Despite the increase in automotive powertrain warranties that are good for up to 10 years and 100,000 miles, whichever comes first, drivers don’t seem to value long warranties as much as did just five years ago. What has changed?
To understand why consumer perception of powertrain warranties has changed, it’s worth understanding what they are the first place, how they vary from one another, and notable changes in the automotive industry over the past decade!
What’s a powertrain warranty?
In layman terms, a powertrain warranty provides coverage for the components of a car that provide the power needed to — you know — make it move. In other words, it deals with the engine, drivetrain and transmission.
If any of the parts associated with the powertrain become defective or become damaged during your warranty period, the manufacturer will usually pay to have it repaired or replaced.
Powertrain Warranties in the Past
Recently, both Fiat-Chrysler (FCA) and General Motors scaled back their powertrain warranty from 10 years/100,000 miles to 5 years/60,000 miles, leaving just a handful of manufacturer such as Hyundai, Kia and Mitsubishi that still offer 10 years/100,000 mile policies.
In the past, such long warranties were offered by most automakers to help sell vehicles, but they seem to no longer impact new vehicle buyers like they once did. That’s likely because conventional cars have become very reliable, with a 2014 Consumer Reports survey finding that 55 percent of owners with a long warranty hadn’t used it for repairs during the lifetime of the policy,
Except, perhaps for Hybrid Cars
Interestingly enough, it seems that longer warranties do help sell hybrid cars, undoubtedly because hybrid cars are still a relatively new technology with a lot more complexity than regular cars. Replacing or fixing their batteries, for instance, can be very expensive.
Although the repair frequencies of hybrid cars tend to be at least as low as those for regular cars, and lower in some cases, most consumers don’t want to take a risk with a technology they are not familiar with.
Do car buyers care about powertrain warranties? Yes they do, but maybe not as much as you would think.
The sales team at East Hills Subaru, a Roslyn, NY Subaru dealer told us that typical powertrain warranties usually don’t cover items that can wear out during normal use, items such as clutches, universal joints, timing belts and CV joints. Factor in the fact that modern cars — not just the Japanese, but also the American, European and Korean models — are much more reliable than the cars of years ago, it’s easy to understand why consumers care less for a longer warranty period.
General Motors and Fiat-Chrysler’s decision to provide a shorter warranty might seem alarming, but the truth of the matter is that it will not affect their sales in any meaningful way.