Free 3 month warranty offers on the rise

Mondial Assistance, the UK’s 2nd largest motor manufacturer warranty services provider, has reported a 22% year-on-year increase in dealers offering free three month warranty on older used cars.

Explains Liz Grindell, Mondial Assistance Warranty Manager for the UK: “As tough times continue to squeeze profit margins across the motor industry, many manufacturers and dealers are looking to add value whilst seizing revenue opportunities.

“Traditionally, a 12 month warranty has been offered as part of an approved used car programme, but we have worked closely with our clients to deliver a comprehensive warranty package that manufacturers and their dealers still provide to their customers but for a shorter period of time. This allows dealers to offer customers an attractive deal on older vehicle stock that they may have previously shied away from promoting. Boosting older used car sales volume will generate interest in younger makes and models by increasing forecourt traffic. In addition, this not only reduces dealer resale costs, it gives them the opportunity to increase revenue by selling on an extended warranty package.”

Whilst the latest figures from the SMMT confirm that new car sales in 2008 fell to 2.13 million, the lowest level since 1996, used car sales are reported to be on the rise as consumers take advantage of falling valuations and price wars.

“Across the board, our figures show that more and more dealers are focusing on warranty to boost customer loyalty, which makes sound business sense as new car sales continue to decline,” explains Liz Grindell, “Although consumers are wary of making large financial commitments, they are prepared to protect their assets in a bid to avoid unexpected expense.”

2009 is already proving to be another tough year for the motor industry. With fewer new car buyers coming through showroom doors, Mondial Assistance is placing increasing focus with manufacturers on the opportunities older used cars present, both in terms of sales and aftersales.

Concludes Liz Grindell of Mondial Assistance. “A good warranty provider will offer a bespoke service that caters to the needs of each individual manufacturer and their customers, with an emphasis on offering a premium level of customer care. If a manufacturer can deliver the right level of comprehensive cover that encompasses excellent support when the customer needs it most, they should secure high levels of customer retention to see them through the recession.”