Warranty firm Autoguard is claiming that while demand for extended warranties and GAP products is up more than 20% over the past year, many dealers are inconsistent in the way they sell and often fail to effectively merchandise the products.

Explaining what he thinks is needed, Robert Dockerill, CEO of Autoguard Warranties, says, “Dealers need to become more sophisticated in the way they upsell warranties, using merchandising, training, video and their websites. Some dealers are very successful at selling extended warranty products, achieving 50%- 60% penetration of all vehicles sold. Their secret is a multi-channel approach to sales with a big focus on the showroom.

“Their staff are trained to briefly mention warranties early on in the sales cycle. Obviously salespeople are there to sell cars, but by mentioning the quality warranty product early, sows the seeds in the mind of the customer. Successful dealers also use point of sale effectively as it is very powerful – posters, leaflets and a product video can help the sales team.

“Dealers need to explain to the customer the complexities of modern vehicles, without being patronising e.g. Electronics. It is also worth asking customers how long they owned their last vehicle, as this gives an indication of how long they are likely to keep their new one. Dealers can then discuss the longer periods of cover.

“Using phrases such as ‘protecting your new asset’ and ‘peace of mind’ is helpful. It is also important to sell the main benefits of the warranty eg. UK wide or European recovery, parts, labour costs, UK wide service centres. If your warranty provider can now provide ‘interest free’ options for the cover, it is worth highlighting this to the consumer.

“It is certainly worth dealers reviewing how they sell warranties, as they can account for 10-20% of the profit in a vehicle sale. Dealers have a great opportunity to upsell warranty and GAP products and many consumers are looking for longer security on their purchases and are more aware of the products and services available. Consumers are driven by a desire for stress-free motoring and peace of mind. In the event of a breakdown from mechanical failure, they want to know they are covered and don’t have to face an unexpected and potentially expensive repair bill.”