GM's New Warranty
Anyone considering a 2007 GM vehicle now has an extra reason to buy one. Today, GM's Rick Wagoner Chairman and Chief Executive Officer announced that GM's 2007 models will come with a five-year/100 mile powertrain warranty and roadside service contract. You can read more about it in our Inside Line News section but one of things I found interesting in our coverage was this statement:
"The pressure is on for Ford and Chrysler. But beneath it all, GM must have supreme faith in its ability to reduce quality issues in the next few years in order to afford this program...
It's either a sign that a solid turnaround is afoot or a sign that GM has simply put its last stack of chips on the table."
Another interesting perspective comes from an editor here at Edmunds.com who has watched the warranty landscape changing for some time. He wrote me an email saying: "It is interesting how warranties can affect consumer perceptions regarding quality. Many people (myself included) feel like the Hyundai warranty of a few years ago was a key factor in moving the brand forward from late night joke references to recognized, serious automaker. GM is obviously going for the same effect. Interestingly, it doesn't always work. Isuzu also upped their warranty coverage in recent years but...well, they're still dying on the vine. The key is that warranties might get consumers in the showroom, but the product still has to deliver in terms of design, features, quality and, yes, even dependability. In other words, just because you can get service and roadside assistance for free doesn't mean you want to USE that warranty feature all the time. Unexpected visits to a dealer still cost you time, energy and frustration, even if they don't cost you money. The Hyundai deal worked because it got people to try Hyundai and very few of them actually had to utilize the warranty coverage. Obviously GM will have to offer the same ownership experience to any new customers brought in by the extended warranty. If they do, this move should work for them. If not, it will be no more effective than Isuzu's efforts."
- Posted by
- Philip Reed September 6, 2006, 10:01 AM
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- Car Buying
A 7/70 drivetrain warranty helped convince me to buy a Plymouth minivan back in 1989 and that purchase worked out well. Good for GM!
Warranty Week says that GM's 2005 warranty claims were 3% as a percentage of sales. Ford's was 2.6%.
Drivetrain manufacturers (Cummins, Dana, etc.) came in around 1 to 1.5%, so GM may be counting on those lower numbers as it provides this new warranty coverage.