Should I buy extended Volvo warranty for my 2001 XC?

Discussion in 'General Motoring' started by John M., Feb 12, 2004.

  1. John M.

    John M. Guest

    Please forgive me if this question has been asked before. I have a 2001 XC70
    with 45K miles (5K miles or 9 months remaining on warranty), and need to
    make a decision soon about purchasing an extended Volvo warranty (around
    $1,400 for 24K mi / 2 years). The car has been well-maintained, and has
    never had any major problems, just the usual nuisance issues with squeaky
    shocks, noisy suspension linkages, and light bulbs. Recently, the
    transmission started to jerk slightly from a standing start, but the service
    dept says this is a known issue (defective valve body) and will replace the
    part next week

    I'd like to keep the car for at least another two years or 15K miles, and
    then trade it in on either an XC90 (or Lexus RX330?). I don't know about
    the past reliability of '01 XC's with my kind of mileage, but $700/year
    doesn't seem like a lot of money compared to a major engine, transmission,
    or AWD fix. Any thoughts or experiences on this would be greatly
    appreciated.. . . John
     
    John M., Feb 12, 2004
    #1
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  2. John M.

    Stuart Gray Guest

    lots snipped.....

    <$700/year doesn't seem like a lot of money compared to a major engine,
    transmission, or AWD fix.>

    If you have the disposable, I think you just answered your own question. As
    long as that Volvo warranty is as good as the original that is.
    If I had the car and the money, I would. Insurance is like umbrellas, take
    one and it never rains, but the day you don't take one...............
     
    Stuart Gray, Feb 12, 2004
    #2
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  3. 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.
     
    Stephen M. Henning, Feb 13, 2004
    #3
  4. John M.

    Sammy Guest

    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.

    Personally, I had a similar choice and after considering it for two
    months, I decided not to take it. I wanted the freedom of NOT going
    to the dealer. Choice is yours. It will certainly make it easier to
    sell the car if there is still some sort of warranty on the vehicle.
    To me, that's the only true advantage. Also, extended warranty
    usually do not cover everything like the basic 4 years. Usually there
    are things not covered. e.g. the sunroof is covered, but not
    everything related to the sunroof. Better find out before signing on
    the dotted line.
     
    Sammy, Feb 13, 2004
    #4
  5. John M.

    John M. Guest

    Interesting point, I never considered that I would have to keep paying for
    scheduled maintenance. Any idea how much that 60K service costs?
    --- John
     
    John M., Feb 14, 2004
    #5
  6. John M.

    Sammy Guest

    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.

    :)
     
    Sammy, Feb 14, 2004
    #6
  7. John M.

    Steve Guest

    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
     
    Steve, Feb 14, 2004
    #7
  8. John M.

    Steve Guest

    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 in the Car business 5 years.
     
    Steve, Feb 14, 2004
    #8
  9. John M.

    Sammy Guest

    From what I heard, profit margin for the dealer is 15%-25% for
    extended warranty. I think ~ 18%-20%.
     
    Sammy, Feb 14, 2004
    #9
  10. John M.

    Seagull Guest

    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
     
    Seagull, Feb 14, 2004
    #10
  11. John M.

    Sammy Guest

    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.
     
    Sammy, Feb 14, 2004
    #11
  12. John M.

    Steve Guest

    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
     
    Steve, Feb 14, 2004
    #12
  13. Being a GM product - they got their money back and then some in the
    5th and 6th years.

    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.
     
    Joseph Oberlander, Feb 15, 2004
    #13
  14. 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?
     
    Irwin M. Fletcher, Feb 15, 2004
    #14
  15. John M.

    John M. Guest

    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
     
    John M., Feb 15, 2004
    #15
  16. 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.
     
    The Sweeney's, Feb 16, 2004
    #16
  17. John M.

    GW Guest

    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.
     
    GW, Feb 16, 2004
    #17
  18. 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.
     
    Stephen M. Henning, Feb 16, 2004
    #18
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