Volkswagen Group has urged its dealers to make up for falling revenue on sales and aftersales by selling insurance products.
Improved and more flexible asset protection is now available to VW, Audi, Skoda, Seat and commercial vehicle franchise holders.
David Maloney, business development director, said: “This is a wake-up call to dealers to mitigate some of the difficulties created by the decline in the economy.
“Some of our dealers are improving their income from GAP (guaranteed asset protection) products,” said Maloney.
“We used to have a ‘one size fits all’ product, but we now take account of changes, such as car buyers’ greater awareness of the scale of depreciation on vehicles.”Finance and Insurance products
Dealers in the group’s franchised networks can sell other F&I products, and Maloney said the changes were in part made because of competition.
Another is his expectation that the Financial Services Authority will soon take a closer look at GAP insurance following its enquiry into PPI (payment protection insurance).
Volkswagen estimates the UK retail value of GAP insurance is around £60 million. About 200,000 policies are sold annually.
On average, dealers sell the products for around £300 each.
Dealers can fix their own showroom price after buying the products from Volkswagen.
New product structure
Maloney said the new product structure was worked out in consultation with dealer councils.
The basic asset protection covers the difference – in the event of accidental damage, fire or theft – between the price paid for the vehicle and the amount owed on the finance agreement, up to £10,000.
A ‘plus’ product covers the gap between the purchase price and the insurance pay out. Volkswagen now allows claims of up to £25,000 for vehicles priced over £30,000 – an increase of £10,000.
Maloney said the group now enabled customers to buy the cover they needed. The claim limit has been halved to £7,500 for vehicles priced up to £10,000. It is now £10,000 for vehicles costing £10,000-£20,000.
Dealers can set up the scheme online at the time of the sale.
Volkswagen allows customers up to 90 days to buy a policy, giving dealers a reason to contact customers.