DEMAND for longer and more comprehensive dealer used car warranties is likely to increase as the cost of living crisis escalates, says the RAC Dealer Network.
Sean Kent, European Director of Automotive for Assurant, which partners with the RAC in the warranty and aftersales market, explained that warranties were to some extent, an economically countercyclical product.
He said: “In periods of financial difficulty, we often see demand increase for longer and more comprehensive dealer warranties over and above the standard cover provided as part of the used car purchase. This may sound counterintuitive but actually makes perfect sense – at times when people do not have lump sums to spend on repairs, they can see the value in warranty cover more easily.
“What this means, we believe, is that dealers should pay more attention to their warranty proposition as we enter the second half of 2022, ensuring that they have the right products and infrastructure in place to satisfy what is likely to be a growing customer need as the cost of living continues to rise over the coming months.
“This will enable dealers to increase customer satisfaction and also help them to maximise the revenue from each vehicle by offering a higher level of protection for car buyers at a time when it is very much needed.”
Kent said that the RAC Dealer Network was already working with its 1,200-plus dealers on ways in which they could meet potentially higher demand for warranties over the coming months.
“We have a highly developed process that helps dealers construct a strategy to ensure that they have the right standard and upgraded warranties in place, that staff are suitably trained, that suitable infrastructure is created and that materials are available to show customers exactly what they will be getting from each product.
“Each of these elements can be adopted quite quickly. For example, we offer online training modules that last an hour and have a proven impact on sales. This is a productive use of time for dealer employees and much can be achieved just by covering the key fundamentals of warranty best practice.”
Kent added that the presence of warranties in the digital sphere was also likely to become more important as the cost of living crisis progressed.
“Modern car buying means that the first time most consumers will see a vehicle is online and they will probably spend some time looking at elements of the sale such as finance options. The warranty is also part of that process. Being able to offer the desired level of protection is likely to become an increasingly important factor of the sale and we are able to support retailers with relevant tools such as digital assets.”
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