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Zach@Granger

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It is not breaking news that prices are up on everything. Inflation has run high, and the federal reserve doesn’t think the battle is over yet to get inflation back down to 2%. One of the areas that has seen some of the biggest price increases is the automotive repair industry. The Federal Reserve Bank goes in detail to explain the reasons why, but it boils down to a tight workforce that is in high demand as well as a parts shortage.


I was curious to see how much that has affected our service department, so I pulled all our repair orders that were paid by an extended warranty company for 2 time periods (Jan-Apr 2020 and Jan-Apr 2024) to see how it has changed at our shop. Through the first 4 months of 2020 our average repair order covered by an extended warranty was $776, and in 2024? An eye-popping $1841! That is a 237% increase in 4 years. Admittedly we have a small sample size being only one dealership. But for the last 3 years, the federal reserve has registered a 5%, 13% and 8% rate of inflation for motor vehicle repair, well out-pacing overall CPI.

Jeep Wrangler JL Can a Mopar Extended Warranty Help You Beat Inflation? 1716395564001-6d



So what can be done to minimize the effects of repair inflation? One of the lesser talked about benefits of an extended warranty is that you are locking in tomorrow’s repairs at today’s repair prices. We work with both Mopar and Ford extended warranties and both of them have many actuaries that determine our cost for their plans. The feedback I’ve received from both manufacturers suggests prices will continue to rise in the future, because repair cost increases are well outpacing the reserves set up to cover them. Ford has scheduled a price increase in August of this year and Mopar just increased its prices in February and is considering doing it again.


I again was interested in seeing what increases we’ve seen over the last 2 years of selling service contracts and our average service contract price has increased 14%, much less than the 23% the CPI repair costs have increased at the same time. None of us can predict the future, but in the past inflation has proven to be sticky and takes longer than anticipated to get fully under control.


Another tool we’ve added to our websites is the ability to pay monthly. We realize increased prices have eaten away at monthly budgets and spending over $2000 on extended warranty coverage can be hard to budget for. So, we added a monthly payment option that allows our customers to pay for their warranty over an 18-month term. Our average monthly payment is taken automatically and comes out to less than $100/month.


You can find our coverage options for both Mopar and Ford on our websites.

www.buymoparwarranty.com
www.grangerfordextendedwarranty.com

Zach & Team
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chrstphr

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Interesting perspective, especially since Extended Warranties are cheaper at the time of a new vehicle purchase than to purchase years later when the factory warranty is expiring or has expired. Almost like locking in your repair costs at a discount.

Although I also think repair costs are higher because issues are not always repaired properly the first time. I'd love to see a breakdown of cost per RO completed with proper diagnostics vs. RO's repaired based on TSB's/Star Center and how many of those in each category were successfully repaired with the first round of parts identified to be faulty and replaced.

I feel like these high shop labor rates should come with a guarantee that the quality of the tech is appropriate for their labor rate. Seems like a lot of these techs don't actually know how to mechanic and are really just over priced parts replacers.
 

NWJeepr

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I appreciate the fact that all the pricing and plans are in one place for comparison. Thanks for sharing!
 

XJConvert

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If your vehicle is more than 3 years from its warranty start date, or has between 36,000 - 80,000 miles, you can purchase a Used Vehicle plan. In order to purchase a used vehicle plan you also have to have an inspection of the car by a certified technician.
If your vehicle has 80,001 or more miles, it is not eligible for Mopar® Vehicle Protection.
What if I have 80,000.5 miles? I'd assume the top condition doesn't apply / I can't purchase a used vehicle plan since I'm not "between 36,000-80,000", but funny that the next sentence says "80,001 or more" instead of just "more than 80,000".

I'm sorry for my completely irrelevant comment lol
 

rickinAZ

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My usual question: If extended warranties pay out more than they take in, how do they stay in business? Not to mention cover their overhead (personnel, advertising, paying IceT, etc...).

Taking in dollars today and paying out at inflated future prices just exacerbates it.
 

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DubaiMarauder

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My usual question: If extended warranties pay out more than they take in, how do they stay in business? Not to mention cover their overhead (personnel, advertising, paying IceT, etc...).

Taking in dollars today and paying out at inflated future prices just exacerbates it.
Likely because most people never use extended warranties. They buy them at the dealer and forget about them unless something happens. If 1 in 5 people uses the Extended Warranty, there's 4 people who paid for it and didn't use it and the warranty company keeps that money. It's just like insurance.

Pay for a product you're required to have but hope you never need to use, only to pay more to use the product you've been paying for all along and not using. It's a complete scam.
 

LooselyHeldPlans

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Likely because most people never use extended warranties. They buy them at the dealer and forget about them unless something happens. If 1 in 5 people uses the Extended Warranty, there's 4 people who paid for it and didn't use it and the warranty company keeps that money. It's just like insurance.

Pay for a product you're required to have but hope you never need to use, only to pay more to use the product you've been paying for all along and not using. It's a complete scam.
He knows this. It was a rhetorical question.
 

AFD

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Pay for a product you're required to have but hope you never need to use, only to pay more to use the product you've been paying for all along and not using. It's a complete scam.
Isn't that most insurance coverage? It's nice to have if you need it, but if you never or rarely ever use it it's a complete waste of money or a break-even at best. At least the old 10-year and lifetime Mopar plans provided some assurance past 8-year/100k-mile, when the customer has a better chance of actually needing to use it (if they keep their vehicle that long). The new plans are much more of a gamble.
 

angrykitty

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I don't care if it's $1, that's a waste of $1.

I have the premium $100 deductible 100k mile warranty. I had a breakdown on the way home from Moab, the Jeep dumped coolant at a gas station. The warranty company couldn't get me a tow during a 3 hours window, wouldn't pay for the tow that I finally got at 1am getting one myself, wouldn't pay for the hotel (happened at 10pm), all supposed to be covered.

It's your money, do what you want with it. My experience shows this thing is useless.
 

angrykitty

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My usual question: If extended warranties pay out more than they take in, how do they stay in business? Not to mention cover their overhead (personnel, advertising, paying IceT, etc...).

Taking in dollars today and paying out at inflated future prices just exacerbates it.
They don't pay out more than they take in, they don't pay out. I got burned.
 

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rickinAZ

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Isn't that most insurance coverage? It's nice to have if you need it, but if you never or rarely ever use it it's a complete waste of money or a break-even at best. At least the old 10-year and lifetime Mopar plans provided some assurance past 8-year/100k-mile, when the customer has a better chance of actually needing to use it (if they keep their vehicle that long). The new plans are much more of a gamble.
Actually, insurance is designed to protect you from catastrophic losses: your house burns down, six-figure medical bills, you're sued for a $1M dollars because some burglar is hurt while robbing you, your new car is totalled in an accident...

Even the most expensive auto (mechanical) repair bills don't qualify. If someone can't swing paying for an unexpected repair they should take the bus - they can't really afford a car.
 
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AFD

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Actually, insurance is designed to protect you from catastrophic losses: your house burns down, six-figure medical bills, you're sued for a $1M dollars because some burglar is hurt while robbing you, your new car is totalled in an accident...

Even the most expensive auto (mechanical) repair bills don't qualify. If someone can't swing paying for an unexpected repair they should take the bus - they can't really afford a car.
Extended warranty doesn't cover a failed engine or transmission?
 

Odyssey USA

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Possibly…if I was going to stay stock but that’s not happening. Even then I’ve been refused a repair on a control arm bushing that was found to be bad (years back) after 2 months of ownership. They said it couldn’t go bad in that short of time. I responded with, “Did you inspect it when I paid for the warranty?” Of course the did not. So nobody knew for sure. They still refused so I got my money back for the extended warranty.
 

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Extended warranty doesn't cover a failed engine or transmission?
I've never had an extended warranty, but I would guess that it does. But that's not catastrophic, if that was where you are going. Catastrophies are potential life-changing financial hits. Most members of this group have more costly aftermarket mods than a new engine would cost. :) If they could afford those, they should be able to weather the failed engine storm.
 

AFD

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I've never had an extended warranty, but I would guess that it does. But that's not catastrophic, if that was where you are going. Catastrophies are potential life-changing financial hits. Most members of this group have more costly aftermarket mods than a new engine would cost. :) If they could afford those, they should be able to weather the failed engine storm.
Yeah, 100% agree with you that anyone owning a vehicle should have cash on side to cover any expected maintenance and unexpected repairs.

I've read of a few people absolutely getting their money's worth out of an extended warranty, and I'm sure there's countless more that never use it at all. Was only saying that just like any other insurance, it's a gamble or a calculated risk as to whether or not you might get your money's worth or it'll be entirely wasted.

Just noticed my 6-month auto policy finally jumped over $1,000 and while I've thankfully never had any major claims over decades of driving, outside of a few unavoidable deer strikes, it's still good to have for the extreme circumstances that you mentioned (even though my state allows for both at-fault only and self-insured drivers). While it would be rare, but absolutely possible to make use of the comprehensive, tort and other costly contributors to that expense, it provides a little peace of mind even if the majority of drivers never need it.

And likewise, while most owners won't get their money's worth from a $4,000 extended warranty (or whatever it is now), some will and will likely come out ahead vs paying out-of-pocket when needed - though not so much now that they've removed the lifetime and 10-year-plus options for those of us that like to 'drive it til the wheels fall off' so to speak. Iirc, someone here actually had multiple engines replaced under their extended warranty. Maybe just bad luck or something else repeatedly causing such damage, but shit happens and sometimes in spades.

Just like most things in life, either one is a bit of a gamble to varying degrees 🤞
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