“While our lost revenue from warranty work is substantial to say the least, although thankfully nowhere near critical, we believe that loss will eventually be replaced with increased revenue delivered by such packages.
"We will just have to grin and bear it for the time being,” said Lifestyle Europe’s managing director Peter Isted, whose group represents franchises such as Renault, Mazda and Ford.
Year-to-date warranty labour sales in Lifestyle Europe’s workshops are down 25%, but that’s against a general labour sales downturn of 8%.
This decline in warranty work is a direct reflection of the increase in product quality, particularly for the likes of Renault which Isted welcomes along with moves by the manufacturer to introduce schemes to encourage customers to keep returning to their local franchised dealer.
Renault’s 4+ package offers four years’ servicing (up to 48,000 miles), four years’ roadside assistance, a four-year finance deal and a four-year warranty as part of the same bundle as standard on new cars and Isted is eager to hear what Ford is likely to lay on the table.
He said: “In these tough times any loss of revenue is regrettable, but this has to be balanced with the fact that the reduction in warranty work is a direct result of product improvements which will inevitably attract more customers to the brand.
"The way we retail vehicles is changing at a rapid pace with a whole host of factors in the mix from the very obvious impact of the internet and social media to these more subtle influences.
"Already, we are seeing manufacturers such as Renault take this on board by introducing a much wider package over a longer period of time.
“At first sight, the obvious answer would have been for manufacturers to extend the warranty to cover more components, but while this would effectively replace our loss of revenue in a much shorter space of time as well as providing us with an additional sales tool, I think it could be detrimental for any brand in the long run.
"All-encompassing schemes which cover pretty much everything apart from insurance and fuel are definitely the way forward.”
All-encompassing packages ‘will influence fleet choices’
Isted also believes that it’s exactly these kinds of packages that will influence fleet choices as well as the buying patterns of the private motorist, although wholelife costs will make the decision-making process for fleets far more complex.