SALES of ‘safety net’ products such as warranties, services plans and GAP insurance are showing signs of increasing penetration in the current, falling used car market.
RAC Warranty, a new warranty brand offered by the RAC in partnership with The Warranty Group, says that this trend is usually seen in tougher economic conditions when buyers are looking for greater peace of mind – and that dealers need to ensure that they are making the most of the opportunities presented to them.
Ian Simpson, sales and marketing director, said: ‘While few people believe that we are definitely heading towards a recession, the recent instability in the stock market and the Northern Rock crisis during late 2007 has had a definite impact on consumer confidence.
‘There are certainly fewer people looking for used cars and the market is falling. Those remaining buyers are less certain about their circumstances and open to the idea of buying products such as warranties, service plans and GAP insurance, that provide a safety net and peace of mind.’
Simpson explained that dealers should be ensuring that they offer these products that meet the concerns of more cautious customers as general worries over the economy continue.
He said: ‘A customer who a year ago may have felt that their job was very secure probably feels a little less so today and therefore warranty, service plan and GAP products look more appealing to them.
‘Certainly, we are talking to many dealers who are seeing their used car sales volumes fall but who are finding that taking a structured approach to selling these products is working well and penetration is increasing.’