Internal Road Hazard Warranties
 

Hello,
Do any of you offer a Internal (not controlled by a third party) Road Hazard Warranty? If so, how does it work for you? Is it profitable? How many claims do you average a year?

Welcome to the Forum! Lots of great people here. :wave:

bbdrew - First post - Welcome to DealershipForum. :wave:

I don't know of any Dealers who are self-insuring their own Road Hazard Policies and I've worked with hundreds of dealers over the years.

I do think there's money to be made selling Road Hazard Policies but I doubt it would be worth the effort/exposure for a Dealer to create their own plan. Some states may view the polices as insurance which adds to the expense/complexity of getting your program in place.

If it were me I'd find a reputable company that would allow you to resell their plans for a profit and then gauge how much demand their is in your market. My bet is you'll find the volume isn't high enough to dump the vendor and go with your own internal policy.

Thank you all for welcoming me. I have got a lot of information from the forum and appreciate the knowledge shared. Look forward to sharing ideas and what little knowledge I have.

I've heard that the Sonsio plan that is offered is a PITA.

Our dealership has internal road hazard warranty on tires. If I recall correctly, around $100 is added to the bill of sale, and it covers only the tires that the vehicle came with ( I believe it is for a year or two). The money accrued is placed into a separate account (kitty). If a customer then shows up with an issue, we replace the tire and bill it internally. We have been doing this for three years now, and I see a claim about once every 5 to 6 months. Very little.

OH and for my fellow parts managers out there.... I bill the tire out AT FULL RETAIL!

Thanks for the post - interesting information.

My first impression is $100 for Road Hazard protection seems pretty high but if your customers are willing to pay it and the program is working out well for your dealership it sounds like it's a "win-win" deal. :)

Sonsio is higher than that and won't hardly pay for anything without a huge fight.

We sell the 36 month Sonsio road hazard, and the cost per tire is almost $13 per tire by the time they ship the sticker to us. we were trying to sell at $18.75 per tire ($75) on set of 4 and sold almost none. We reduced the sale price to $15 per tire and now we get about 20% of our customers purchasing it really isn't worth the time in my opinion. We pitch it in every quote that we write up but most refuse it. maybe its just where were located but it seems that the majority of our customers but the least expensive tire that they can find and wont spend the extra for the road hazard.
We also sell Hyundai and on their program they include a 2 year road hazard with the tire, and I believe when we had Toyota they did the same.

Thanks for the information.

I'd agree that if you're only making about $2/tire and only about 20% of your customers are buying Road Hazard Warranties you'd probably be better off without it.

On a different note, I do wonder how much Sonsio is making on the deal - maybe Road Hazard coverage is something a dealer could self-insure. :confused:

We have switched to a company called US Auto Force for their tire protection plan. it costs us $140 per month and is for unlimited amount of tires purchased from them on or off from the mfg program. It is a prorated program that provides coverage for repairs and replacement for a none repairable tire up to $150. Since the cost is so low on this we now provide this at no charge to the customer.