PROTECT ME
One-upmanship among car brands gives owners ever-stronger warranty cover
Today’s typical new car has about 60,000 parts and more lines of digital code than a commercial jet aircraft. So it’s not surprising that problems can occasionally happen.
You curse softly, take the car back to the dealer and get it fixed under warranty. It’s their problem, not yours.
Depending upon which make of car you’ve bought, though, you may have cause to curse rather more loudly if your warranty has run out. So it’s now your problem. And fixing it won’t be free.
In the 1990s, the average manufacturer’s new car warranty was two years/50,000km.
A few brands, including Nissan and Hyundai, went to three years/100,000km. That’s since become the industry standard but, in the never-ending quest to gain a competitive advantage, several car companies have broken ranks and given longer periods of coverage.
In late 2014, Kia set the Australian warranty benchmark: seven years/unlimited km.
That move trumped Hyundai, which in 2007 moved to five-year/unlimited km coverage.
That level of coverage was recently matched by Skoda and Renault, while Isuzu’s warranty is five years/130,000km; Mitsubishi and Jeep do five years/100,000km.
Lexus and Infiniti buyers get four years/ 100,000km.
Other makers aren’t fully committing to the extended warranty game, dipping in and out with special offers.
Holden recently introduced a seven years/ 175,000km warranty but only on new cars bought before the end of this year.
The brand says it will revert to the standard coverage of three years/100,000km next year and has no immediate plans to repeat the offer.
Citroen moved to six years’ coverage earlier this year but after a change of importer retreated to three years.
Honda has flirted with extending warranties as a short-term marketing tool, in the same way rivals might do zero-finance deals to stimulate demand.
Honda’s current seven-year coverage offer will finish at the end of the year.
There are indications the brand will use extended warranty deals as a marketing device for limited periods next year – a move Subaru is likely to mirror. Honda’s popular CR-V, which wasn’t included in the latest deal, may be the first to carry it in the new year.
So why this outbreak of generosity?
“A long warranty is a way for a challenger brand that’s relatively new in the market, or a struggling brand trying to improve its sales, to get noticed or change perceptions of its cars,” says Ross Booth of industry valuer Redbook.
“Kia’s seven years’ warranty says to potential buyers that, although its cars are cheap, they
are also reliable, well-made and the company has faith in its product.” It’s certainly worked. Kia’s sales have increased by more than 20 per cent annually since 2014 and it’s now the fastest growing mainstream brand in Australia.
Subaru and Ford have the standard threeyear warranty, occasionally bumping that up to five years as a sales promotion on models they need to shift.
“There’s no doubt that more brands are thinking about longer warranties,” says Booth. “Five or seven years gives new-car buyers peace of mind.
“It doesn’t do any harm to resale values
either, when the car can be traded in with some factory warranty coverage remaining.”
Toyota isn’t considering extending its warranty period, head of sales and marketing Sean Hanley told journalists in October.
“Our research hasn’t indicated that extending warranties will sell you any additional cars,” he says.
“We look at buying motives and while that is in the top three it’s not the top.
“We watch this space all the time. We examine it but in reality we don’t have any plans to extend.”
Hanley believes competitors’ strategies of extended warranties haven’t dented Toyota sales. “You could mount a fairly serious argument that it hasn’t affected our sales in the past three years.”
Mazda’s Vinesh Bhindi also rules out extending the brand’s warranty period.