Extended Service Plans and Buyer Perceptions and Behaviors in Automobile Industry: An Abstract

Sometimes called an “aftermarket car warranty,” “vehicle service contract,” or “extended auto warranty,” extended service plan (ESP) market is significant, exceeding $16 billion (Warranty Week 2018). ESPs are typically purchased at the original equipment manufacturer (OEM, such as Toyota and Ford) dealership at the time the vehicle is purchased, but one may often also buy an ESP through a third-party warranty provider at a later time. Unlike other, the so-called manufacturer’s warranties, which are included in the price of the product, ESPs are really vehicle service contracts (or safeguards) against expensive, unforeseen repairs. The term “extended” is also sometimes used because ESPs usually extend the length of the coverage and allotted mileage (and sometimes a few other extra coverages such as roadside assistance) set by the OEM warranty.