GM to Offer 6-Year Warranty on Cars, Industry’s Longest
General Motors, in an apparent attempt to improve the public’s perception of the quality of its cars, said Thursday that it will effectively double the length of its repair warranties and offer the longest available in the auto industry.
In a press conference, GM Chairman Roger B. Smith announced the new program, which provides a six-year warranty on the engines, powertrains and exterior rust-proofing of all of GM’s new cars built in the U.S. and Canada, and said it was made possible by rapid improvements GM has made in the quality of its passenger cars.
“Five years ago, our studies indicated that a six-year warranty program would have been too costly” because of the poor quality and high repair costs at that time, Smith acknowledged.
But Smith insisted that GM’s quality has risen so much since 1980 that the company can now offer the new warranties without suffering dramatically higher warranty costs, and without hurting earnings. “I think we can absorb the extra costs of this program,” he said.
The new warranty program will be retroactive in order to cover all cars built since the start of the 1987 model year and can be transferred to a second owner when a car is sold, GM said. The program will not cover GM’s light trucks or its Japanese imports.
GM’s move is likely to intensify the highly public war of words that has developed among the major domestic auto makers over which company produces the highest-quality cars.
Both Ford and Chrysler have repeatedly claimed in their advertisements that they build the best cars in the United States--omitting the fact that the quality throughout the domestic industry is still considered by many industry experts to be below Japanese standards.
Independent surveys have generally supported Ford’s claims. The Power Report, a highly respected survey of automotive customer satisfaction, found that in 1986 Ford had the lowest incidence of owners experiencing problems during the warranty period.
Problems at Delivery
At the same time, the report noted that during the same year, GM “appears to have made little progress, and perhaps even regressed, when it comes to reducing problems at delivery and during the warranty period.”
But on Thursday, GM’s Smith denied that either Ford or Chrysler have better quality than GM. “Maybe two years ago I would have agreed, but not today.”
“I see that Ford says its quality is better than Chrysler’s, and Chrysler says that its quality is better than Ford’s, and I agree with both of them,” Smith said.
Ford, which currently offers three-year warranties on most of its cars, refused to respond to GM’s announcement Thursday. Chrysler, which in its advertisements has repeatedly dared its competitors to match its five-year warranties, said it will study GM’s program and respond later. Toyota, Honda and Nissan also did not move to match GM.
Reasons for Confidence
Smith said that GM became confident that it could offer six-year warranties after its studies showed that GM’s newest models, the Chevrolet Corsica and Beretta compact models, beat the Japanese on quality.
But he did concede that the quality of most of GM’s cars is still below Japanese standards. “On the Corsica-Beretta I’d say we’re ahead of the Japanese, but I wouldn’t say that about all our cars,” Smith said. “There are some cars that will have to be re-engineered before we can say we are at the top of the industry (worldwide) in quality. But we are at a level now where we are confident that we can bring out a program like this.”
COMPARING WARRANTIES
- General Motors (new plan): Six years, 60,000 miles on engine and powertrain; six years, 100,000 miles on rustproofing.
- Ford, Mercury: 36 months on engine, transmission, outer-body rustproofing, regardless of mileage.
- Lincoln, Merkur (Ford): Five years, 50,000 miles on engine and powertrain; five years, 100,000 miles on rustproofing.
- Chrysler: Five years, 50,000 miles on engine, powertrain and rustproofing.
- Toyota: Three years, 36,000 miles on engine and powertrain; five years on rustproofing, regardless of mileage.
- Honda: 24 months, 24,000 miles on engine and powertrain; 36 months on rustproofing, regardless of mileage.
- Nissan: Three years, 36,000 miles on powertrain, engine, rustproofing.
