What’s a warranty worth?

  11 August 2014

In next week’s Auto Retail Bulletin – the monthly sister-title to Auto Retail Agenda – we interview Tim Tozer, the new boss of Vauxhall and a man with plenty of retail (as well as manufacturer) experience. Mr Tozer is somewhat pessimistic about the worth of warranties lasting more than three years.

Given that Vauxhall currently operates a lifetime warranty, this is an interesting position to take. He maintains that beyond three years there are too many clauses in warranties that mean some parts of the car cease to be covered and so they just confuse or upset the owner.

I’d argue that perhaps Mr Tozer could be missing the point, and there are three things that make me say this. First, from a consumer’s standpoint if a car is advertised with a warranty longer than three years the level of cover shouldn’t change after three years to include fewer aspects of the car.

Second, the words ‘lifetime warranty’ may seem great at first, but does any consumer really believe the warranty is for life? And for that matter, the life of what? The life of the car? The life of the consumer? Vauxhall doesn’t help itself by immediately writing (below the words ‘lifetime warranty’) 100,000 miles. Does that mean that Vauxhalls only have a life of 100,000 miles?

Finally, my experience talking to car buyers is that they will pick a car, or at least place it on a list of potential purchases, if it has a long warranty – even if they’re only planning to run it for three years.

What I don’t know, and perhaps a retailer that operates franchises with different length warranties can tell me, is if warranty length makes any difference to service retention. To give credit to Mr Tozer, he said that it was too early to make a decision on changing Vauxhall’s warranty, but will he wait a lifetime before making a decision?

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Tristan Young

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