This year is proving to be one of the most interesting years in the warranty sector for some time, with a number of key trends emerging, the biggest of which is increased demand for longer warranties. Over the last 12 months, we have seen a 10% drop in sales of three month warranties and a corresponding 10% rise in six months.
This change presents opportunities for dealers in several ways. One is to make the vehicles on your forecourt more attractive by offering a longer standard warranty. This is something that we know has a positive impact on sales and is definitely valued by customers.
Another is to place renewed emphasis on warranty upselling. Many dealers revisit how warranties fit into their sales processes only very infrequently but this is an area in which new advances and best practice ideas are being developed all the time.
Of course, a longer warranty also potentially increases your ties to the buyer through your workshops and can have a very definite impact on retention. Upselling from a six month warranty to two years massively increases your chances of fulfilling that customer’s next car purchase and capturing both repairs and routine maintenance.
An area which is further neglected and can potentially reap even greater rewards is more comprehensive warranties. Car buyers are seeking increased peace of mind and upsell levels are also increasing here. We have recently introduced our own product to meet this demand, called Platinum Plus, which covers wear and tear as well as diagnostics and failures caused by carbon build up on EGRs, DPFs and diesel turbos.
Taken together, we believe that all of these emerging trends should be prompting dealers towards re-examining their warranty options and processes. If you haven’t looked at your own in a year or so, you’ll probably benefit from undertaking such an exercise.
Sean Kent is sales director at the RAC Dealer Network, which partners with Assurant in the warranties and aftersales sector.