Opinion ID: 152280
Heading Depth: 2
Heading Rank: 2

Heading: VSCs

Text: A VSC is a vehicle protection package similar to an extended warranty. Generally speaking, it covers the cost of repairing certain mechanical breakdowns and provides other, ancillary benefits such as roadside assistance. VSCs are sold by a number of companies, including Honda. Honda's brand is known as Honda Care. Honda does not sell its VSCs directly to customers. Rather, it provides its dealers with Honda VSCs, and the dealers make the ground-level sale. Although Honda dealers must pay Honda a fee for every Honda VSC they sell (these fees range from $360-$1,365 per VSC), dealers are free to charge their customers whatever price they wish for a Honda VSC, retaining the difference between price and fee as profit. Although the dealer is the one making the sale to the customer, the Honda VSC contract is ultimately between the customer and Honda, not between the customer and the dealer. Honda dealers may promote and sell different brands of VSCs (e.g., a Toyota or General Electric VSC). But if one of the dealer's customers requests a Honda VSC, the dealer is contractually obligated to make one available for purchase. And Honda dealers have other reasons to offer Honda VSCs. Their customers, Honda owners, generally prefer Honda VSCs over competing brands because Honda VSCs guarantee that all repairs will be made by factory-trained Honda technicians at authorized Honda dealerships using only Genuine Honda or American Honda authorized parts. Also, Honda pays its dealers a performance based allowance for each VSC sold. The amount of this allowance depends on a quotient keyed to vehicle sales. For example, if a Honda dealer's Honda VSC sales are 70% of his total car sales (i.e., the dealer sells seven Honda VSCs for every ten cars he sells), that dealer will receive more money than if its Honda VSC sales were 20% of its total car sales. A dealer, then, has a financial incentive to increase its Honda VSC sales percentage.