UK car dealers have recorded an 11% reduction in guaranteed asset protection (GAP) insurance sales this September, compared to the same month last year, according to data from Dealerweb.
The company said the fall in volumes is the first sign that the changes introduced by the Financial Conduct Authority’s (FCA) on September 1, governing how GAP products can be sold, are having an impact on dealer income.
Dealerweb compared the volume of GAP sales achieved by the franchised dealer networks of 12 volume and prestige car manufacturers.
The analysis also found that, while dealers are losing out on GAP insurance volumes, the price of each policy sold has so far remained steady after the rule change, with the average sale price falling only 3% year-on-year.
James Hill, Dealerweb sales operations director, said: “The data suggests new rules have had an immediate effect, largely through the new requirement for dealers to disclose that consumers should shop around to find the best deal.
“The potential implications for dealers are significant and it’s not just a matter of falling volumes. If dealers’ GAP sales continue to fall, the price of these products could soon come under increased pressure, leading to reduced margins.
“It’s critical that sales staff have robust follow-up procedures for those customers considering a GAP product.”
Under the new FCA regulations, dealers are required to outline details of a GAP insurance policy at the earliest point in the sales process, then leave two clear days before concluding the sale of a GAP policy – making it easier for consumers to shop around. Businesses must also provide information advising consumers that they are able to source a GAP product elsewhere.
The data underpinning the Dealerweb research comes from those dealers using its Evo 8 sales process system.