LAS VEGAS — As auto dealers experience increases in finance and insurance revenues, Ally Insurance is bullish on the expansion of Flex Coverage, its piloted subscription warranty program, Mark Manzo, president of insurance at Ally, told Auto Finance News.
“We’re getting pretty close to expanding the pilot,” said Manzo, noting the warranty program started its pilot phase last year and is currently testing in 14 markets. “Dealers can provide other services and benefits around the sale of the car,” he said. “Vehicle service contracts, that’s a big part of the F&I experience.”
Flex Coverage is a vehicle service contract that, in essence, provides dealers the opportunity to sell a warranty program to consumers after the sale of the vehicle, Manzo said.
“About 45% to 46% of the customers who buy a car will buy a warranty at the dealership, but then the cost of that warranty usually goes into their monthly payment,” he said.
Ally launched the subscription warranty product for the consumer who decides to buy a warranty after they drive off with their vehicle — whether it’s because they want to budget or avoid unexpected expenses. Ally intends to bring it to dealers so they can make it a part of their product offerings for consumers after the sale of the car at a later date, Manzo noted.
With Flex Coverage, a consumer can extend their coverage beyond the manufacturer’s warranty, if their vehicle is a 2016 model or newer with less than 60,000 miles, according to Ally’s website. The program protects more than 7,500 components including engine, brakes, suspension and transmission to name a few.
While there is no detailed timeline for the expansion of the Flex Coverage pilot, Ally continues to test the product offering, Manzo noted.
“You got to refine the product, figure out what the consumer wants to pay and where they see the value,” he explained. “You want to add [value] and avoid adverse selection.”
Yet, Ally’s dealers are already showing interest in the product offering, Manzo said.