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Dealers missing out on used car service plan opportunity, says The Warranty Group

Used car service plan opportunities are being routinely ignored by many franchised dealers, says The Warranty Group.

The issue occurs because manufacturers tend to place emphatic emphasis on new car service plans but do not give the same weight to used.

Serkan Obuz, head of corporate sales and training, said: “This is perhaps the single biggest area of opportunity that exists in the service plan sector.

“Manufacturers are very much focussed on new car service plans – many have brand names that are well-established with car buyers – but very few do the same with used sales, so their dealers tend to lack focus.

“We find that, generally speaking, used car customers are every bit as receptive to service plans as their new car counterparts, so there are definitely opportunities being missed here.”

Obuz said that The Warranty Group worked with a couple of manufacturers who had well-thought out used car service plans in place, worked on them closely with their dealers, and saw good results.

He said manufacturer used car service plans, where a good consumer offer is inclusive, tended to deliver in excess of 50% penetration. According to Obuz, most franchised dealers experience around 10% penetration on used car service plans, but The Warranty Group have increased this to 35% in some cases.

Obus said: “Where manufacturers view service plans as a crucial element in the used sale and an adjunct to their approved programmes, we do see levels of penetration almost as high as for new cars.

“When you consider the potential for profit and customer retention that service plans create, it is surprising that more manufacturers and franchise dealers don’t take them seriously in the used sector.”

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