Thursday, March 12, 2015

The General will cut vehicle warranties from 100,000 miles to 60,000. Same old GM?

General Motors today announced that they will reduce their vehicle warranty by 40,000 miles - from the current 100,000 mile powertrain warranty to 60,000 miles in 2016.

"Through research, we have determined that when purchasing a new vehicle, included maintenance and warranty rank low on the list of reasons why consumers consider a particular brand over another," reads the dealer memo, sent by Chevrolet vice president Brian Sweeney and GMC vice president Duncan Aldred. My take on this comment reinforces my opinion that warranties are nothing more than a marketing tool.

Ignore the PR bull; what this says to me is, "The 100,000 mile warranty seemed like a good idea but it cost us more than it was worth." Why do I say this? Yes some of GM's competitors do not have 100,000 mile powertrain warranties but so what? If the warranty did not cost GM there was no reason to end it.

If a warranty is a neutral in the car buying decision, and if your vehicles have a lower than average warranty cost per vehicle, there is no reason to shorten the warranty. On the other hand, if it is a neutral and your warranty costs per vehicle are higher than average, you have two choices - cut your warranty or improve your products. 

I have no secret info on why General Motors slashed their powertrain warranty but I also don't see any reason for it other than costs. If you have faith in your products GM, reinstate the 100,000 mile powertrain warranty.

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