This is the first article in a two-part series on selling warranties in the used truck market. Part II will be published Friday.
Few words in the trucking industry carry more weight than warranty. To new truck purchasers, a warranty represents a promise of performance, uptime and a lower total cost of ownership. To parts and service customers, warranties offer reassurance of a product’s quality and a commitment from suppliers to support that product in the field.
One segment of the trucking industry where warranties aren’t as common but can be just as valuable is the used truck market. With the new truck market thriving and fleets turning over thousands of trucks each month, the used truck market is experiencing an uptick in vehicle supply.
For truck dealers with more pre-owned equipment than lot space, used vehicle warranty programs can elevate one’s inventory over competitors and help create peace of mind for prospective customers.
Finding the right warranty provider
One aspect of the used truck market’s uniqueness is warranty availability, or lack thereof. Warranties aren’t automatically included in the purchase of a used truck like they are with new truck orders. Used equipment dealers looking to offer warranties as a value-added option for customers must use an OEM-backed warranty program (if possible) or an independent third-party warranty provider. While the former is designed to cover certified pre-owned vehicles available through an OEM’s national used truck inventory, third-party warranty providers enable a used truck dealer to offer a warranty for nearly any truck, regardless of nameplate.
But the comprehensive coverage available in the third-party warranty marketplace doesn’t mean all used truck warranty providers are the same. Each business offering warranties in the used truck market has a unique list of coverage options and protection plans available, meaning used truck dealers must research each provider to determine the best partner for their operation and customer base.
Wade Bontrager, president and CEO, National Truck Protection/Premium 2000, says understanding one’s clientele is a good first step for a truck dealer to take before evaluating warranty providers. A dealership moving primarily 3- to 5-year-old trucks may desire more comprehensive warranty programs than a lot selling older equipment to third or fourth owners.
Bontrager says National Truck Protection and Premium 2000, which were long-time competitors before being acquired by the same private equity backer in 2018, offer similar but not identical warranty options. Some dealers prefer each specific company’s product suite while others have shown a willingness to support both brands. He says, together, the brands provide dozens of warranty packages to support the dealer community.
A similar focus on choice defines the product selection at Truck Master Warranty (TMW), says Jeff Dobish, CEO. Dobish founded TMW in 2013 with a select number of coverage options and has expanded those choices as the business has grown. Today, TMW’s customizable warranty plans permit customers to choose the components and warranty timelines they prefer.
“For us, it’s all about options,” he says. “We let you choose what you want to cover.”
It’s also important for dealers to remember coverage refers to more than just componentry. The length of a warranty package, the potential to extend warranty coverage and warranty transference restrictions also are features that should be investigated by a dealer before signing on with a warranty provider.
Then there’s the matter of claims. Dealers hoping to use warranty packages to assuage customer concerns and move used trucks should be confident in the warranties they offer. Supporting a warranty company that operates a difficult claims department, or fails to pay claims at all, will damage a dealer’s reputation with end users and weaken its ability to sell future warranties.
Bob Zeppenfeldt, regional sales manager, National Truck Protection/Premium 2000, says dealers and end users deserve to know if a prospective warranty business is a company they can rely on. He says, “It’s about reputation. Do you pay your claims and do what you’re supposed to do?”
Bontrager agrees. “You want to make sure you are working with a company you trust.”
Along those same lines, Dobish notes dealers also should take time to evaluate how a potential warranty provider is financially backed and supported. He says TMW promotes itself as the only third-party warranty provider that is fully licensed, insured and bonded in every U.S. state and Canadian province in which it does business, so dealers can feel secure supporting its products in the used truck marketplace.
Says Dobish, “If we do a deal with $35,000 in liability, we are required to put $35,000 away in a trust. That money has to be there” in case there is a claim, he says.