Enhancements introduced on Oct. 1 to the GM Protection Plan and Mechanical Repair Protection Program make both programs more appealing to end consumers and thus an easier sale for dealers, according to John Gressa, director of GM Protection Plan Marketing and Development.

The new and revamped programs provide a wide array of time, mileage and deductible options to meet the needs and pocketbooks of customers buying or leasing new or used vehicles, Gressa told F&I Management and Technology.

“We went through and did an extensive market research campaign to look at what our current programs had been offering and where we could make improvements, add plans, and add time/mileage options, so that we filled in a lot of the competitive gaps,” Gressa told F&I. “We found through consumer research that the number one reason customers buy a service contract is because they want peace of mind against the future failures of the vehicle. Based on that, we've put together materials that not only convey that message, but quickly make clear to the customer that this is a product that is endorsed by General Motors.”

The changes include a renaming of plans under the GM Protection Plan and Mechanical Repair Protection umbrella program names. Traditional service contracts will incorporate the “Guard” name, while the “Smart” theme will be used in products targeted to lease customers, similar to GMAC’s SmartLease, SmartBuy and SmartAuction programs for dealers and retail customers.

The plans are marketed by GMAC Financial Services, and are serviced and administered by Motors Insurance Corp., a member of the GMAC Insurance Group. "We over here at MIC worked on a lot of the product development and market research to develop these programs in conjunction with the GMAC field force," Gressa said.

One enhancement being offered is Tire Road Hazard coverage, available as an option on any new vehicle service or maintenance contract. For tire damage caused by roadway hazards, this coverage provides zero-deductible protection for flat tire repair (up to $35 per tire) as well as complete or prorated replacement of the vehicle’s original four tires, up to $150 per tire. Coverage extends for 60 months or 50,000 miles, regardless of the term of the underlying service or maintenance contract.

Expanded time and mileage modifications are offered for Major Guard, Value Guard and Basic Guard plans. The new limits are 84 months (up from 72 months) for in-warranty vehicles, and a 48-month term (up from 36 months) for out-of-warranty vehicles no older than five model years.

In addition, time/mileage options for out-of-warranty coverage have been expanded to increments of 12-month/15,000 miles, 24-month/30,000 miles, 36-month/45,000 miles, 48-months/48,000 miles and 48-month/60,000 miles – complementing previous increments of 12 months/12,000 miles, 24 months/24,000 miles and 36 months/36,000 miles.

"For those drivers that the dealerships get in buying late model used cars who drive more than 12,000 miles a year, the dealerships now have a product to offer that goes with those additional miles," Gressa said.

Following are the GM Protection Plan and Mechanical Protection Plan products offered for the 2002 model year:

Major Guard coverage continues to supplement the GM New Vehicle Limited Warranty with protection for virtually every electronic, electrical and mechanical part of the vehicle. Major Guard also provides 24-hour towing or roadside assistance as well as rental reimbursement when repairs require two or more service days. The protection is available on new and used vehicles up to seven years old.

"The Major Guard name has been very good for us," Gressa said. "Major Guard is a high-end product. It's the broadest level of coverage."

Value Guard replaces the former “Custom” plan. It provides protection on vehicles up to 10 years old for an array of large, expensive components in eight major groups: gasoline engine, transmission/transaxle, drivetrain, steering, front suspension, brakes, electrical and GM-installed air conditioner. Value Guard provides the same rental coverage as Major Guard, and provides a $50 authorization or reimbursement for towing.

"Value Guard is a value priced product," Gressa said. "If you can't afford the best, this is a good middle ground product."

Basic Guard replaces the former “Powertrain” plan. Available on vehicles up to 10 years old, Basic Guard is a lower-priced alternative that provides basic protection for the gasoline engine, transmission/transaxle and drivetrain components.

"This covers parts in five major component groups, covering your engine, transmission, suspension, etc.," Gressa said. "It covers the basic parts of the automobile that keep you running. It's the economy priced product."

Smart Care continues to provide prepaid basic maintenance benefits, such as oil, oil filters, chassis lubrications and tire rotations in accordance with manufacturers’ recommendations. It can be packaged with any mechanical plan or purchased separately.

Smart Care Plus is a new maintenance contract that combines the Smart Care benefits with the addition of one replacement of the front brake pads, one replacement of the rear brake pads/shoes and annual replacement of front and rear windshield wiper blades. This coverage is available only on new vehicles.

Smart Protection is a new vehicle service contract that offers the same coverage as Major Guard, but for lease and SmartBuy customers. Coverage continues for up to a maximum of 48 months or the maximum odometer mileage reading selected by the customer, which can be any 1,000-mile increment from 37,000 to 60,000 miles. Smart Protection is available on new vehicles only.

"Even though there's been some movement back from supporting leasing, leasing is still a popular option and there's a significant number of people who lease," Gressa said. "When we started looking at the changes in the lease market, there's been a lot of different terms coming in. Although a lot of lessees will go for a 36-month lease, with, usually, the 45,000 miles, people can buy additional miles. And there are odd-term leases now, 39-month, 42-month, etc. We wanted to define something that was flexible for the lease customers so we came out with Smart Protection," Gressa said. "It provides the same level of service contract protection as Major Guard, but the twist we put on it is that it's priced in 1,000-mile increments from 37,000 miles coverage up to 60,000. So it gives a lot of flexibility to tie the mileage of the coverage directly to the number of miles the customer thinks they're going to drive."

Smart Protection Plus adds Smart Care Plus coverage to Smart Protection coverage. This means nearly all of a customer’s service and maintenance needs are covered for the term of the lease or SmartBuy contract.

"Smart Care Plus takes that vehicle service contract coverage with the 1,000 mile flexibility, and to that we've added a maintenance component," Gressa explained to F&I. "The customer, if they buy this package, not only has the service contract coverage for that exposed period of mileage, but for the full term of the lease they would have maintenance coverage. Oil change, filter change, chassis lubrication, tire rotations, one replacement of the front brake pads, one replacement of the rear brake pads or shoes, and annual replacement of the front and rear windshield wiper blades," Gressa said.

"So with the advent of the 100,000-mile tune-up, the long-life fluids, and the cooling system and transmission, there's not too much more in the way of maintenance that the lease customer who's doing a 36- or 48-month lease would need to do to that vehicle," Gressa said. "We feel this gives the customer the convenience of having that all packaged, worked into the lease payment, and they have their service contract so they don't have to worry about repairs."

According to Gressa, roadside assistance is provided with the coverage. "We also expand the rental car allowance on the service contract side, so if the vehicle is in the shop for two hours of labor time, we'll provide a vehicle, which is a little more liberal than the overnight that usually is in place with the manufacturers' warranties," Gressa pointed out.

MRP Certified is a mechanical repair protection plan that extends coverage already offered on GM used vehicles to non-GM used vehicles sold by GM dealers participating in the Certified Used Vehicles program. If the purchased vehicle is still covered by manufacturer warranty, MRP Certified provides Major Guard level of coverage to 39 months/39,000 miles. If the vehicle is not under manufacturer warranty, MRP Certified provides 3 months/3,000 miles of Major Guard level of coverage.

Extensive Training Program

According to Gressa, GMAC went through an extensive training process before the Oct. 1 introduction of the new plans. "The first phase was to train all of our field staff," he told F&I. "We held a series of meetings to make sure they were up to speed on the changes -- what we were introducing and how it worked. We also did that with our internal claims people and our field claims adjusters. So everybody on our staffs that touches the products was educated."

During the month of September, each of the GMAC regional field sales teams went out and held dealer meetings, according to Gressa. At these meetings, dealership personnel were trained and introduced to the new product changes.

"Following each of those sessions, both internal and external, as questions came up we developed a very extensive and through Q&A sheet," Gressa said. "If we saw a question, we'd answer it and put it out on our Internet site, so everybody had a reference document and as the questions came in they could reference that and usually find the answer."

GMAC has introduced a brand new Internet site, www.gmprotectionplan.com, in conjunction with the new product launch. "The site was established as an educational and presell site for consumers to use to get a lot of information about the GM Protection Plan before going into a dealership," Gressa said. "We don't do any direct selling on the site. It's really there to educate them about the benefits of our product, and also to give them education on what a service contract actually is, what a maintenance contract is, and why it makes sense to buy it."

According to Gressa, the site is a good reference tool for dealership personnel as well. "You can walk through and get a lot of good information and some good ideas for sales techniques and some help on answering commonly asked questions," Gressa told F&I.

The site will soon have actual copies of the service contract that the consumer receives after signing up for the program, according to Gressa. "So instead of just having the brochure to refer to, or having to send somewhere for a sample agreement, they can go on our site and see exactly how the contract is going to read, what's covered, and the exclusions, and have that information before they go into a dealership and buy.

"We feel that this will be nice way for the customer to be educated," Gressa said. "They'll have a lot of their questions answered, and we feel it will work for those consumers who are out there shopping around and finding information. This is a quick way for them to get accurate and complete information before they come in. We think it will be an excellent presell, because once people understand what they're getting with this product, it's very attractive. It delivers that peace of mind," Gressa said.

GMAC will shortly be sending out information on how dealers can link their individual dealership pages to the gmprotectionplan.com Web site, according to Gressa. "So instead of having to develop information on the service contract, they can have a hot link right over to our site," he said.

"We're trying to keep the excitement in the product, keep it competitive, and keep it as a premiere product in the marketplace," Gressa said.

For more information, visit www.gmprotectionplan.com.