The number of used car warranty claims has stayed largely consistent through the majority of the pandemic despite drivers covering far fewer miles, the RAC Dealer Network is reporting.
Kellie Grocott, RAC director of sales at Assurant, which partners with the RAC in the warranty and aftersales sector, said that the finding seemed counterintuitive but was being borne out by figures.*
Grocott said: “Research by the RAC suggests that 49% of motorists have driven less in the last year. That’s quite a fall and we have been watching for an accompanying reduction in claims but, based on our warranty data, it just isn’t happening, even though it is now more than a year since the pandemic was declared.
“We saw a dip in April and May of 2020 as the first lockdown took effect but, following that, claims recovered quickly and, during the second half of the year, were as we would’ve expected in any normal time period and have remained so.
“There appears to be quite a lot going on here but probably the biggest factor is that these kinds of mileage reductions are not consistent across all motorists. Some people who were previously covering well above average mileage have been working from home and barely driving at all while others who were perhaps involved in delivering essential services have spent more time behind the wheel. It is also the case, as the RAC research shows, that the car has played a vital role in allowing people to complete their essential journeys since the pandemic first hit.
“What we believe is happening in terms of the claims we are seeing is that, for the average dealer selling RAC warranties, the motoring habits of their typical customer may not have changed that much. Many of them could be in occupations where they are still driving to work, they are still going to the supermarket and they are still taking their children to school. Their used cars are still occasionally breaking down in the same way as usual and they still look to their warranty as a safety net.
“From our point of view, the key takeaway is that because RAC Dealer Network customers are continuing to make claims at the same level, the warranty is maintaining its value as protection against unexpected costs. It remains an important part of any dealer’s used car proposition in exactly the same way as before.”
Grocott added that, as an additional factor, there was also some evidence that showed people who had avoided using public transport because of health concerns during the pandemic were moving into used cars in quite large numbers.
“The RAC research also supported this. There is no apparent rush back to using trains and buses, and it looks unlikely that this will happen even when mass vaccinations have been completed. This is creating a new area of demand for used cars among commuters and, because these people depend on their vehicle to get to work, a warranty is important to help manage unexpected costs.”
*Covering March 2020 to February 2021.