The warranty pitch lands when the customer is already done
A customer just spent two hours fighting over ten dollars a month. They're worn out, they finally signed, and the factory warranty on their brand-new car is sitting at zero miles with its whole life ahead of it. That is the exact moment F&I pitches them an extended warranty. No wonder it's a fight, and no wonder penetration suffers.
Coverage timing
The moments when coverage sells itself go unworked. A service contract that just paid for a transmission proves its value to the customer holding it, and a warranty that expires next month gives that customer a reason to act now. In the service lane a customer declines a repair because it is out of pocket, when the work could have been financed.
Nobody markets to any of them, because F&I lives in the box at delivery and the day is over once the customer drives off.