Longer used car warranties became more popular in 2022, the RAC Dealer Network is reporting, in reaction to both the cost-of-living crisis and the ageing vehicle parc.

The number of policies written covering six, 12, 24 and 36-month periods all increased with only the shortest available cover – for three months – seeing reduced sales. Overall, the company’s average warranty term rose from 9.9 months to 11.1 months.

Sean Kent, European director of automotive at Assurant, which partners with the RAC in the aftersales market, said: “Longer warranty sales are being prompted by two sources. Firstly, dealers are increasing the standard cover they sell with their used cars. Increasingly, a three-month warranty is no longer seen as sufficient cover to attract and reassure customers, with six and 12-month policies becoming the norm.

“Secondly, more customers are choosing to lengthen their warranty at additional cost. This is a result of both tightening personal finances and concerns about the effects of unexpected motoring bills, but it’s also the case that new vehicle production shortages mean many people are currently buying older used cars and are aware of the increased potential for breakdowns.

“Really, this is all part of a general trend towards people keeping their cars for longer but still wanting some form of ongoing warranty protection. The recent RAC Report on Motoring highlighted that fewer motorists planned to change their cars with the same regularity as in the past, citing reasons such as rising costs affecting their personal finances and a fall in income during the pandemic.”

Sean reports that the RAC Dealer Network, which consists of more than 1,200 used car retailers across the UK, had also seen an increase in claims frequencies in 2022 – up 18% on the previous year – alongside a 22% upswing in parts costs.

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“Again, we’re seeing the effects of the ageing used vehicle parc. Older cars simply break down more often. Covering them inevitably means more claims and that’s reflected in our figures. It’s probable that this will be the trend for the foreseeable future.

“The substantial rise in parts costs is partially a corollary of the type of claims being made – with more major failures – and a general increase in both parts and labour costs. This is an area where we are introducing new systems in order to gain greater control and we’ll be issuing more information about this development soon.”

Sean expects dealers to continue to enhance their used car propositions by increasing the length of standard warranties and for consumers to continue to pay to upgrade their cover further still.

“We’re in a situation where there is not really any end in sight to the ageing of the vehicle parc while the cost-of-living crisis looks as though it will persist for some time to come. Against this kind of backdrop, the degree of protection and reassurance offered by longer warranties has ever-increasing appeal.”

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