Rideshares Pose Growing Concerns for Dealership Service Contracts

When ridesharing emerged in the transportation market it did more than just disrupt the taxi industry. It has also thrown dealerships for a loop when it comes to service contracts.

Auto service contracts are sold by vehicle manufacturers, auto dealers, and independent providers and are designed to protect consumers against unexpected, costly repairs to their vehicle. But rideshares aren’t traditionally covered in service contracts and some dealerships don’t cover limo or taxi services, let alone an industry that skews those two business models. But it’s also not as simple as having an F&I officer asking a customer if they do rideshare because it can be picked up as a side job at any time.

“You don’t know when you sell a car — [the customer] may not have even been doing Uber when you sold them the car. Maybe they started doing it a year later,” Dave Duncan, president of Safe-Guard Products, said during a panel discussion at the 2017 Industry Summit in Dallas, Texas last week.

Additionally, because it’s a job done on an individual’s schedule, they could have a full-time job while also being a rideshare driver, meaning they may be overlooked by the F&I officer.

“Are we really going to turn down someone’s claim because they are an Uber driver, and how much are we going to battle that [when] they didn’t know, the F&I manager didn’t qualify them, and even if they did qualify them [the customer] wasn’t a driver at the time,” said  Kelly Price, chief executive of National Automotive Experts (NAE/NWAN), during a panel discussion, adding that disputes like this could bring compliance scrutiny on dealerships.

Some solutions have been coming into play, but the efficacy is not known. The Warranty Group, a provider of warranty solutions and underwriting services, recently began adding an additional $250 to service contracts for rideshare drivers in addition to additional training for F&I officers, John Luckett, senior vice president of sales and marketing, said during the 2017 Industry Summit.

“We have recognized it as something that slipped through the cracks, just like with any industry you have to grow, we have to adapt, we have to change,” he said.

Meanwhile, the rideshare company Lyft has been preempting part of the dilemma for dealerships by approaching dealerships to recruit car buyers to become Lyft drivers for incentives from Lyft, Lance LeCoe president and chief executive of C.A.R.S. Protection Plus, Inc. said at the conference.

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