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Guest blog - mind the GAP

Amongst customers in recent years, the popularity of GAP insurance has grown significantly. Quite rightly, FSA registered dealers are leveraging this incremental and valuable revenue source by marking-up the product.

And, in my opinion selling GAP insurance at the point-of-sale is absolutely the right place.

Fully trained dealership sales staff are on-hand to ensure this product, with its increasing complexity, is fully explained so that the customer can make an informed purchase.

However, there is a real danger of “gilding the lily” if unrealistic mark-ups are applied.

I am old enough to remember how used car warranties were subject to unrealistic mark ups by a minority of dealers to value shift with the net result that VAT and the higher rate of IPT matched.

The potential to increase penetration of GAP products at the point-of-sale remains substantial, and we should avoid sales being lost to the internet providers, or the emergence of further regulation.

I congratulate the dealer channel on their approach to sensible retail pricing, and applaud their structured sales approach.

It would be a real shame if a very small minority of dealers spoil this valuable customer service for the rest of the market.
 

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