Can a Ford Protect Extended Warranty Help You Beat Inflation?

[Zach@Granger]

It is not breaking news that prices are up on everything. Inflation has run high, and the federal reserve doesn’t think the battle is over yet to get inflation back down to 2%. One of the areas that has seen some of the biggest price increases is the automotive repair industry. The Federal Reserve Bank goes in detail to explain the reasons why, but it boils down to a tight workforce that is in high demand as well as a parts shortage.


I was curious to see how much that has affected our service department, so I pulled all our repair orders that were paid by an extended warranty company for 2 time periods (Jan-Apr 2020 and Jan-Apr 2024) to see how it has changed at our shop. Through the first 4 months of 2020 our average repair order covered by an extended warranty was $776, and in 2024? An eye-popping $1841! That is a 237% increase in 4 years. Admittedly we have a small sample size being only one dealership. But for the last 3 years, the federal reserve has registered a 5%, 13% and 8% rate of inflation for motor vehicle repair, well out-pacing overall CPI.

So what can be done to minimize the effects of repair inflation? One of the lesser talked about benefits of an extended warranty is that you are locking in tomorrow’s repairs at today’s repair prices. We work with both Mopar and Ford extended warranties and both of them have many actuaries that determine our cost for their plans. The feedback I’ve received from both manufacturers suggests prices will continue to rise in the future, because repair cost increases are well outpacing the reserves set up to cover them. Ford has scheduled a price increase in August of this year and Mopar just increased its prices in February and is considering doing it again.


I again was interested in seeing what increases we’ve seen over the last 2 years of selling service contracts and our average service contract price has increased 14%, much less than the 23% the CPI repair costs have increased at the same time. None of us can predict the future, but in the past inflation has proven to be sticky and takes longer than anticipated to get fully under control.


Another tool we’ve added to our websites is the ability to pay monthly. We realize increased prices have eaten away at monthly budgets and spending over $2000 on extended warranty coverage can be hard to budget for. So, we added a monthly payment option that allows our customers to pay for their warranty over an 18-month term. Our average monthly payment is taken automatically and comes out to less than $100/month.


You can find our coverage options for both Mopar and Ford on our websites.


www.buymoparwarranty.com
www.grangerfordextendedwarranty.com

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[Area51BS]

The consumer has power to change everything. If people, a large number hold off on buying cars. Manufacturers will adjust. Just as some huge box stores are cutting prices on thousands of items to attract shoppers. That means shoppers aren’t coming in the door and they feel it. Corporate America deserves to have their ass handed to them.

 

[userdude]

The consumer has power to change everything. If people, a large number hold off on buying cars. Manufacturers will adjust. Just as some huge box stores are cutting prices on thousands of items to attract shoppers. That means shoppers aren’t coming in the door and they feel it. Corporate America deserves to have their ass handed to them.

One side of the face: "Prices are going up! We have to raise prices!!!"

Other side of the face three months later: "Record breaking profits!"

 

[Area51BS]

And we must agree parts are a complete rip off. $2000 for a plastic headlamp assembly with some LEDs and cheap chinese electronic components. Just one example. How much is a touch screen? Surely 3 times that of an IPad which is far better.

 

[hemiblas]

Good info and a good reason why we should get one. I was going to get them on my 2018 JLs, but I keep wanting to upgrade them to something new....Another Bronco or another JL. Once Jeep and Ford decide on some meaningful rebates, hopefully I can get another new car and warranty from Granger.

 

[lakesinai]

It is not breaking news that prices are up on everything. Inflation has run high, and the federal reserve doesn’t think the battle is over yet to get inflation back down to 2%. One of the areas that has seen some of the biggest price increases is the automotive repair industry. The Federal Reserve Bank goes in detail to explain the reasons why, but it boils down to a tight workforce that is in high demand as well as a parts shortage.


I was curious to see how much that has affected our service department, so I pulled all our repair orders that were paid by an extended warranty company for 2 time periods (Jan-Apr 2020 and Jan-Apr 2024) to see how it has changed at our shop. Through the first 4 months of 2020 our average repair order covered by an extended warranty was $776, and in 2024? An eye-popping $1841! That is a 237% increase in 4 years. Admittedly we have a small sample size being only one dealership. But for the last 3 years, the federal reserve has registered a 5%, 13% and 8% rate of inflation for motor vehicle repair, well out-pacing overall CPI.

So what can be done to minimize the effects of repair inflation? One of the lesser talked about benefits of an extended warranty is that you are locking in tomorrow’s repairs at today’s repair prices. We work with both Mopar and Ford extended warranties and both of them have many actuaries that determine our cost for their plans. The feedback I’ve received from both manufacturers suggests prices will continue to rise in the future, because repair cost increases are well outpacing the reserves set up to cover them. Ford has scheduled a price increase in August of this year and Mopar just increased its prices in February and is considering doing it again.


I again was interested in seeing what increases we’ve seen over the last 2 years of selling service contracts and our average service contract price has increased 14%, much less than the 23% the CPI repair costs have increased at the same time. None of us can predict the future, but in the past inflation has proven to be sticky and takes longer than anticipated to get fully under control.


Another tool we’ve added to our websites is the ability to pay monthly. We realize increased prices have eaten away at monthly budgets and spending over $2000 on extended warranty coverage can be hard to budget for. So, we added a monthly payment option that allows our customers to pay for their warranty over an 18-month term. Our average monthly payment is taken automatically and comes out to less than $100/month.


You can find our coverage options for both Mopar and Ford on our websites.


www.buymoparwarranty.com
www.grangerfordextendedwarranty.com

I bought my FordProtect Premium from Zach 2 years ago, and the long term peace of mind for 84 months is well worth the fair price. Granger was fair and easy to deal with. The ESP is attached to the VIN, and honored at any USA Ford dealer, including here in SC. I'll be buying one for my son's Escape this summer. I highly recommend Zach and Granger Ford!

 

[lakesinai]

One side of the face: "Prices are going up! We have to raise prices!!!"

Other side of the face three months later: "Record breaking profits!"

I hope so! I'd like my Ford stock to go up!

 

[nwGTS]

This is the same argument I made to myself when purchasing my extended warranty from Granger.

10 year warranty at Granger's discounted rate grants peace of mind driving.

 

[ramblinwreck]

I am reasonably confident that the risk analysis experts that price these warranty’s are aware of inflation and pricing it into the contracts.

 

[SeptuagenerianSasquatch]

I bought my FordProtect Premium from Zach 2 years ago...I'll be buying one for my son's Escape this summer. I highly recommend Zach and Granger Ford!

It's your purchase decision, but if I was considering an Escape I'd double-consider a Bronco Sport.

Astonishing how expensive things have become.

 

[stonerdoom]

Corporate America deserves to have their ass handed to them.

You're being far too kind.

On topic- A year later, I feel even better about my Bronco purchase and the 10 year extended warranty from Granger. In fact, at this point, I feel like I robbed them. When I tell people what I paid, they, quite frankly, do not believe me.

 

[Shazamalingo]

Im sorry but tying those numbers solely to inflation is disingenuous - at best. My anecdotal evidence regarding cost to repair/maintain is that prices are up a little over the past few years, but not a ton.

There are many decent reasons to get extended warranties (I get them on most of my ICE cars). But, this takes it a bit too far. After all, if you invested $2k in 2020 in an S&P index fund after the downturn, you would have $4k+ in 2024. This post assumes you just let your money deflate.

So......I wouldn't go there with this

 

[Doc TOC]

I am reasonably confident that the risk analysis experts that price these warranty’s are aware of inflation and pricing it into the contracts

Ironically, over 40% over buy coverage and trade/sell their vehicle before the warranty ends. That is an actuarial helper too.

I anticipate warranty costs to go up next year. With the drop in the available capital market, domestic reindustrialization, and oil market instability, economists are predicting steady 4% inflation over next 3-5 years. Now would be a good time to get a long-term warranty contract for those that are really keeping their Bronco (or other vehicles).

Dang Bronco owners keep buying stuff and driving up demand

[Don't go political on this. It's a global economic issue. Keep your 2 cents in your pocket.]

 

[HighVelocity]

It's only of value if you actually use it.

 

[DEC]

The consumer has power to change everything. If people, a large number hold off on buying cars. Manufacturers will adjust. Just as some huge box stores are cutting prices on thousands of items to attract shoppers. That means shoppers aren’t coming in the door and they feel it. Corporate America deserves to have their ass handed to them.

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