Do Car Dealer Loyalty Plans Save Cash?

Car dealerships are rolling out more than new vehicles this year. Many are offering customer loyalty programs that promise to save drivers money on items such as oil changes, tire rotations and even new vehicles.

AP

These programs generally operate like hotel or airline affinity programs and offer points or credits each time consumers do repeat business with their local dealership. Accumulating points can help customers reach special "elite" levels for complimentary services.

"People who proactively join programs like these can save money off their auto repair bills," says Michael Gray, co-author of "Auto Upkeep: Basic Car Care, Maintenance, and Repair."

Consumers enrolled in loyalty programs get discounts ranging from about 5 percent off for repairs to free oil changes.

In addition, customers may get coupons on their receipts, such as rebates for future services. The rebate amounts are based on how much money the consumer spends on repair or maintenance.

Along with saving money, loyalty programs may help drivers save time, Gray says. Members often get free loaner cars when their vehicle is serviced, or the dealer may offer pickup and drop-off service to help reduce the inconvenience of having a car repaired.

Other incentives include hundreds of dollars in discounts on new auto purchases.

Dealers benefit because these programs strengthen the bond between a car owner and the dealership's maintenance department.

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"Dealers have found that keeping current customers is less expensive than attracting new ones," Gray says.

Loyalty programs have their critics. Dealerships often charge a higher price for auto service compared with smaller, independent auto repair shops. As a result, any "savings" obtained through the loyalty program may be just a mirage, critics say.

"If the price of an oil change or tire rotation is twice as expensive as what you'd pay elsewhere, then a 20 percent discount is no savings," says Joe Ridout, spokesman for Consumer Action, a nationwide consumer advocacy nonprofit group based in San Francisco.

Customers should ask several key questions before enrolling in a loyalty program.

Consumer incentives
Signing up for loyalty programs is fairly easy. When a customer visits the dealer -- whether for a car purchase or repair -- he or she may be asked to provide an e-mail address to receive discount notices and special offers. Customers who agree to do so are automatically enrolled in a loyalty program.

Dealer loyalty programs are important because they can help car owners reduce their total cost of ownership, says Stephen Berkov, senior analyst with car Web site Edmunds.com.

Cars are becoming more complex, and repairing them can be difficult, Berkov says. By offering maintenance programs that are covered under warranty at no charge, manufacturers and dealers can help drivers reduce their overall car costs for the time they own the vehicle.

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