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Under guarantee: The viability debate rolls on

The recent feature ‘Extended Warranties Can Boost Profits’ (AM, June 29) suggested that dealers were not only finding it more difficult to sell extended warranties but in many cases the dealer network was at odds with the consumer.

Two key areas of concern are clearly highlighted. They were that 40% of all consumers believe warranties have no value and that many consumers felt that the product was not explained properly.

It also suggested that many dealers were considering the viability of FSA accreditation.

So the debate continues. Are warranties really worth the paper they are written on?

Our answer has always been an unequivocal yes. Many of our partners have enjoyed both year-on-year growth in terms of warranty sales penetrations and increased front-end profit income from them.

The debate regarding the value of FSA accreditation will continue, but here’s the dichotomy. If so many consumers see little or no value in warranty and if so many consumers believe that when warranty products are sold to them they are not fully explained, then surely any control regulations must serve some purpose.

Experience suggests that this consumer viewpoint arises when products are mis-sold or when the consumer feels the sales person has over-promised and under-delivered.

We are masters of our own destiny. As product providers, we must give evolved innovative products with tangibly measurable training and skills development. As dealers, you must recognise the need to embrace these products and services and implement clear and concise processes to manage their effectiveness.

Now is the time for us to take note of the consumer feedback and if it’s not working for you then embrace the challenge of change.

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