Quote:
Originally Posted by Waterbelly
BMW's costs are wholesale, consumers costs are retail.
I buy a warranty for $100.
It covers a repair that would have cost me $150 (retail).
The wholesale cost of the repair was $75 for BMW.
I saved $50. BMW made $25 (instead of $75). If you extend to after 36 months, when cars start leaving dealership service, this can make sense for BMW.
Where there are differences in costs, middle ground can be had. It is possible for BMW to make money and for you to save money. Not a zero sum game.
I don't personally purchase extended warranties. But your black and white "math" view is misleading.
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Valid point, but not relevant for most of the warranties. BMW factors that in. You'd still get it fixed if it was out of warranty, correct? When BMW prices the warranty, they include the missed margin on you not buying retail.
So, they factor in the $75 for the actual expense of the repair PLUS the lost $75 they would have made if you paid retail. Net-net, this made no difference. You might think you essentially paid wholesale for the repair, but you paid for it with the price of the policy. The only way this works, is if people leave things broken if it's out of warranty, so getting wholesale is better than nothing. There are certainly some things people don't get fixed if out of warranty, but this doesn't have a material effect on the math.
You could argue the wheel warranty is one of those policies where your argument is valid. Most people leave the curb rash alone unless they paid for a warranty. BMW prices this accordingly.
The main extended warranties, no way this wholesale/retail difference makes a material difference.