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RAC Dealer Network seeks expansion as revenues soar

Sean Kent,  European director of automotive for Assurant

The RAC Dealer Network wants to recruit an additional 200 used car dealer partners in the first half of 2022.

It follows a year of growth, where revenue from warranty premiums increased by 25% year-on-year.

The total number of used car retailers in the RAC Dealer Network now numbers more than 1,300.

Sean Kent, European director of automotive for Assurant, which partners with the RAC in the warranty and aftersales market, said that the results were also 9% up on 2019, showing a marked increase compared to pre-Covid conditions, despite various lockdown periods leading to interruptions in business.

He explained that premium revenue growth during the last two years had been prompted by two key trends.

“The first is that we are seeing a higher propensity among customers to upgrade their warranty at the point they buy a car, either by opting for longer or more comprehensive cover. It is clear that they are seeking higher levels of protection for the purchases, especially bearing in mind recent stock shortages.

“Secondly, we’ve noticed a general upgrading of warranties provided as standard by dealers with new vehicles. These have been generally moving from providing a three month term  to providing six month term. This is happening very much in response to consumer demand.

“These are both long-term trends but do seem to have accelerated during the stock shortages of the last couple of years. Used cars are becoming more expensive and customers appear to be looking for better protection from unexpected motoring costs.”

Further growth has been prompted by new products introduced across the RAC Dealer Network, including the RAC Electric Vehicle (EV) Warranty, alloy wheel and cosmetic damage insurance, and specialist preparation standards for vans, motorhomes and motorcycles.

Kent said: “We have been working to meet changing market dynamics, such as satisfying the need for a dedicated EV warranty, and also to appeal to a wider range of dealers through cover for new vehicle types and provide a larger variety of products for retailers to offer.

“As well as the brand recognition provided by working with the RAC, these enhancements are very much part of our proposition as we look to add new dealers to the network over the next few months.”

The used car sector remained 12.2% down by volume on pre-COVID 2019 in Q1, 2022.

The Society of Motor Manufacturers and Traders (SMMT) reported that 1,774,351 used car sales had been completed in the first three months of the year, resulting in a 5.1% year-on-year rise in a period where high values continue to deliver significant margins for car retailers. The comparison highlights the knock-on effects of new car manufacturing issues.

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