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Insight: The best route to warranty renewal

The warranty renewal route is many and varied - should it be administered by the sales or aftersales team, the warranty provider, manufacturer or a customer contact centre?

And is there scope for service advisers to both renew and upsell to customers without a warranty product?

In addition to its point-of-sale warranty products, Mapfre Warranty has developed its Black & White Warranty range specifically for use by aftersales to sell to customers who decided not to buy at the point of sale or who did not buy their vehicle from the dealership.

Head of new business Steve Burgess said: “Equipping the aftersales or service team with the right knowledge, tools and products to start conversations about warranty options at this point is vital.

"Every dealer has a different view on warranty and how it fits into their business, but there is certainly an opportunity to look at the aftersales department as a way to generate warranty sales.”

Burgess, who highlighted the value a robust warranty process can have on a business at AM’s recent Used Car Conference, added: “A major benefit of warranties overall is that they’re probably the only product that can touch every part of the dealership and encourage interaction between departments.”

For dealers though, a warranty renewal scheme is not quite so straightforward.

With eight sites in and around the M25 retailing Volkswagen cars and vans and one Skoda franchise, Citygate’s warranty renewal programme operated with vigour up until around 18-months ago when it recognised the group had literally become “a victim of its own success”.

Explained group aftersales manager Simon Poole: “We found customers were all too keen to extend their warranty and service plans, but it also meant their vehicle replacement cycle was extended which affected both our new and used car sales.

"We were a victim of our own success, so we completely changed our approach. We now contact customers two-and-a-half to three years into their ownership cycle to talk to them about changing their vehicle.

"If at that point the customer is not interested in considering a replacement vehicle, we then talk to them about warranty renewal and service plans. Consequently, our warranty renewal has slowed, but it has created more balance across the business.”

Extended warranty

Paul Greenberg, head of business at Hatfield Audi, agrees: “We were making around £50 per warranty and it wasn’t worth our while given the time invested and the money it was making.”

 

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