What's driving growth in the warranty market?

What's driving growth in the warranty market?

Against a backdrop of tightening legislation from the FCA and changing consumer attitudes and behaviour, the warranty market is booming.

We believe that there are some key trends driving this growth and many of these are good news for both franchised and independent dealers.

According to the latest Trend Tracker research, warranties are 10 times more likely than service plans to attract franchised workshop customers.

Furthermore, 69% of new car owners highlight new car warranties as a primary reason for returning to the franchised workshop for servicing.

The research also shows that there is a major growth opportunity for franchised workshops to develop robust post-warranty servicing strategies.

We have seen a marked increase in giveaway warranty lengths from 3 to 6 months. This is down to growing consumer awareness of their rights’ and dealers recognising the need to protect themselves.

Claims values have remained steady, despite the tendency to replace rather than repair failed parts. The availability of non OEM parts and specialist repairers has helped manage the cost of claims.

Over the last 18 months, the cost of the warranties has risen slowly, but steadily. We believe this is due to dealers looking for quality of service to them and their customers over the traditional attitude of going for the cheapest option.

Finally, there is no doubt that the web is having a major influence on how consumers purchase warranties. Our data shows a 30% year on year increase in online enquiries.

Robert Dockerill is CEO of Autoguard Warranties

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