Should I buy extended Volvo warranty for my 2001 XC?

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

 

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...............

 

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.

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.

 

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 in the Car business 5 years.

 

From what I heard, profit margin for the dealer is 15%-25% for
extended warranty. I think ~ 18%-20%.

 

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
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.

 

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.