BEDFORD, Texas — Warrantech Automotive, an independent provider of service contracts and aftermarket warranties, has launched an extended labor warranty (ELW) program developed exclusively for service departments. 

ELW programs help dealers’ service departments increase customer loyalty while generating a significant amount of revenue.

“This is an industry first for Warrantech,” said Joel San Antonio, chairman of Warrantech. “No one else in the service contract industry offers such an unprecedented level of comprehensive products for its automotive clients. In our quest to help auto dealers provide the highest quality warranty and service contract products in the market, we recognized that both dealers and consumers would benefit from the ELW program.”

While most consumers understand the features of extended warranty coverage, few realize that parts and labor costs are two separate issues.

“In the case of a malfunctioning transmission, the replacement parts are protected for a year or longer while the labor costs are usually covered for 90 days. This means that if the replacement transmission malfunctions after three months following the date of the original repair, the manufacturer’s warranty will pick up the cost of the replacement parts, but the consumer will have to pay the cost of any labor charges needed to complete the installation,” said Bruce Saulnier, president of Warrantech.  

Extended labor warranties come with two levels of coverage. A one-year ELW warranty increases labor from 90 days to one year on most mechanical repair. A two-year parts and/or labor warranty extends the coverage for most mechanical repair on both parts and labor to a total of two years.

For dealers, the benefits of this new coverage can be substantial. “This coverage will be affordable to the consumer as pricing will be pennies per day of coverage,” said Saulnier. ”Plus, the ELW will provide additional revenue for the service department, and will help increase customer loyalty through the dealership’s ability to deliver repairs at no cost to the consumer in the event of replacement of the defective or malfunctioning part.”

Packed full of features, extended labor warranties have a simple percentage rate structure of the part cost, based on the coverage the dealer elects to offer. The ELW is designed to work seamlessly with dealer management system integration through Reynolds & Reynolds and ADP. Coverage options automatically print out on repair orders, and show up as a separate line item for every mechanical part. 

For customers, the decision to enroll for an extended labor warranty is easy. Following an explanation of benefits given by an automotive service advisor, the customer simply accepts the coverage, or opts out of the program if they decide not to take advantage of the coverage.

“This is a phenomenal gap coverage program for automotive dealers to sell to customers,” Saulnier added. “With ELW, dealers are able to boost profits while providing a higher level of service to customers.