Younger used car buyers are more likely to purchase an extended warranty for their vehicle than other age groups, according to research carried out for the RAC Dealer Network
When asked, “Are you likely to purchase an extended warranty in the future?”, 54% of 18-34 said yes compared to 47% of those aged 35-54 and 28% who were 55 and over.
The research was commissioned by Assurant, the company that partners with the RAC in the warranty and aftersales space, and undertaken by Harris Interactive, part of Harris Research, which questioned 1,257 respondents before the current crisis.
Sean Kent, RAC director of sales at Assurant, said that the additional propensity of younger used car buyers to opt for an extended warranty was noteworthy and of interest to dealers.
“Many dealers are using the present situation to look at their propositions in detail, ready for a return to more normal business conditions. This research is a great way to help them focus their efforts by offering the right warranty products to the right customer.
“The findings are interesting. It is perhaps likely that people in this age group have fewer savings or other cash reserves and feel more exposed to unexpected motoring costs, so value the protection that a warranty provides.
“This does indicate that dealers could potentially meet the needs of their younger customers by ensuring they are being offered the opportunity to purchase an appropriate warranty.”
Other interesting findings from the research showed that 37% of people had taken out an extended warranty on their current used car, with 28% having bought it from the supplying dealer and 9% having sourced it from elsewhere.
Also, there was a strong tendency to return to the dealer from which the customer bought the car for future warranties. When asked, “After your extended warranty expires, which are you most likely to do?”, 36% said they would speak to the dealer that supplied the car, 28% would look online, 24% would take no action and 13% were unsure.
Sean added that the research showed the scale of opportunity that existed for dealers when it came to extended warranty sales among used car buyers.
“The findings illustrate that, over the market as a whole, more than a quarter of people have bought an extended warranty from the supplying dealer and more than a third would look to return to that dealer for a further warranty. These are additional revenue streams for the dealer whilst continuing to deliver a service that meets the need of their customers.
“Our experience is that, with the right approach to marketing, training and products, sales penetration can even be higher than this. Plenty of evidence for this can be found across the RAC Dealer Network and we continue to provide advice and support to help dealers enhance their capabilities at this time, of which this research is a part along with the virtual dealer workshops that have been on-going through this month.”
The RAC Dealer Network consists of almost 1,500 dealers across the UK.
About the research
Harris Research collected 1,257 respondents’ responses to its web survey in the UK.