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One in three used car dealers have upgraded the standard warranty they provide from three to six months.
The shift follows the “Make the Switch from Three to Six” campaign trialled across 101 dealers in the RAC Dealer Network, of which 31 adopted the longer warranty.
Kellie Grocott, RAC director of sales at Assurant, which partners with the RAC in the warranty and aftersales sectors, said: “Our account managers have been working closely with these pilot dealers, highlighting the advantages of six-month warranties.
“They’ve explained that there are three main reasons to offer a six-month warranty as standard. Firstly, our research indicates that it is in line with consumer expectations and shows a high degree of confidence in the car being sold.
“Secondly, it aligns the warranty with The Consumer Rights Act where, if a fault in a used car comes to light after 30 days but before six months, the consumer is entitled to a repair, replacement or refund. Especially, a six-month warranty can protect the dealer from unforeseen costs in these circumstances.
“Lastly, our data shows that the average claim frequency is significantly higher for six-month warranties than three, which is warranty repair work that the dealership can capture for their workshops and then reclaim. This longer-term relationship also increases the number of potential customer touchpoints, building the potential for retention.
“The price of a six-month warranty rather than three for the average dealer is only a matter of a few pounds and the benefits to both retailers and their customers far outweigh the cost.”
Grocott said that the “Make the Switch from Three to Six” campaign would now be extended to more of the RAC Dealer Network’s 1,300 dealers who are offering three-month warranties.
“Our aim is to move the entire network to at least six months over time but we are realistic about how long that might take. However, it is clear that there is a long-term trend in this direction – we already have relatively large numbers of dealers who have moved on to 12 months, which is very popular with consumers and has measurable business advantages.”