Nearly 60% of Vehicle Service Contract Buyers Enjoy Peace of Mind
Many American drivers who have to pay for unexpected, major car repairs could be at risk of facing costs they cannot afford. Fifty-one percent of consumers reported paying for major vehicle repairs in the last five years, according to a survey of more than 2,000 Americans conducted online for Ally Financial by The Harris Poll. Of consumers who reported paying for repairs, four in five (80%) said they spent $500 or more, and nearly three in five (58%) said they spent $1,000 or more. One in three (33%) said they spent $2,000 or more.
Meanwhile, a 2018 Federal Reserve study found that when faced with an unexpected $400 emergency expense, 41% of adults either could not pay the expense, or would need to borrow money or sell something to cover it. This means that a significant portion of drivers who are faced with unexpected repairs could not cover them out-of-pocket.
"Expensive car repairs can cause serious financial stress, especially for those with little or no emergency savings," said Mark Manzo, president of Ally Insurance. "Most major vehicle repairs come unexpectedly, and standard insurance policies usually only cover repairs in case of accidents. The rise of complex vehicle technology and the increase in the number of used vehicles on the road have only made repairs more expensive and frequent."
According to AudienceSCAN, 13% of U.S. adults are Potential Auto Insurance Switchers. Nearly half (44.8%) are between the ages of 25 and 34, 40.2% live in a metropolitan area and 21.3% have annual household incomes of between $25,000 and $49,999.
There is a solution that could help many consumers: vehicle service contracts (VSCs), which cover repairs that often are not covered by factory warranties or are no longer covered by expired warranties. Only 18% of those surveyed reported buying a VSC in the last five years. Nearly three in five (59%) of those who had purchased VSCs said the peace of mind that comes from knowing repairs are covered was the top motivator for buying the coverage.
Many Potential Auto Insurance Switchers would like to be more careful with money this year. According to AudienceSCAN, it's a personal goal of 35.4% of this audience to reduce debt or increase savings, and 22.3% would like to make purchases that will help them feel more safe/secure. Nearly 20% are even planning to purchase financial/retirement planning services this year.
"Service contracts provide customers with the security of knowing they don't have to worry about car repair bills derailing their budgets or putting them in debt," Manzo added. "Payments for some VSCs can be rolled into regular auto payments, making it easier for consumers to budget and map out their expenses ahead of time. You can't know when to expect the unexpected, but you can plan ahead by talking to your dealer about vehicle service contracts."
One of the best mediums to target Potential Auto Insurance Switchers through is the TV. According to AudienceSCAN, it's where 45.2% of this audience gets most of their local news and where they saw commercials that drove 72.1% to action last year. Within that same time frame, 68.1% took action after receiving direct mail ads and/or coupons. This audience is also 49% more likely than other adults to respond to outdoor ads, directory search ads and pre-roll video ads.
AudienceSCAN data is available for your applications and dashboards through the SalesFuel API. Media companies and agencies can access AudienceSCAN data through the AudienceSCAN Reports in AdMall.