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Dealers could follow new car sector and offer longer warranties on used

The used car sector could follow the example of the new car market by offering longer warranties on mid-cost models, says The Warranty Group.

Sales and marketing director Ian Simpson pointed to the a range of new car warranties that exceed the once standard three years and 60,000 miles by offering from four years to “lifetime” warranties.

Simpson said: “At first glance, it appears counterintuitive that you can get more than twice the warranty length when you buy an £8,000 hatchback than if you many spend multiples of that amount with a prestige manufacturer.

“However, it really makes perfect sense. The buyer of the £8,000 car is probably working on a tight budget and is frequently planning to hold onto their car for a while. Having the reassurance of a long warranty is important to them as an element in the purchase.

“This is something that very much works in the mid-market where buyers are usually looking for practical and effective transport for themselves and their family that won’t spring any nasty financial surprises.”

Similar thinking could spread to the used car sector, Simpson believes, where the mid-market used buyer of 2013 is frequently looking for reliability above all else.

He said: “Used car buyers with perhaps £3,000-£6,000 to spend on a used car actually have a very similar mind set to the mid-market new car buyer. What they want is protection from unexpected bills.

“Therefore, it is possible that offering longer warranties is something that could have a real impact in this sector. An independent used car retailer offering a two year warranty on a £5,000, five year old family car would have a much stronger proposition than a competitor offering six months.

“Clearly, there is an additional cost involved but it does create a package that meets customer needs.”

Simpson added that customers continued to look for longer and more extensive used car warranties, and that many dealers were looking for ways to meet this demand.

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