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APC Reports Post-Sale VSCs Spike as Dealers Shift Gears

APC executives report significantly higher response and close rates for second-chance service contracts in March and April, when stay-at-home orders suppressed vehicle sales and F&I production.

Sales of vehicle service contracts post-sale first spiked in March and then again in April and May as auto dealers slashed marketing budgets and shifted focus to existing customers, according to new data from Automotive Product Consultants (APC).

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APC executives said sales of its second-chance service contracts improved by 64% in March, the highest year-over-year gain since the current agent-dealer program was launched in 2006. Strong sales continued with year-over-year increases of 39% in April and 31% in May.

Conversely, U.S. new vehicle sales fell by 46% in March, 50% in April and 30% in May as the nation adjusted to stay-at-home orders intended to limit the spread of the novel coronavirus, according to estimates compiled by Automotive News.

“The moment the pandemic hit, we saw response rates and close rates go up as customers were sitting at home, reading and responding to marketing from their dealers,” said APC President Kyle McEvoy. “In addition, we’ve seen F&I agents — many of whom had their windshield time taken away — now urging dealers to adopt the program to pick up incremental post-sale revenue at a time when it’s sorely needed.”

Dan Haugen, CSO of Portfolio, a longtime APC partner, said his company reminded its agent network about the program in a mid-April bulletin.

“The response was highly encouraging and we are looking forward to seeing the long-term results,” Haugen said. “The more car buyers we can protect, the better, and the current environment demands ingenuity.”

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