Used car buyer confidence is unlikely to see an increase in 2012 and may even decline, meaning that demand for ‘safety net’ products such as extended warranties will remain strong, says RAC Warranty.
Macroeconomic factors such as a possible double dip recession, continued Eurozone instability and ongoing high levels of unemployment mean that used car warranties are still being enhanced at very high levels measured by both length of time and depth of cover.
Ian Simpson, sales and marketing director, said: “A used car is one of the single biggest purchases that a buyer makes and it is understandable in the current economic climate that spending such a large sum fills them with a high level of doubt.
“Customers continue to upgrade warranties at an elevated rate in order to create as high a level of peace of mind about their motoring costs as possible. In fact, the enhancement rates that we currently see bear comparison with the worst parts of the last recession.
“As far as the mood of buyers is concerned, it is difficult to foresee any improvement during the whole of 2012.”
Simpson added that the dealers who had enjoyed the best performance in the last 12 months were often the ones who showed the best appreciation of the mood of the buyer.
He explained: “It does not take a psychologist to recognise that used car buyers at this time want a highly credible offering in order to feel secure – they want to buy from an established dealer, to be talked in detail through a full service history and to have the whole sales proposition underpinned by a comprehensive warranty from a recognised provider.
“In almost all parts of the market, the dealers who are familiar with these needs and work to meet them will be the ones who have the best 2012.”