March 27 2008.

Selling a Guaranteed Asset Protection (GAP) or Return To Invoice (RTI) policy on a new or used bike can increase the profitability on the bike sale by several hundred pounds, sometimes making more profit than the bike sale on its own, says MB&G, the UK's largest privately owned motor trade warranty specialist.

Kevin Pearce, Operations Director of MB&G, says, "It's an old adage, but nowadays dealers cannot survive just on the chassis profit alone, they need additional revenue/profit margins and  finance and insurance products can assist them in achieving this."

"As biking enthusiasts themselves, dealers understand what's important to customers when it comes to enjoying a biking lifestyle. However, many of them are not maximizing the opportunities of selling warranties, GAP and RTI on new and used bikes.

"Selling a warranty generates short term revenue and profit, but also gives the dealer regular contact with a customer and an opportunity to maintain a relationship which will generate longer term revenues," explains Kevin.

MB&G has estimated that during an average 12-month warranty period based on a one in four claims ratio, a dealer can generate around £150 revenue on each warranty claim and another £90 - £150 on an owner getting their bike serviced at the dealership.

These two transactions can generate around £100 in profit for the dealer, but more importantly start a long term relationship with the customer.

MB&G has developed an RTI policy that caters for customers that only have Third Party Fire & Theft cover, allowing dealers to provide RTI cover to a wider audience.

"Dealers should focus on selling any value added package that encourages regular communication between them and the customer and that gives them a reason to come back time and time again," said Pearce.

For more information contact Kevin at MB&G on 0191 259 0647.