Should I buy extended Volvo warranty for my 2001 XC?

lots snipped.....

The people who sell extended warranties are not in the business to loose money. It comes down to the decision of whether you can afford to self insure the car. If you can afford a major fix, then the odds favor not getting the extended warranty. If you can't afford a major fix, the it is a non-brainer, get the extended warranty. The vehicle doesn't have a history of major problems but such things happen. Also, sometimes cars are sabatoged.

You can buy an extended warranty if you so desire. But you should be aware that from the dealer's point of view, he is already a winner, no matter what happens.

If you do purchase an extended warranty from teh dealer, then you become prisoner and you'll have to keep respecting the maintenance schedule. Without an extended warranty, you are not oblige to respect EXACTLY the maintenance schedule and you can have it done at an independent garage. Plus maintenance schedule costs increase with greater mileage and years. Doing a 60,000 miles cost a great deal more than doing a 30,000 miles.

The main point for dealers is to keep the clients captive. To prevent him from going elsewhere. Maintenance (including parts) generates more than 85% of all profits. Think about it.

Pers>Please forgive me if this question has been asked before. I have a 2001 XC70

..snip

Interesting point, I never considered that I would have to keep paying for scheduled maintenance. Any idea how much that 60K service costs? --- John

Too many factors to give an exact amount, but if I recall (and I could be wrong), they bill a minimum of 5 hrs of labor. That's what they are entitled if they don't find anything else to do. Btw, it will take the tech less than 1 1/2 hr to do the whole job (40 minutes if he is in a hurry...). No wonder the best (quickest) tech can manage to earn more than a $1,000 per day. Quality of work??? Who gives a s***.

Btw, this whole business of keeping you captive, I'm not that smart, it's a VP at Volvo who once "accidentaly" told me.

:-)

I should add... investigate an alternative to thier extended warr. product... find somewhere else to buy one and then you can negotiate with them on that $1400. Beleive me, it's very negotiable... but you need to be armed with facts, or they will BS you right under the table.

FYI

I used to sell GM ext warranty (a GMAC not offbrand warr.) and our cost on the popular one a 72month 80k mile warrant was $625 and we sold it for $1295, and people were glad to have it.... If someone would have ever said (which they did not), I want the warranty but I can buy it via XYZ warranty Co. Inc for $900. I would have said.. "Hmmm... Tell you what, we want you to be a happy customer, if I offered you the warramty for $995,could we go ahead and take care of this matter now?"

Like shooting fish in a bucket. I'd rather have $400 of extra gravy profit than $0

FYI

PS I worked > From what I heard, profit margin for the dealer is 15%-25% for

When comparing extended warranties,make sure you are comparing apples to apples.

Look over the terms of the extended warranty and compare with external sources. The first question that comes to mind is, do you have to take the car to a specific dealer for the warranty to be honored? Do you have to take the car to a Volvo dealer? This may not sound unreasonable, but imagine having a breakdown somewhere away from home where a dealer isn't just around the corner...

Also, what are the terms of the warranty? Is the deductible per visit or per repair? If the latter, the deductible may apply to each part that is replaced, which means you are paying more out of pocket for repairs.

Next, how does the repair shop get paid? Look for warranties that pay the shop directly with a credit card and avoid any that use a reimbursement process.

And finally, what is covered? Wear and tear and common maintenance items generally are not (worn belts, tires, oil changes, brake pads, etc.). However, some policies will cover a breakdown when a wear and tear item suddenly fails. These plans tend to be more expensive.

Cheers,

-+JLS

I don't know about third party, but as far as Volvo is concerned, extended warranty used to generate 30%+ some 10-25 years ago. But the margin has come down dramatically.

In 2000, the longest ext. war. on Volvo's top of the line was generating ~ 18% (or 21% ???) profit to the dealer. It is not as rich as it used to be. Profits on parts are all over the map, but don't be shocked if the dealer makes easily 40%+ on some items. Average, I think, is about 25%-30%. It's more complicated than that as some dealers sell to indep garages or other similars and reduce their profit margin when selling to third parties. While clients pay through the noses.

You are right, I refer to 8 years ago! Things may well have changed. And I just assumed (!) that Volvo might be like GM in the ext. warr. department.

For example my auto insurance co. offers ext. warranties for a decent rate. FYI

Being a GM product - they got their money back and then some in the

Shoot, borken motor mounts can run you $300+ just in parts. Then sensors and the gasket problems that plague some of the motors and... $1600 for a transmission alone - rebuilt, not new.

For $1295(nogotiable) - it's a steal.

Just out of curiousity...

I'm currently looking at 2001 XCs as well, and the warranties that I have seen on them are 6 years/100,000 miles. This will leave me with about 3 years and 60,000 miles of warranty left.

Are you getting yours from a Volvo dealer? And is it a certified used?

I paid $38,800 for my 2001 XC when it was new, with a 4 yr/ 50K warranty. But now I've heard that many people are buying 1 year-old, low-mileage (less than 15K) , ceritifed used Volvo's with 6yr/60K warranties. The only difference is a $50 - $75 deductible I think. Maybe I should just trade in my '01 XC on a certified used '03 XC. :-) --- John

All service contracts are negotiable--what is not negotiable after the contract goes into effect is the service provided.

OEM-what ever company, will specify that your vehicle is repaired with NEW, ORIGINAL EQUIPMENT MANUFACTURER parts.

As a service manager in DiamlerChrysler shop, I have seen many "recycled" (junk yard) engines and transmission installed in vehicles covered by third party service contracts--Why-that is what the Service Contract Provider mandated. If the owner wanted OEM-they had to pay the difference. Another little fact is that the third party providers will only pay a given amount for a repair-should the area you reside in or your vehicle fails in has a higher labor rate that is more than what the company will pay--that additional cost is YOURS! OEM contracts can be cancelled by the purchaser for what every reason; sold it, totaled it or just changed their mind. This is not true with some third party providers.

With DiamlerChrysler, we have no option-it is new and it comes from Chrysler. We have an SLK320 Mercedes, and I have a negotiated service contract on it. The selling dealer shaved $300. off the advertised $2300. This is in addition to our 2004 XC 70-which I will purchase a service contract for as well. I also had an OEM service contract on my 1990 Jeep Cherokee--in 1990 the warranty period was 12 months/12,000 miles.

If you are planning to keep you vehicle beyond the normal warranty--it can be a good purchase. It is much like life insurance--You buy it and try as hard as you can to never use it.

The original cost of a product that has any length of life span is very much like the tip of an iceberg--the part that sinks the ship is the huge mass of cold reality below the water line (maintenance and repair).

As the gentleman said earlier--get educated, get smart and get the product you want which includes not getting a service contract if that is your educated decision. I do hope you never have the need for it or life insurance.

John M

If you can afford it buy it.

During my 50K KM service it was discovered the turbo was leaking oil and axle shaft cracked. Just replacing the turbo costed more than the warranty.

If you dont buy your warranty, Mr Murphy will make sure everything that could go wrong in your car will go wrong.

If you buy your warranty Mr Murphy will try his best to make sure your car wont go wrong. In my case he didn't try hard enough.

When you have warranty, the dealer will try really hard to find faults and then claim it for your benefit and theirs. It indirectly keeps your car in top shape and they make good profit.

Actually, people who can afford it don't need it. They can pay the cost of major repairs. It is the people who can't afford it who need it. They are the ones who can't pay the cost of major repairs.