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Warranty still worthwhile under new Consumer Rights Act?
Following the last blog in our Consumer Rights Act 2015 series, which looked at dealerships’ provision of services, this blog will take a closer look at the specific issue of vehicle warranty.
Under the new Act, customers have the right to return a faulty product for up to six years after purchase. So what does this mean for dealerships providing vehicle warranty? Is warranty still valid? Is it still necessary? Your customers may ask you the same question so it pays to be prepared.
Is vehicle warranty still valid?
Yes, is the short answer. Vehicle warranty continues to offer customers a level of protection that is not provided under the Consumer Rights Act. The Consumer Rights Act offers a tiered returns policy that places emphasis on proving if a fault was present at purchase or developed later, while warranty provides customers with a mechanism to repair faults that arise later on.
For up to six months after purchase, any fault can be presumed to have been there from the time of delivery – unless the dealer can prove otherwise. It is essential, therefore, for dealers to take precautionary measures to protect themselves (as well as ensuring customers’ vehicles are fault-free) to mitigate or completely avoid the possibility of refunding the full purchase price.
To learn more about ensuring the burden of proof is covered at sale, read our blog: How the new Consumer Rights Act affects motor dealers.
If a dealer protects themselves when selling a vehicle, after the first 30 days they should not be liable under the Consumer Rights Act, provided proof a fault was not present at purchase is available. It is worth remembering that within the first 30 days of purchase, customers have an early right to reject goods that are unsatisfactory quality, unfit for purpose or not as described.
Benefits of warranty over Consumer Rights Act
Vehicle warranty provides more comprehensive protection for customers for mechanical or electrical faults with their vehicle. While the Consumer Rights Act focuses on the state of a vehicle at purchase, warranty will cover faults occurring for the lifetime of the product so customers won’t need to prove that a fault was present at purchase to receive support.
Of course, providing vehicle warranty has benefits for dealers as well, not least boosting customer retention. Warranty has proven 10x more effective at retaining customers than services plans and beyond this, they are a major selling point for any vehicle – new or used – so ensure your sales team understands the advantages:
Benefits for customers:
- Peace of mind
- Financial protection in the event of a mechanical or electrical fault
- An ongoing relationship with their dealership
- A choice of repairers – including overseas
- No restrictions on the number of claims
- Use of genuine parts.
Benefits for dealerships:
- Increased routes to market and revenue streams
- Additional sales opportunities
- A wider product range
- Greater customer retention rates
- Better satisfaction ratings
- Transfer of risk to an external party.
To learn more about providing extended warranties to your customers, read our blog: Extended warranty – is your dealership providing them?