Dealers are being warned that claims made through self-funded warranties could well exceed the any funds set aside.
WSG reviewed over 50 admin schemes it manages for dealers and found that nearly a quarter (22%) lacked adequate funds to cover claims over a 12-month period based on their average claim rates and amounts – which could mean severe cash flow issues if their self-funded pools are insufficient to cover annual warranty claims.
Some dealers will need to replenish their claim funds within the next year, in some instances by as much as £20,000, to meet obligations.
John Colinswood, CEO of WSG, said that while self-funded schemes appear to offer significant savings on warranty costs, its research indicates that the reality can be quite different.
“The funds we examined include a diverse range of dealers from small independents to multi-site franchises. The findings reveal that many dealers will face considerable shortfalls in their claim funds in the coming months, a problem exacerbated by the increased cost of warranty claims over the last year due to global parts shortages and rising labour rates.
Login to continue reading
Or register with AM-online to keep up to date with the latest UK automotive retail industry news and insight.