Understand The Carmaker’s Guarantee Before You Buy
All warranties are not created equal (GM).
New car warranties have come a long way in the past couple of decades. As the quality of Japanese cars began trumping the style and flash of Detroit, the local guys had to step up. Quality has been improving, but to give customers confidence in their cars, warranty coverage was also increased. Soon enough, the warranty became a significant part of the marketing and a major selling point for some cars.
Who can forget Lee Iacocca in the 1980s pitching Chrysler, Dodge and Plymouth products by declaring they had the best warranty in the business and finishing with his famous line, “If you can find a better car, buy it.” More recently, Hyundai made a big splash when, emboldened by improved quality, it upped its powertrain coverage to 10 years or 100,000 miles and declared it “America’s Best Warranty.”
Upping The Ante
A warranty is insurance — and assurance — that your car will work at least through the stated period. A warranty may be included with the car, but, like insurance you buy from an agent, it’s not free. There are rooms full of actuaries and accountants constantly calculating outstanding and future warranty costs and figuring out an exact dollar amount they must add to the price of every car.
Given their recent perilous issues with finance and viability, GM and Chrysler have both had to step up their warranty coverage and now offer powertrain coverage through five years or 100,000 miles. Despite the myriad recalls they have experienced recently, Toyota and Honda enjoy great consumer perception regarding quality, so their warranty coverage needn’t be best in class. When its sales in the U.S. tanked, Mitsubishi boosted its warranty coverage, which is now on par with Hyundai, covering the entire car for five years or 60,000 miles and the drivetrain for 10 years or 100,000 miles for most of its models.
Today, all cars carry some kind of warranty, but not all are created equal. While three years or 36,000 miles (always calculated by whichever comes first, and often referred to as “3/36”) seems to be the de facto bumper-to-bumper warranty coverage, most luxury cars have a 4/50 warranty and still some other cars have 5/60. While many American and Japanese vehicles offer an additional powertrain warranty to as long as 10/100 — this covers the engine and transmission only — most European luxury brands do not extend powertrain coverage beyond the basic warranty period.
Although there can be dubious value in buying a luxury car, you sometimes get more for your money in terms of warranty coverage. There are many Ford and Lincoln products that are essentially identical under the hood. But buy the Lincoln instead of the Ford and that 3/36 warranty becomes 4/50 and that 5/50 powertrain coverage becomes 6/70. There are similar bumps to the warranty coverage from luxury brands under the Toyota, GM, Nissan and Honda corporate umbrellas.
What’s Covered and When?
Some companies refer to the basic warranty as a bumper-to-bumper warranty because it covers virtually everything on the car (but typically not tires, which are covered by the tire manufacturer). Powertrain warranties usually cover the engine, transmission or transaxle, drive axles and related components, typically the lubricated internal parts. Rust-through warranties are just that — they cover corrosion that perforates the car, but surface rust doesn’t count.
Emissions warranties are another issue entirely, primarily because both the Federal and state governments mandate that emission control equipment must work for a minimum period. These requirements vary from state to state, but most are much longer than the basic warranty. To give customers more confidence in the mostly uncharted waters of hybrid-electric and electric-only vehicles, battery packs and electric drive components in these cars typically carry much longer warranties than the rest of the car.
Warranties cover defects in components and workmanship. But it’s often easier discussing what’s not covered and under which situations a warranty claim may be denied. Anything that is consumable or designed to wear out, like brake pads, wiper blades or floor mats, generally gets no coverage. If you use your car for certain commercial purposes, such as a taxi or delivery vehicle, most warranties will not provide for repairs in those cases. DVD, navigation and other infotainment systems receive shorter coverage than the rest of the car.
If you modify the car, particularly with non-factory parts, you may void the warranty, or at least warranty coverage of related parts. For instance, if you put in a new audio head unit and the factory speakers blow out, you’re on your own. If you install aftermarket wheels that are a different size than the original equipment, any suspension or brake damage will likely be denied coverage. Some accidents, re-titling of the car as “salvage” and ignoring maintenance are all ways to get coverage denied.
The Fine Print
Legalese abounds in warranty guides. And there is lots of fine print in a new-car warranty, despite Federal legislation from the 1970s that requires “readily accessible” and “unmistakable” language. For example, Kia’s 2011 warranty runs 118 pages.
Warranty books also often explain how to remedy the situation when you feel that you have been denied a legitimate claim. In virtually all cases, before you can file suit, you must try mediation and arbitration. One of the primary arbitrators in the U.S, who works with almost all manufacturers, is the Better Business Bureau, whose BBB Auto Line (www.bbb.org/us/auto-line-lemon-law/) has been resolving disputes between consumers and automakers for more than 30 years. If neither mediation nor arbitration work and you do need to file suit, the Magnusson-Moss Warranty Act provides that the manufacturer must pay your legal costs if you prevail, so there is definitely an incentive for them to fix a problem.
However, if your car is under warranty for a covered problem, in most cases you will have little trouble getting the dealer to submit a warranty claim. After all, the dealer gets paid by the manufacturer to fix the car. There are even cases of manufacturers fixing cars that have just slipped out of warranty for what may be a defective part. You won’t find this goodwill move on any documentation in your glove box and it is not something the manufacturer is compelled to do, but it happens more than you might think.
What to Look for in a Warranty
The longer the bumper-to-bumper or basic warranty, the more protection you have against defects in the car. And the powertrain warranty can also help keep your piece of mind against the most expensive repairs down the line. However, not all warranties are transferable to the next owner. Take Hyundai and Mitsubishi’s 10/100 powertrain warranties. They only cover the first buyer. Subsequent buyers are only covered up to 5 years and 60,000 miles. But Suzuki’s 7/100 warranty is fully transferable to the next owner. Come resale time, the remaining factory warranty could be a factor in the price you get — provided you let a prospective buyer know about it.
Given the quality and preparation for steel that goes into today’s cars, rust is practically a non-issue. But some European cars are noted for having long corrosion warranties, including quite a few brands with 12 years and unlimited mileage.
Beyond the basic warranties, some manufacturers include scheduled service. While not technically a warranty, an included scheduled maintenance program can significantly reduce the out-of-pocket expense and unpredictability of owning a car, particularly a luxury model. But, much like a warranty, you pay for this service in the cost of the car, with estimates ranging from under $1,000 to over $3,000, depending on the model. Some brands may include the first service or adjustments during the first year while others will cover everything, from oil changes to any consumable on the car, including brakes pads and wiper blades for the duration of the warranty period. The current champ in that regard is Jaguar, who for 2011 include not only a 5/50 warranty, but also 5/50 of service in the price.
Roadside assistance has become another common add on to new car warranties. Again, the coverage varies. For some automakers, like Chrysler and Nissan, roadside assistance will only cover towing services for a car with a warrantable condition. Other brands include lock out service, spare tire mounting and even a couple of gallons of gas when you run out.
There are lots of choices to make when buying a new car and lots of factors to consider. While the warranty details may not make the top of that list, it’s certainly worth considering when it can make the difference between two similar models.