Dealers need to give people better information about the value of extended warranties to encourage them to buy one.
That’s according to warranty provider WMS Group, which said research had revealed that nearly eight in ten (78 per cent) of consumers took out a warranty but only a fifth shelled out to extend them.
Commercial director Craig Grant said there was a ‘huge need for clearer and better consumer understanding’ of the benefits that extended warranties can bring, since nearly half (46 per cent) of customers would be likely to extend their warranty if offered the opportunity.
The study saw 150 dealers and 2,000 consumers polled.
WMS Group said that although new cars came with a manufacturer’s warranty, if customers were looking to keep their car for longer than that, or were buying a used car out of its warranty period, an extended warranty should be a serious consideration.
Key benefits that dealers retailers ought to be educating them on included peace of mind against unexpected repair bills and good value for money, it said.
Educating them also benefited dealers with extra revenue and increasing the likelihood of repeat business by helping build a personable and trusting relationship with customers.
‘As the second most expensive purchase after a house, consumers really do deserve to understand the value that extended warranties can provide in protecting that investment,’ said Grant.
‘From our research, the interest in purchasing an extended warranty is substantial but only 32 per cent of people are even aware they exist.
‘Clearly then, consumers need better education on why they need to invest, and of what benefit it is going to be for them in the long run.
‘After all, if their vehicle does need a costly repair, they may feel more inclined to sell it if they have no extended warranty, as persistent repairs may add up in the long run.
‘For dealers, it’s also about considering the additional revenue opportunities of upselling extended warranties, which undoubtedly is a welcome boost after having their income curtailed during the pandemic.’
He added that they needed to be as clear as possible about the terms and conditions, and said: ‘Equally, it is important to treat the customer fairly and ensure that the coverage they may be thinking of purchasing may not be appropriate for that specific vehicle – this is where dealers can really stand out among competitors.
‘Ultimately, it’s about putting the customer in the driving seat and ensuring their needs are at the forefront of any conversation.’