlikely something will happen at 55,000 miles.

Yes, things "can" happen but not too likely.

Nothing to do with "spin".

houdini1

Taco's?

snakeweasel

Well that begs the question, was she nicer (and I mean a lot nicer) in her younger days?

explorerx4

it's about the cars.
on edmunds?

verdugo

Of course, but if mfr A offers car at price X with loner warranty and roadside assistance

Does that warranty apply only if you have no friends? I think you meant 'loaner,' right?

You're welcome Richard!

duke23

Jipster wrote :
"There is a cost for everything and guess who pays?

The cost for roadside assistance on a new car has to be minimal... say $100 for 5 years. If it helps sells cars, sounds like a good marketing idea to me.

If you as a Honda salesman had the roadside assistance with your line-up of vehicles, and the competition didn't... what would you say to your customers? I think I know the answer, but you know. "

It is cheap marketing, use someone like Cross Country Auto that does huge affinity/loyalty marketing and you probably could swing 10 years for $150 as a manufacturer. I think why Honda doesn't offer it is they are afraid it would tarnish their we're so reliable even our tires don't puncture marketing they've built and depended on. Now as to adding it to Honda Care Extended warranty for an extra fee in F&I, well that's different, sure we'll include it. You did say extra fee didn't you? As the Parrot says, you know.

fezo

if you ever decide to get out of the car business, i see a future for you in politics.

No need to insult the man.... :P

dino001

Actually, it was supposed to be "longer".

dino001

That is generally true - that's why extended warranties are such profit makers. I was saying that long time ago, when Joel was arguing big benefits of them - machines tend to break early and late in their lifecycles, much more seldom in the middle of it, which is exactly above say 20K and 100K.

However, it's a little different story with competitve comparisons between otherwise equal products. Those small things may create a tiebreaker. One never knows what the latest trend is. Before warranties or roadside assistance, I see Ipod connections, horsepower and now of course mpgs being more in consideration. But if those match, warranty may come to play, eventually.

verdugo

I guess Richard won't be giving me any brownie points then.

exb0

Honda doesn’t think that their cars need road side assistance, but Acura does. All Acura cars come with 4yr/50mi road side assistance standard. As matter of fact that service is so great, that my salesman was trying to convince me that I should extend it for another three years for a nominal fee of $450. After that they were trying to sell me AcuraCare warranty that includes road side assistance. Go figure! I am so confused; I think should have purchased both products. :confuse:

sterlingdog

Of course you do. You get extra credit for being observant.

Richard

jipster

that my salesman was trying to convince me that I should extend it for another three years for a nominal fee of $450.

Hail, I'll do it for $350.

No way is 3 years of roadside assistance worth $450. Triple A (AAA) charges about $78 a year for their gold service. Which includes all the usual stuff (tow,gas,locked out), as well as their newly added service of putting on a fresh diaper for you or your kid... whichever the case may be. :sick:

jkinzel

Well I purchased a 2008 Taurus Limited. I’m sure I didn’t get the best deal, but I’m not unhappy with it. Any time you can get your tax, tabs and fees paid is not bad.
MSRP was $29355. Tax, Tab, Fees came to $2613. I got the car out the door $29312.

Ice Blue Taurus Limited with limited convenience pkg, limited wood pkg, power moon roof, Sirius Radio and a full tank of gas. The gas alone is an $83 value @ $4.19 a gallon.

The purchase process started with a call to the dealer asking what kind of deal he could give me and we agreed to the price over the phone. We drove the hour to the dealer (closes dealer with a car I wanted) and arrived at 1:00PM. We took a test drive, looked over the car and went in to do the paper work. This is where I thought I was going to have to fight because he was going to start adding stuff.

We went over the agreed price, tax, rebate and the final price and then he said “all I need to add to this is the excise tax, tabs and doc fees”. I was amazed. We started at 1:00PM and I was on my way home by 3:40. Even the F&I gal was low key and low pressure.

qbrozen

A taurus for 30 large??
HOLY ...

Well... ummmm... congrats. enjoy.

jkinzel

Like I said, maybe not the best deal.

capitano

A taurus for 30 large??
HOLY ...

But he got a Tab for free.

chikoo

They didn't see the need to add a longer warranty that would seldom be used

That is REALLY good one, Craig, . If it's so seldom used, why not add it? Costs them next to nothing and creates anothe marketing opportunity.

It does cost them ...... as warranty accrual expense. Hits the bottom line.

chikoo

Taco's?

of course not....... :sick:

madmanmoo

Congrats, Jkinzel.

It's nice to hear a dealer took such great car of you. BTW, I like the sound of "Ice Blue Metallic". Sounds sparkly. :P

-moo

qbrozen

Oh, don't get me wrong. Your deal may be just fine. I wouldn't know. I wouldn't buy a new Taurus. Depreciation is WAAYYY too steep for my taste.

dino001

That's what I wrote later. It was Craig claiming it's seldom used, which would mean the added cost is small, but potential marketing gain might offset that added cost - all if and only if the warranty is trully used seldom, of course.

oldfarmer50

"...Depreciation is WAAYYY too steep..."

I can't understand all this concern with depreciation. If you're a poor slob like me you keep your new car until it is just a pile of rust staining your driveway. If you're a rich guy like you it's just a few less cigars you light with $100 bills.

Either way, get the car you like and don't worry.

jkinzel

Depreciation is WAAYYY too steep for my taste.

Not a problem for me, my next replacement for this may come in 12 to 15 years.

The car we replaced turned 15 years last month.

dino001

You forgot about another caregory: poor slobs who "have to" drive better car than they can trully afford (know a few of those), as without it their life would be miserable. They don't mind 18 percent APR on their plastic, two large car payments and adjustable rate mortgage. All that counts is "enjoyment" they get from that newest iron. For them depreciation is a real concern.

I recently had a few discussions with people saying they would not get such and such feature (say manual tranny) because it affects the resale value. I always say I buy car for myself, not the next guy who will own it - they didn't even understand what I was saying.

cotmc

I always give some consideration to depreciation.

Wait -- I think I might have just come up with a new Schoolhouse Rock jingle:

"Give consideration
to your car's depreciation..."

I know some of you all are very good about keeping your new vehicles for a long time, but if we were to keep statistics for EVERYONE who makes this claim, I wonder what percentage of them, for one reason or other, purchases a replacement in less than 5 years??

Perhaps a worst-case scenario is if your car gets totalled in an accident. I believe the insurance company is only obligated to reimburse you for the current market value of your vehicle, regardless of how much you paid, or how much you owe on the loan.

boomchek

I agree too, don';t buy a car for resale value alone, or for someone else. Enjoy it, and you'll ALWAYS lose money on any car, unless you buy a one off collectible or exotic.

With resale value, one of the most common questions I get from first time, or inexperienced buyers is:

Buyer: Isn't it true I lose $2000-4000 the minute I drive off the lot?

Me: It is if you're planning on selling it right after you drive it off the lot. Are you planning on reselling this car it tomorow?

Buyer; umm, no

graphicguy

cotmc....I think you'd be dead on. There used to be a point in time where you did keep the car until it was a rusted heap. oldfarmer is at least being honest in his assessment of keeping his cars until they're little more than blistering hulks.

The last car I had which I kept until it was a rusty heap, was already a rusty heap when I bought it.

I'm shameless in my reasons (either real or imagined) for buying a new vehicle. The only one in recent memory that deserved to have my boot up its tailpipe was a $50K Cadillac that my Mother, kind as she was, gave to me. It was barely a year old, and it didn't have many miles on it. But, it was such a typical example of GM's total lack of commitment to quality control several years ago, that even a crusher would have been too good a fate for it.

I'm currently shopping (using yet another reason that's at best, nebulous) for another car. Among others, I'm looking at Accords. Gotta say, they've got them to the point where it's hard to justify an Acura over the Accord.

There's quite a brouhaha over on the Accord threads regarding their cylinder activation/deactivation technology....VCM. There was at least one person over there that said they were going to get rid of their car because of the VCM. May be a good reason...maybe not. Maybe Honda could do a better job about explaining the technology and what it does....what to expect. I don't know.

But, when he eventually goes to trade that Accord, what's he going to say to them regarding why he wants to get rid of it? If he says there's something wrong with the car, specifically the VCM, he kind of shoots himself in the foot regarding trade-in value. Even if he becomes a private seller, what do you say to the potential buyer? This car is crap? But, I want top dollar for it?

Better to be honest and say..."I just want a new car".

qbrozen

I can't understand all this concern with depreciation. If you're a poor slob like me you keep your new car until it is just a pile of rust staining your driveway. If you're a rich guy like you it's just a few less cigars you light with $100 bills.

I have to consider it because I change cars too damned often. I don't fit in either of your categories. Although all of my car swaps put me closer to the former.

But, more importantly, on a car that depreciates steeply, why not buy a used one? I've bought 3 that fell into that category. 2 Volvos and a Lincoln. Paying half a car's price after someone else puts a measly 30k miles on it is definitely the way to go with these vehicles, IMHO.

qbrozen

Not a problem for me, my next replacement for this may come in 12 to 15 years.

Good. That's very good.
Enjoy.

armadilloal

Well I purchased a 2008 Taurus Limited. I’m sure I didn’t get the best deal, but I’m not unhappy with it. Any time you can get your tax, tabs and fees paid is not bad.
MSRP was $29355. Tax, Tab, Fees came to $2613. I got the car out the door $29312.

If only there was a website out there where you could compare the price you paid to the price others were paying for the same car...

...seems like a good deal to me. Too bad I couldn't get a discount like that when I bought my Saturn!

chikoo

Perhaps a worst-case scenario is if your car gets totalled in an accident. I believe the insurance company is only obligated to reimburse you for the current market value of your vehicle, regardless of how much you paid, or how much you owe on the loan.

something called an "insurance" which the FI guys try to sell you should help with that. It is not much.....

ah-hah...it is called GAP insurance. I should know better. I got one on of my cars....

dino001

GAP only covers difference between loan/lease balance and insurance payment. Necessary for leases, waste of money for loans.