AutoScene talk to Lee Coomber, RAC Client Director of the RAC Dealer Network to discuss the challenges of doing business in 2022 and how the RAC Dealer Network are negotiating these challenging times.
Tell us about your business offering and target customer?
The RAC Dealer Network is a partnership between the RAC and Assurant, a Fortune 500 company that delivers solutions designed to protect consumer purchases across 21 countries. We aim to deliver the best possible warranty and aftersales product experience to motor retailers and their customers in the UK. Currently, the network consists of over 1,200 dealers, ranging from small, local independents to giant car supermarkets to major franchise dealer networks.
What differentiates you from others in this space?
We have three key differentiators – brand, product and support. The RAC name has unparalleled recognition and consumer trust in the warranty and aftersales sector, and is a major advantage for dealers. Our product range is designed to provide exceptional levels of cover while delivering high degrees of flexibility to meet different dealer and consumer needs. Finally, we offer a range of support options for dealers designed to help them grow not just warranty sales but their entire business.
How are you navigating the current economic climate in 2022?
Has your market materially changed during recent years?
In times of economic turbulence, many car buyers look for longer and more comprehensive levels of cover because they are concerned about their month-to-month personal finances. This has been apparent since the pandemic and is also holding true as we probably enter recession. We have evolved our product range to meet this developing need by removing our entry level Silver product and making our Gold warranty the new standard. Also, at the top of our range, we’ve added Platinum Plus, which we believe to be perhaps the most comprehensive warranty of its kind. All of this is designed to help dealers meet changing consumer needs and has been well received.
Warranty sales are much lower in independent dealerships. What would be your advice to independent dealers who are looking to increase their warranty sales?
It’s all about finding the right partner. We work hard with our dealers to help them promote their warranty offering as effectively as possible not just because it is a generator of revenue but to help them meet customer needs. That means not just having a well-structured and effective product range but the right in-showroom and digital sales material, effective online and in-person staff training, sensible sales incentive structures, and ongoing account management that means your warranty offering meets changing market conditions. There are many independents within the RAC Dealer Network who have very high levels of warranty sales where we have provided the necessary guidance and means to enable them to deliver.
What support can you offer to dealers who may be concerned over FCA compliance?
We work to ensure complete FCA compliance. This is something we take very, very seriously and into which we put a great deal of resource, offering guidance to our dealers on all the latest and existing regulations such as IDD, remuneration and the new consumer duty standard as it comes into effect.
EV sales have surged over the last few years and now used car dealers are seeing affordable used EVs on their lots. Do they need a different type of warranty and what is your offering in this market?
We recently introduced a new warranty especially for used electric and hybrid cars that can be applied to any model up to a maximum of eight years old and with 80,000 miles on the clock at the time of purchase. Cover is available for a variety of periods up to 36 months and claims can be made up to a limit of the vehicle purchase price.
This product delivers the most comprehensive level of cover that we’ve yet offered on any vehicle of any kind, with the aim of creating peace of mind for electric and hybrid buyers, especially as the vast majority of them will be moving away from petrol or diesel power for the first time.
The used car market has been extremely volatile post covid with inflated prices and low stock levels. Do you believe that we will see a return to “normal” in 2023?
Our view is very much that there is no normal in the sense that we will return to the pre-pandemic market. Stock is likely to remain in poor supply for the foreseeable future, even if there are some improvements in availability, and this will very much shape the market. Prices and values may fall a little but will probably stay close to historic highs. This is certainly the shape of the used car market for which we are developing our future strategies. However, if the last few years have taught any lesson, it is that the situation can change quickly, so we are also intent on remaining agile.
What are you planning for the future to develop your proposition?
We’re looking at building more third party partnerships that offer value for our dealers. For example, we have recently held an event with G3 Remarketing designed to give dealers easier access to stock both online and physically, and have also formed a relationship with Vehicles in Video that will allow dealers low-cost access to their web site vehicle video service. There are many more of these relationships in development and they are representative of the way in which we aim to be a genuine partner to the RAC Dealer Network rather than just another warranty provider.