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AM Online

Extended warranties still proving popular

Used car buyers are continuing to upgrade warranties, according to RAC Warranty.


The company says that buyers began specifying longer warranties with higher levels of cover during the recession in large numbers but that the trend has yet to see a noticeable falling off.

Ian Simpson, sales and marketing director at RAC Warranty, said: “Clearly, used car sales have picked up considerably since the depths of the recession, indicating growing consumer confidence, and have been a key source of dealer profitability during the last year.

“However, while these buyers are now feeling confident enough about their economic prospects to buy a car, they are still nervous about the possibility of any unplanned spending in the future, hence the continuing popularity of upgraded warranties.”

Simpson said that this trend was an understandable effect of the recession with many people still very aware that tough economic times lay ahead.

He explained: “We have perhaps reached a point where used car buyers feel that the threat of redundancy or other personal economic catastrophe has diminished and can justify to themselves the regular monthly outgoing to buying a vehicle.

“However, they are still concerned about the prospect of unexpected costs and the idea that perhaps they may have to find a four figure sum for a major repair is a source of worry. That is where upgraded warranties have a role to play.

“Really, in this kind of situation, a high quality warranty works well for everyone. For the used car buyer, it provides a safety net that brings a high degree of peace of mind, while it is also a profit opportunity for the dealer, both in terms of initial spend and the subsequent capture of any repair work that arises.”

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