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Service plans sales increase caused by uncertain used car market

Selling more service plans is helping dealers to bridge the profitability gap caused by uncertain levels of used car sales, according to the Warranty Group.

The Warranty Group says dealers are concentrating on realising more profit per unit sold while used sales remain slightly below the level of 2009, and that service plans have become a key element in this strategy.

Ian Simpson, sales and marketing director, said: “Dealers are finding that a potential profitability gap has emerged during 2010 as used car sales and their values have fallen. However, they have been fighting back against this trend and service plans have emerged as a solution.

“Because economic conditions remain difficult, used car customers remain open to the idea of buying products that allow them to plan their future motoring expenditure as exactly as possible and service plans very much fit in with this way of thinking.

“We are finding that service plan sales are increasing quite dramatically this year, and this increase is being fuelled by used car dealers who are taking these products very seriously as a profit source.”

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