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Jaguar: Free service will maintain loyalty

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Jaguar: Free service will maintain loyalty

Diana T. Kurylko

Automotive News -- May 10, 2010 - 12:01 am ET

Jaguar executives expect a free scheduled maintenance warranty for the 2011 models that debuted this month to bring more Jaguar owners back to the dealership for service, reversing a recent trend.

The executives say the program also will make for higher-quality vehicles coming off lease and will help close more deals on the showroom floor.

The Jaguar Platinum Coverage program debuted with the launch of the redesigned 2011 XJ sedan. The 5-year/50,000-mile new-vehicle warranty includes free scheduled maintenance, no-cost replacement of major wear-and-tear parts and 24/7 roadside assistance.

Jaguar North America says that 90 percent of owners return to dealerships for service in the first year of ownership but that the figure drops to 35 percent by the fourth year. With the new warranty, about 70 percent of customers will use dealers at the end of their warranty, says Richard Beattie, vice president of marketing and sales.

Unlike Jaguar's previous free maintenance program, there is no charge for oil changes, filters, brake pads, brake discs, brake fluid and wiper blade inserts. Jaguar pulled the plug on the old free maintenance program after the 2005 model year.

The brand's European competitors also eliminated free maintenance at about the same time to cut costs. Mercedes-Benz killed free maintenance for 2005 models; Volvo, for 2006 models; and Audi, for 2007 models. Only BMW kept its program, which was launched in 1997 and includes wear-and-tear coverage. Volvo relaunched its plan last year.

Beattie says Jaguar also will benefit when cars covered by the warranty come off lease because the vehicles will have been serviced regularly by dealers. Dealers will have higher-quality used cars to sell as certified pre-owned vehicles, he says, and a smaller number of cars will go to auction.

Service visits have fallen off "dramatically because the product quality has been so good," says Michael Levitan, vice president of Long Island Automotive Group, which owns Jaguar Huntington and Jaguar Southampton on New York's Long Island.

"We didn't see a lot of customers," Levitan says. "Now they will come back without reminders, and dealers won't have to solicit for business."

Jack Terhar, owner of Sill-Terhar Jaguar in Broomfield, Colo., says the program also helps dealers close sales because the package is worth $2,500 to $3,000 in service costs over a five-year period.

He says a similar program at Volvo has worked. Terhar says at his Volvo store, service retention after the first year of ownership jumped to 90 percent from 30 percent.

Tassos Panas, executive vice president of sales for Volvo Cars of North America, developed the brand's 5-year/60,000-mile warranty with scheduled maintenance, wear-and-tear coverage and free roadside assistance. The program began last July.

"It has exceeded our expectations and pushed the closing ratio from 32 percent before the plan to 37 percent," Panas says. "It has locked people into Volvo service for the next five years."

Jim O'Donnell, BMW of North America CEO, says dealers make money on service because 97 percent of buyers return for the free 4-year/50,000-mile maintenance program.

Read more: http://www.autonews.com/article/20100510/RETAIL05/305109987/1434#ixzz0nXDKb2Y4

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