For decades, vehicle warranties were an afterthought. In the event of a problem, owners would take a vehicle back to the dealer for repairs which, depending on the age and mileage, were usually carried out with little discussion.
But the soaring costs of parts and repairs today means warranties are extremely important and valuable – both to the vehicle owner and the dealer.
Security
As Motor Trade News points out, warranties now go beyond replacing faulty parts and repairing bodywork and “are fast becoming one of the most powerful tools dealers have to protect margins, smooth revenue volatility, and retain customers long after the initial sale”.
It explains: “Rising repair costs, longer ownership cycles, and increasing vehicle complexity are fundamentally reshaping the economics of aftersales – and dealers who integrate warranties strategically are outperforming those who don’t.”
One of the biggest reasons is that vehicles are staying on the road longer and many owners are now keeping their vehicles beyond the traditional three-year swap-over period.
But while people are holding on to vehicles for longer, repair costs are rising sharply. Warranty Solutions Group found that the average warranty repair bill for vehicles bought in 2025 is £621.49 and many everyday faults routinely rise above £1,000.
Importantly, WSG also discovered that nearly 40% could not cover a £400–£500 repair bill without borrowing.
Deal or no deal
The high cost of complex components and repairs means that with the right warranty in place, dealers have a better chance of securing a sale – but could be out of pocket if they get it wrong. In the same way their motor trade insurance can cover them in the event of damage to a customer’s vehicle, the right warranty means the buck doesn’t stop with them if there is a problem.
Customers today see warranties as reassurance that if something goes wrong, they know they are covered for the cost of the repair. This means that dealers have to plan their sales and after-care strategy carefully.
This is crucial when making a sale because, as Motor Trade News points out, dealers who clearly explain the terms and cost of warranties are getting better returns.
In fact, far from being a vehicle delivery tick-box exercise, warranties can become an extra revenue for motor traders, not only in terms of sales, but also for regular maintenance and non-warranty repairs.
Motor Trade News explains: “Warranty repairs anchor customers into the dealer’s aftersales ecosystem. Vehicles return to approved repairers, boosting workshop throughput, labour utilisation and parts sales.
“Customers who experience a smooth claims journey are significantly more likely to renew cover, extending the revenue relationship well beyond the initial transaction.”
Revenue stream
At a time when owners are under huge financial pressure to operate and maintain vehicles, creating surges and slumps in sales, warranties can help steady a dealer’s cashflow.
Phil Miskelly-Wise, OEM and corporate sales director at WSG, said: “For dealers, this means warranty conversations are no longer a ‘nice to have.’ They are central to responsible selling, particularly in the used market where affordability concerns are most acute.
“Warranties work best when they are embedded into the sales process, not bolted on at the end. That means aligning sales, F&I and aftersales teams around a consistent value message.
“Dealers increasingly have access to live claims intelligence that shows which components fail, how often, and at what cost. Using that data to support conversations builds credibility and trust.”
He said it is also important to tailor warranties to each vehicle and the way it is used, rather than offering a one-size-fits all warranty.
“A three-year-old hybrid, a seven-year-old diesel and a high-mileage electric vehicle do not carry the same risk profile. Dealers who tailor cover accordingly protect both customer experience and profitability.
“For customers, that means financial reassurance. For dealers, it means resilient revenue, stronger retention and a more sustainable aftersales model.”
