Auto industry cuts costs to recover
 Sometimes called an "extended warranty", a service contract is a promise to perform (or pay for) certain repairs or services. Although technically not a “warranty” as defined by federal law, service contracts may be arranged at any time and always costs extra. Warranties, on the other hand, ONLY come with a new car and are included in the original price. Vehicle service contracts are popularly referred to as "extended auto warranties" or "extended warranties". Use of the term "extended warranty" or "warranty" on this site is intended to refer to vehicle service contracts and not manufacturer's warranties.
By reducing costs and selling more vehicles, the auto industry has begun to show the first signs of recovery. Car consumers still struggling with the economy can reduce costs of their own with the purchase of an extended warranty.
GM announced that it would repay 8.1 billion of government loans five years early, mitigating the controversy surrounding the government's previous bailout. And AutoNation, which owns a string of dealerships in the southern U.S., posted a staggering 60% profit, reflecting American's renewed confidence in the auto industry.
Taken together, the news means an unmistakable turnaround for an industry that was once on the verge of bankruptcy. But while it appears Americans are returning to the lots and U.S. automakers have learned from their mistakes, the purchase of an auto warranty is still integral to any savvy consumer's purchase plan.
An increase in vehicle sales is just one aspect of the story. The other aspect of the industry's turnaround is their reduction in costs. That means dealers and manufacturers may be less willing to undertake costly repairs once they've sold a vehicle.
Coverage may be reduced, and the length of a warranty might decrease. In situations like this, the purchase of an extended warranty from a reputable company like AA Auto Protection is critical.
A bumper-to-bumper warranty can extend the life of a vehicle, something increasingly important in these tough economic times.
The industry may be recovering, but the country is not out of the woods yet. A warranty nullifies any surprise costs incurred by vehicle breakdown.
4/23/2010 8:28:55 PM
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