Extended warranty sales are expected to remain strong next year as used car buyer confidence looks unlikely to improve significantly in 2011, according to RAC Warranty.
The company points out that at the end of 2010, used car warranties are still being enhanced – by both length of time and depth of cover – at around the same rates as during the worst parts of the recession, indicating that the mood of consumers remains cautious.
Ian Simpson, sales and marketing director, said: “Next year, the measures that the coalition Government has undertaken to reduce public spending will really start to bite and that will have a definite impact on general confidence.
“Even if buyers are not affected directly themselves, they are likely to know family or friends who are being made redundant or seeing a downturn in business.
“As a result, we believe that business will remain fairly static during the year for the vast majority of used car dealers with no major changes in sales levels or residual values while good quality stock will remain in short supply. Things may be a little worse or a little better but there is unlikely to be any significant shift.”
Simpson added that, as a result, pressure was being placed on dealers to ensure that they extracted the maximum value from each sale that they made.
He said: “The dealers that have enjoyed the best 2010 are those that concentrated on getting the basics right – they sourced the best stock they could find, presented it in the strongest way possible, marketed it in a proactive way, took the customer in a professional style through a full programme of additional items such as extended warranties and service plans, and did everything possible to attract their future aftersales business.
“Doing well in 2011 will be about the same kind of approach. There are no magic pills for thriving in current conditions but those dealers that are adopting a thorough and professional approach are the ones that we believe will make the best of what will remain a fairly tough used car market.”