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Do dealers make money on warranty?

Asked by Anonymous Oct 02, 2026 3 views 1 answers
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Answered Oct 05, 2026
Yes, automobile and retail dealerships make substantial profits by selling warranties. Extended service contracts and third-party vehicle warranties carry exceptionally high profit margins for dealerships—often ranging from 40% to over 100% markup over the wholesale cost paid to the warranty provider. Finance and insurance (F&I) managers are heavily incentivized to sell these protection plans because they represent a major revenue stream for the dealership long after the physical vehicle sale is completed.
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