10:52 am, September 22, 2025
Vehicle warranties are one of the most powerful tools in a dealer’s armoury. When used properly as an integral part of the sales process, they not only protect customers but also build trust, strengthen aftersales relationships, and generate valuable repeat business.
Yet despite their importance, warranties remain misunderstood – often clouded by myths that can damage customer confidence and even lead to lost sales. In today’s market where transparency and trust are everything, it’s time to tackle some of the most common warranty misconceptions head-on.
By debunking these myths, dealers can position themselves as experts, give customers real peace of mind, and unlock new profit opportunities.
Myth 1: ‘All warranties are the same’
One of the most damaging misconceptions is that all providers are the same and all warranties offer the same cover.
Many consumers – and even some dealers’ sales teams – assume that a warranty is a standardised product with little variation. In reality, warranties differ widely in terms of what they cover, how claims are handled, and the support services offered.
Some budget policies have long exclusion lists that leave customers exposed, while quality warranty providers build their products around real-world reliability data, ensuring that customers have the most comprehensive cover for their vehicle.
Dealer takeaway: Position your warranty partner as part of your value proposition. Emphasise that a strong warranty is a mark of quality and reassurance – not a tick-box add-on – and highlight the provider’s online reviews and awards to drive confidence.
Myth 2: ‘Save money by running your own pot instead’
On paper, self-funded warranty schemes – often called Dealer Fund schemes – appear to be a clever way of keeping money in-house. Rather than paying a third-party provider, dealers set aside their own fund to cover claims, with the promise that anything left unspent is retained as profit.
It’s an attractive concept. But in reality, the numbers can show a very different picture. Our latest analysis revealed that almost one in four dealers running these schemes don’t have enough in their fund to cover the claims they are likely to face in the next 12 months. For some, that equates to a potential shortfall of £20,000 or more. In a market where cashflow is already under strain, that’s a serious risk.
The appeal of a self-funded warranty scheme is obvious: the idea of control and potential savings. But control doesn’t always mean security. The reality is that dealers are shouldering all the risk themselves – and one large claim could eradicate the profit made from multiple vehicle sales.
Dealer takeaway: Working with a reputable warranty provider transfers that risk away from the business. Dealers know exactly what their warranty costs will be, regardless of how many claims are made or how large they are. That predictability is powerful when margins are under pressure.
Myth 3: ‘A warranty covers everything’
Customers sometimes expect that once they have a warranty, every repair will automatically be covered. When an excluded item crops up, disappointment can turn into mistrust which may even lead to reputational damage. This myth often arises when terms and conditions are poorly explained at the point of sale.
Dealer takeaway: Educate customers clearly and positively. Highlight what is covered and explain exclusions with simple examples (e.g. brake pads or tyres). This avoids frustration later and promotes transparency and fairness.
Myth 4: ‘Warranties aren’t worth the paper they’re written on’
Unfortunately, poor industry practices of the past have left some consumers sceptical about warranties altogether. Tales of valid claims being rejected or endless small print have created a perception that warranties are designed to avoid paying out.
The reality today is very different. Reputable providers pay out millions of pounds in claims every year, helping drivers back on the road quickly and cost-effectively. Many also provide added-value services such as roadside assistance and diagnostic support.
Dealer takeaway: Share real success stories and claims data with your customers. Seeing how warranties genuinely work helps overcome cynicism.
Myth 5: ‘A warranty only benefits the customer’
While warranties are designed to protect the driver, they also deliver major advantages for dealers. A robust offering boosts customer satisfaction, reduces post-sale disputes, and builds a pipeline of aftersales opportunities.
Most importantly, a quality warranty builds trust. When customers know they’re covered, they’re more likely to recommend your dealership and return for their next vehicle purchase.
Dealer takeaway: Stop treating warranties as a low-value add-on. Instead, make them a core part of your customer service strategy.
Myth 6: “Selling warranties is just about making commission”
Some agents and even customers still see warranty sales as a ‘hard upsell’ to generate extra revenue. But in today’s environment, this approach can backfire – particularly if customers feel pushed into buying something they don’t understand.
The most successful dealerships sell warranties as part of their commitment to long-term customer care.
Rather than focusing on price, they highlight benefits such as stress-free motoring, financial protection, and nationwide repair coverage.
Dealer takeaway: Position warranties as an investment in peace of mind, not just a line item on the invoice.
Myth 7: ‘Newer cars don’t need a warranty’
Finally, many drivers assume that only older, high-mileage cars need cover. The truth is that even nearly-new vehicles can suffer unexpected failures – and with today’s complex mechanical systems and electronics, repairs can be eye-wateringly expensive.
For dealers, this is an opportunity to emphasise that a warranty isn’t just for ageing vehicles. It’s for anyone who wants reassurance and financial security should the unexpected happen.
Dealer takeaway: Offer warranty options across your stock profile, tailoring the messaging to the customer’s needs and risk profile.
Turning Myths into Opportunities
Warranties aren’t just paperwork. They’re a vital trust-building tool that protects both customers and dealerships.
By tackling myths directly – through staff training, clear communication, and visible case studies – dealers can transform warranties from a misunderstood add-on into a genuine competitive advantage.
In a marketplace where reputation is everything, the way you present and deliver your warranty offering could be the difference between a one-off sale and a lifetime customer.
To find out how more, speak to a WSG agent today or visit Dealer Warranties – Warranty Solutions Group.
