Lawgistics Insight – The Value of Used Car Warranties


A concerning practice is dealerships viewing warranties as a shield against customer claims, thus neglecting their duty to address legitimate vehicle issues.

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At Lawgistics, we often encounter concerns from used car dealerships regarding customer dissatisfaction stemming from prolonged or rejected insurance warranty claims. A troubling trend, these issues cast a shadow on the true value of used car warranties.

(This article was first written in May 2011, hence the quotes from 2006 and 2008 however it has been updated to reflect current regulations and include links to our new warranty management solution).

Reflecting on a survey conducted by Auto Trader in 2006, we find that among 1200 UK motorists, nearly 45% perceived warranties as ineffective. Over 30% reported unsatisfactory resolutions, and 40% experienced claim invalidations due to overlooked ‘small print’ details.

Furthermore, a 2008 What Car report highlighted warranty claim refusals, often attributed to ‘wear and tear’, as a top consumer complaint.

These revelations paint a stark picture: many used car warranties fail to deliver the promised ‘peace of mind’, adversely impacting consumer trust in car sales businesses.

Legal Duties and Customer Rights: A Balancing Act

As retailers, adherence to the Consumer Rights Act is paramount. Ironically, warranties intended to bolster consumer rights often fall short, providing lesser protections than those inherently present in a vehicle sale.

A concerning practice is dealerships viewing warranties as a shield against customer claims, thus neglecting their duty to address legitimate vehicle issues.

Customers are entitled to seek compensation for component failures, often leading to substantial consequential losses. As a dealer, liability for these losses, including recovery charges, vehicle hire, and even accommodation costs in some cases, is a real possibility.

The Core Challenge with Warranties

Imagine selling 100 quality used cars, each with a six-month warranty. In an ideal scenario, 90% of these customers will experience no issues, affirming their satisfaction with both the purchase and the warranty.

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However, the critical focus should be on the remaining 10% who may encounter problems and file warranty claims.

Customer Satisfaction: The True Barometer of Warranty Value

Effective warranty claims management is crucial. Mishandled, these claims can escalate into significant grievances, reflecting poorly on the warranty’s value.

It’s vital to recognize that not all claims will be justifiable, and customer expectations can sometimes be unreasonable. The warranty should provide a clear, fair resolution process, guiding customers through what is legally reasonable.

Conclusion: Rethinking Warranty as a Customer Service Tool

At Lawgistics, we view warranties not merely as a defensive tool but as an integral part of customer service. A well-managed warranty claim process should lead to complete customer satisfaction, not frustration. Which is why we offer our members exclusive access to innovative software designed specifically for the efficient administration of a self-funded warranty program. This tool streamlines the creation and distribution of online warranties, integrates a user-friendly claims dashboard for efficient processing, and provides a digital framework for effective claim resolution. Additionally, we offer the added benefit of having warranties overseen by our skilled technicians, supported by a round-the-clock helpline, ensuring thorough assistance and reliability.

The Consumer Rights Act already offers significant peace of mind. A warranty should complement this, providing clear guidance for claim processes and ensuring customer concerns are addressed effectively.

In conclusion, the real value of a used car warranty lies in its ability to resolve customer issues efficiently and fairly, thereby enhancing the overall customer experience and reinforcing trust in your dealership.

Feel free to reach out to Lawgistics for personalised advice and exclusive access to our pioneering self-funded warranty management software. Our dedicated team is ready to assist you in every phase of this journey. Contact us at 01480 455500, or simply fill out the “Contact Us” form below this article to embark on this transformative path.

Joel CombesManaging DirectorRead More by this author

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