As AFVs become more popular and digitisation sweeps the industry, how have warranty providers adapted their services and packages?
Like many areas of the motor retail industry, warranties are having to adapt to a new normal. Chief of these is emerging technologies, be that the uptake of AFVs with their fewer moving parts and batteries to consider or learning to engage with the online used car buyer as physical sales took a backseat over the past year.
AFVs have been in the spotlight since the announcement that the sale of new internal combustion engine vehicles will be banned from 2030. This led to a spike in interest as one in four vehicles sold by carwow in December were either an electric vehicle, petrol hybrid or petrol plug-in hybrid.
And dealers are acting. Andrew Shipp Motors recently became the first dealer to include the RAC Electric Vehicle Warranty as standard with its used electric car sales. The Cowfold dealership is shifting emphasis to become an electric vehicle (EV) specialist and sees the dedicated warranty.
Andrew Shipp said: “Most of the people who come to us are buying their first EV and, to some extent, it is a leap of faith for them. They may not know anyone who runs an EV and they are spending a lot of money on a technology that, although widely proven, is new to them and is very different from a traditional petrol or diesel vehicle in a number of ways.”
With customers and dealers looking to new technologies, Motor Trader spoke to players in the warranty market to find out how they are approaching AFV warranties, online sales, and digital tools to help their dealer partners.
Warranty Assist’s managing director John Highfield said that MotorEasy, its sister company which is said to be the first extended warranty provider in the UK to introduce cover for the main EV battery, has already had to pay several claims, costing on average £6,000, with Renault Zoes and BMW i3s proving the most common.
He said: “Based on our workshop evidence to date, it seems EVs have yet to catch up with the engineering evolution and build quality of conventional vehicles. As a result, there are many pumps, electric modules and motors on these cars that tend to fail, while Teslas have common faults with the door handle motors, one costing us over £3,000 over six different claims.”
Looking at its digital tools, Highfield said that MotorEasy is looking at ways to integrate its car protection products at both point of sale and within the stock management process.
He said: “On the POS front, our B2B warranty provider Warranty Assist, is supported with a bespoke digital admin platform that allows dealers to configure the level of warranty cover they offer, as well as the level of margin they’d like to take. More recently, Warranty Assist was selected as the exclusive partner and supplier to YoAuto & YoTrader’s stock management and sourcing platform, effectively enabling dealers to bolt on warranty protection as they upload vehicles for sale.
“Whether its stock management or POS, our approach is to offer dealers as much flexibility and choice as possible, tailoring their warranty product to suit individual needs, be it margin, converting a sale or building brand and customer perceptions.”
Buyers shop around when looking for a car and will also seek a second opinion on social media and reviews sites like Trustpilot. On this, Highfield said: “MotorEasy now includes a Marketplace section, where consumers can often buy our competitor products, alongside our own. While we potentially lose a sale in some cases, our data suggests it builds a sense of consumer trust and provides a more functional and helpful buying experience that ultimately leads to more long-term visitors.
“Our product development strategy is also heavily focused on building win/win partnerships with other companies across the car retail and ownership landscape. Both MotorEasy and our B2B platform Warranty Assist have “out of the box” solutions that enable us to plug our car protection products into partner web sites. Partners benefit from both a revenue share on any products they sell, as well as a broader opportunity to extend their customer relationships. A car retailer that re-sells our warranties or service, repair and maintenance platform, is able to engage and profit from their customers throughout the ownership cycle.”
Extended used car warranties are sometimes criticised in consumer media. Highfield said that MotorEasy combats this by making it easy to find its reviews and Trustpilot scores. He said: “From a consumer ratings point of view, our Trustpilot score and reviews are always readily accessible both on our site and via social media. Whenever we get a review, we go to great lengths to engage and thank customers, especially those who go to the effort of posting their thoughts in a video.”
Kellie Grocott, RAC director of sales at Assurant, told Motor Trader how RAC has introduced a solution in response to the need for EV cover. She said: “The creation of the Electric Vehicle Warranty has been led by our innovation team and is purposefully timed to meet the fact that EVs and hybrids are now appearing on the used market in larger numbers and, for the first time really, outside of franchise dealer networks. There is massive public interest in EVs and, as more and more stock flows through to the used car market, it is important we are able to offer the right product for the right vehicle.”
The RAC Electric Vehicle Warranty provides the most comprehensive level of cover it has yet offered, according to Grocott, and is designed to deliver the peace of mind needed by customers as they move away from petrol and diesel power.
She said: “We believe that it could play a key part in building consumer confidence in EVs and hybrids across the market by helping to foster their acceptance as an attractive choice in the used vehicle sector.
“As demand for EVs and hybrids grows, car and van buyers are going to expect dealers to offer them as part of their stock mix, and this warranty provides a cornerstone for innovative sales propositions for these kinds of vehicles. We are giving dealers the support they need by providing them with products that meet changing customer requirements.”
To help dealers promote its warranties RAC provides an online platform called “The Engine,” that is designed to provide support and help them maximise the impact of the RAC brand. Its features include extensive marketing collateral for use in the showroom and online, monthly e-mails, quarterly newsletters, social media tools and essential reporting facilities.
Grocott said: “The aim of The Engine is to deliver regular and engaging content to help our retailers use the RAC brand to build their business performance by satisfying customer needs.”
Grocott pointed out that RAC has just completed the roll-out of a new, multi-million-pound cloud-based platform across the 1,300 used car retailers that make up the RAC Dealer Network.
She said: “Global Warranty Platform – or GloW – has been created and built on Salesforce technology to make all aspects of automotive warranty sales, claims and handling faster, easier and more effective for dealers and their customers.
“This is a highly scalable, secure and dynamic solution providing technology that places our members at the cutting edge of the automotive warranty sector, particularly excelling in terms of customer expectation and digitalisation, while ensuring our products and services continue to meet the needs of a rapidly changing used car sector.
“As GloW is rolled out across our network, we are providing training and resources that ensure its effectiveness is maximised for each individual dealer, and it has been extremely well-received across our user base. Our dealers recognise that being able to handle all aspects of administration with high levels of efficiency is a key element of the entire warranty process and gives them a potential competitive advantage when it comes to sales penetration.”
Adam Head, Northern Zone sales director, AutoProtect, said that it has provided a warranty for AFVs for several years and is continuing to develop to reflect the evolving technology and experience of the growing AFV parc.
He said: “The AFV landscape is developing rapidly and so is the claims experience. One of the advantages of owning an electric vehicle is reduced maintenance costs, and for the most part, that is correct. However, once a battery starts to deteriorate, the cost to change a battery has been high, as has the cost of labour. Similarly, when things go wrong, such as a heater, the work required to affect the correct repair can be extensive and expensive.
“The picture we have seen is one of modest claim levels but very costly ones. Battery costs have been coming down, and more technicians have been trained in EV maintenance and repairs. As the volume of EVs increases, we will see more data on claims/costs. I expect the used EV warranty to evolve rapidly, reflecting the evolution of batteries we are seeing.”
Digitisation is well established within AutoProtect, said Head. “In 2018, we re-developed our warranty/MBI portfolio to enhance the breadth of cover, the transparency of that cover and to take friction out of the customer claims experience, we launched a dedicated iClaim portal.
“Digitisation plans were already well advanced before the pandemic lockdown to further develop the business’ online capabilities,” he said.