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Warranties provide peace of mind – for dealers and customers

car in bubblewrap

By Geoff Maxted

New car warranties have long formed an important part of customer expectation. No right-thinking person would spend money on a new vehicle without some form of cast-iron guarantee ensuring at least three years of worry-free motoring. And we have reached the stage now where even three years is considered slightly inadequate.

At some point though, any new car warranty will expire – and although owners know that day is coming, few are prepared for the financial shock that hits them when their vehicle fails them. A few years ago, warranties started to be advertised on television – a policy adopted by the WMS Group, which has chosen to advertise to support its approved network of dealerships. It has wheeled out the stars – Sir Stirling Moss OBE and former ‘Stig’ Ben Collins are featuring in front of the cameras to attract customers to selected dealers’ forecourts (


Market growth

Even in these days of relatively trouble-free cars, owners continue to be concerned about breakdowns particularly after the warranty expires. Yet, in the past, there has been resistance to these products, usually through a lack of understanding.

This was demonstrated by a recent survey of 2,000 UK car owners by Allianz Global Assistance which revealed that almost half of motorists mistakenly think that extended warranty cover doesn’t include the labour costs. This lack of information potentially undervalued the benefits, but now the message is getting through.

With the average age of cars on Britain’s roads now more than seven years old, it’s not surprising that breakdowns could be a concern. If a customer is unlucky enough to have a fault develop, a greater awareness of the fact that after-market car warranties could save thousands of pounds in repair bills has resulted in the speedy growth of the market.

“Our goal is not only to provide products, insurance and administration services but also to help dealers to maximise potential sales” Nick Franklin, Mapfre Warranty

As a result, the car warranty industry is booming with more and more franchised dealers offering bespoke and comprehensive plans under ‘approved used’ schemes. Many independents now also outsource warranties.

To demonstrate how the industry is going the extra mile, Nick Franklin, head of new business, partnership and distribution for Mapfre Warranty, pointed out: “Our goal is to not only provide products, insurance and administration services but also to help dealers to maximise potential sales.”

Nick Wakes, director at AutoProtect, added: “The Consumer Rights Act has encouraged some dealers to switch on to higher quality and longer-term warranties to build higher perceptions of the dealer and engender greater consumer confidence.”

Certainly the warranty market is showing good year-on-year growth of up to 30% in recent years, with providers enthusing about the future. One company reported a healthy 17.5% improvement in 2015 alone.


What’s new?

Thanks to the recent consumer legislation, potential buyers are far more aware of their rights, and today require warranty products that provide a greater level of protection without any small print obfuscations. The forecourt 30-day warranty has rightly been consigned to history.

Ian Simpson, automotive European managing director for The Warranty Group, said: “In terms of the general warranty market, we believe that there is an ongoing desire among customers for cover that is both longer and more comprehensive, and that dealers have become much better at meeting this need by introducing the option of an enhanced warranty into the sales process. A point of interest for us is the element of sales to mainly independent dealers that are sold under our partnership with the RAC.”

“Short-term, low-level and non-insured products do not treat customers fairly and thereby tarnish the industry”Eric Stone, WMS Group


Eric Stone, business development director for the WMS Group, added: “Short-term, low-level and non-insured products do not treat customers fairly and thereby tarnish the industry.”

By taking a look not just from a product perspective but also at a dealer’s systems, controls and processes, the warranty provider can build up a much more comprehensive overview of a client’s strategy and ethos.

This, plainly, is the point. By developing movement towards inclusive longer-term warranties, even for older vehicles, dealerships can offer their customers peace of mind. This is borne out by the greater use of online self-services like AutoProtect’s i-Claims digital application, meaning warranty claims can be dealt with as quickly as one hour after the claim is submitted. Ultimately this benefits the dealer by the prompt, efficient payment of claims.


Client satisfaction

In a competitive market it is not enough to provide a warranty product and sit back. It is also important that client satisfaction is to the fore. Those on the front line of vehicle sales will know how knowledgeable and demanding consumers are becoming.

This requires taking a consultative approach. By monitoring both dealer performance and satisfaction, providers are able to offer swift improvements to product features. Such attention to detail ensures a higher level of customer warranty renewals.

Most providers now send out satisfaction surveys to provide statistical insights into their service. This feedback is vital to product development and increasing digitisation, as more retailers move services on to the internet.


The future

Naturally enough, respondents were reluctant to talk about their franchised dealers and car manufacturing clients, old and new, for whom they provided warranty services.

However market leader Car Care Plan has partnerships with more than 40 large and mid-sized dealer groups and more than 2,500 smaller dealers. In addition it provides warranty programmes for more than a dozen manufacturers’ networks, including Ford, Nissan, Jaguar Land Rover and Vauxhall.

In its position, it has been able to invest in systems, such as its electronic claims vetting and invoicing, and claims apps for customers.

A comprehensive warranty can bring “genuine incremental profit both at point of sale and in after-sales if utilised in the correct way”, said Franklin.

In today’s used car industry anything that makes getting warranties and insurance easier, and is more clearly explained has to be a good thing especially if it offers a low-risk, low-cost revenue stream. For example, Mapfre have had positive feedback on its new ‘click and buy’ platform, which allows dealer clients to buy additional insurance products at the touch of a button.

Warranty products are a valuable asset to both independent and franchised dealers who are looking, as Stone said, “to provide cover for the ‘too good to go to trade’ vehicles that fall outside of the approved programme parameters and requirements”. WMS was happy to tell AM that it provided products to “most franchises”, including GAP, and other value-added products such as wheel and tyre insurance.

There can no question that working with manufacturers, franchised and independent dealers and partners in financial services has led to growth and a marked improvement in product quality.

No matter how carefully a vehicle is prepared for sale, the worst can still happen and motorists just have to get on with it. The problem is that the complexities of modern cars carry the penalty of complicated and thus expensive repairs – anyone who has an automotive electrical issue these days will testify to that. That’s why it is comforting to know that a used car has warranty back-up. Offering peace of mind at the point of sale should be on the front line of ensuring customer satisfaction.

Liz Grindell, head of warranty at Allianz Global Assistance in the UK, said: “Investing in a warranty doesn’t have to be expensive or considered a luxury, even for an older, higher mileage vehicle, as there are a lot of flexible packages now available.”

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  • Julie - 11/10/2016 10:19

    Please can you clarify what a warranty covers that the Consumer Rights Act 2015 doesn't?