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NEWS
Fiat Chrysler plan service contracts
Capped price serving rejected because of the negative impact on dealers and customersThe Fiat Chrysler Group will offer its customers service contracts rather than join the rush to capped price servicing in Australia.
The scheme should kick off before the end of 2013 and cover all of FCGA’s five brands – Alfa Romeo, Chrysler, Dodge, Fiat and Jeep – before the end of 2014.
The company believes a service contract is a fairer deal for its dealers and their customers, avoiding the potential issues that capped price servicing creates. A service contract will specify a whole-of-warranty fee which covers the cost of all scheduled servicing, lubricants and consumables.
Capped price servicing – as its name suggests – charges a set figure for each service. However, different brands offer better deals than others. For instance, major services are sometimes not covered and the programs don’t all extend over the entire warranty period. But FCGA managing director Clyde Campbell said a service constract will be transparent.
“It is a guarantee to the consumer that no matter what happens you are not going to pay a cent more or a cent less. You can budget with complete safety this is the cost of ownership of this car for the next three years.
“The only thing it excludes is stuff like windscreens, tyres and batteries.”
Mr Campbell said the company was in the process of developing fee structures, as the contract cost will vary from model-to-model in the range. However, the fee will obviously be in the thousands of dollars.
“It would have to be more for an SRT8 than a V6 Pentastar I would think. The cost of components will be different. Do you or don’t you need special tools for it and if you do, how do you amortise it over the volume?”
While service contracts have been dabbled with in Australia, they are more popular in the USA and FCGA is utilising Chrysler Group data to help prepare its plan. Mr Campbell said FCGA had rejected capped price servicing because of the impact it had on both dealers and customers.
“Fixed price servicing you really need to get the dealers aligned on it. You really then start interfering with their profitability.
“I think it can compromise the dealers ability to look after the customer. A dealer it doesn’t work for … is just going to ignore the customers or bring them in and try and extract money from them in another way.
“A dealer who says ‘wow fixed priced servicing is twice as profitable as I ever budgeted for’, the customer might say ‘I can’t believe I have to pay that much to this bloke for that job because he is operating out of a tin shed and his mechanics haven’t had a shave or shower for three years’.”
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Written byBruce Newton
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