Coachworks has been reviewing the way its dealer clients sell extended warranties and found those achieving the highest penetration rates are the ones who empower the aftersales department to lead the process after vehicles have been sold.
"Extended warranties are expensive items for used car buyers to purchase because of what they cover, so there can be an understandable level of resistance at the point of sale," said Coachworks Consulting managing director Karl Davis.
"Dealer bosses tell us there can be a reluctance to sell extended warranties because used car sales staff know they have easier products to up-sell, such as service plans or paint and fabric protection, which offer them more commission," he said.
"These products are also cheaper for the customer and have tangible benefits which are easier to explain in the showroom and are therefore less likely to be met with resistance."
Davis and his team are actively advising dealers not to risk alienating customers during the vehicle sales process and believes extended warranties can be more effectively sold by the aftersales department after the car has been purchased.
"If a car still has a manufacturer's warranty, or is covered for 12 months by the dealer's used car scheme, then the best opportunity to sell an extended warranty is four to six weeks before the cover runs out. That contact should be made automatically by the aftersales
department through the dealer management system (DMS) with a personalised letter, email or text.
"Dealers who are doing this tell us customers are more likely to purchase extended warranty cover if they are given a compelling reason to protect their car at this stage of ownership.
"We've been working with dealers across the UK for over 15 years and repeatedly find the most successful retailers, regardless of size or franchise, achieve high extended warranty penetration by driving sales through the aftersales department. It's all about sweating accurate DMS data to make an appropriate and timely offer rather than bombarding customers at the point of sale," he said.