Warrantywise has designed its insurance and warranty products for greater flexibility after recognising customers wanted to extend, often on a monthly basis. Its renewals team has seen retention rates of up to 60% during its busiest months this year.

“We are finding there is less need to promote the warranty in the way perhaps a sales executive would have done in the past, simply because of the greater awareness and acceptance which now exists among consumers,” said Hodges.

Allianz Global Assistance has devised pay as you go (PAYG) warranty schemes, offered at the point when a customer’s new car or approved used warranty expires, which has lengthened dealer and customer relationships on average by 15 months and has helped contribute to the company’s sales increase, up 15% in 2012 compared with 2011.

 

More sales may mean more claims

There is one area, though, where the warranty companies are, in the main, agreed: an increase in warranty sales may lead to more claims, but the ratio remains stable.

Imperial’s Smith thinks the industry has some way to go to change customer opinion entirely: “I still think there’s a certain degree of reticence regarding used car warranties from consumers which us as an industry have to overcome.”

Finally, a reduction in warranty work for the dealer is inevitable as vehicles become more reliable, but Pattison’s view is probably typical among the franchised network: “Warranty work has declined over the past two years and the issues which do arise tend to be software-related, not mechanical, which are much easier and cheaper to fix.

“However, while warranty income is always welcome, we prefer to be selling a product which is much more reliable. That way, customers are much more likely to come back and buy the same brand again.”

*BCA Used Car Market Report 2013