Old car warranties thrive
February 19th, 2009 by Richard Aucock
CAR dealers are selling more older, cheaper cars, in response to customers having less cash.
Mondial Assistance reports that the number of dealers offering free 3 month warranties on older cars has risen by 22 per cent.
This is because customers still want to change cars, but cannot afford newer and more expensive models. They may not also be able to get credit on more expensive vehicles.
Liz Grindell, Mondial Assistance warranty manager, explained that Mondial Assistance had developed a shorter 3 month used car warranty as a result. This is an alternative to its traditional 12 month warranty.
‘This allows dealers to offer customers an attractive deal on older vehicle stock that they may have previously shied away from promoting.’
There can be marketing benefits, too. ‘Boosting older used car sales volume will generate interest in younger makes and models by increasing forecourt traffic.
‘In addition, this not only reduces dealer resale costs, it gives them the opportunity to increase revenue by selling on an extended warranty package.’
Used car sales are reported to be on the rise as consumers take advantage of falling valuations and price wars. Warranties, reckons Mondial Assistance, are a key sales tool.
‘Our figures show that more and more dealers are focusing on warranty to boost customer loyalty, which makes sound business sense as new car sales continue to decline.
‘Although consumers are wary of making large financial commitments, they are prepared to protect their assets in a bid to avoid unexpected expense.’
With fewer new car buyers coming through showroom doors, Mondial reveals it is working with car makers on the opportunities older used cars present – both in terms of sales and aftersales.
‘If a manufacturer can deliver the right level of comprehensive cover that encompasses excellent support when the customer needs it most,’ said Grindell, ‘they should secure high levels of customer retention to see them through the recession.’
By Richard Aucock