Extended warranties go viral

Consumers the winners as luxury brands extend new car warranties in face of Coronavirus-led sales collapse.

There aren’t many silver linings to be found in the coronavirus (COVID-19) headlines each day, but one small ray of sunshine is the pandemic appears to have prompted some car makers to extend new car warranties. 

Like much of the economy, new car sales have been heavily disrupted by the unfolding public health crisis caused by the coronavirus.

New vehicle sales for the month of March were down nearly 18% compared with the same month last year, marking the 24th consecutive month of negative growth for the car industry in Australia. 

Many brands have been reaching into the marketing kitbag to try to find ways to maintain sales momentum, with extended warranties seen as a valuable sales tool to convince consumers to choose one brand over another. 

Brands like Mitsubishi and Kia have led the way in the mainstream passenger car market over the past few years, pushing the standard warranty out from the long-established standard of three years and 100,000km, to the now increasingly common five-years, unlimited kilometres. 

Among mainstream brands, Korean car maker Kia, and Chinese marque MG currently have Australia’s best new car warranty, both offering an impressive seven-year, unlimited kilometre offering across their model range. 

But until now many luxury-car brands have been reluctant to weigh into the warranty wars. 

Well-known marques like Audi, BMW and Mercedes-Benz have stuck stoically to the old three-year marker, albeit with unlimited kilometres. 

Exceptions include Lexus, Rolls Royce and Infiniti, who each offer four-year warranties, and electric car specialist Tesla, which offers Australia’s longest warranty with an eight-year, 240,000km assurance. 

Speaking at the launch of the BMW 8-Series last May, BMW Australia chief executive Vikram Pawah told wwww.carsales.com that luxury buyers were not interested in the “marketing benefit” of extended factory warranties but were more interested in a vehicle’s durability. 

That view might be set to change, however, with two of the Bavarian car maker’s fiercest rivals, Mercedes-Benz and Jaguar-Land Rover, breaking ranks in recent weeks to offer extended warranties on their new vehicles.     

German luxury brand Mercedes-Benz has thrown down the gauntlet to its rivals, announcing all new cars, vans and utes sold to Australian customers from 1 April, will be covered by a new five-year, unlimited kilometre manufacturer’s warranty. 

"We appreciate that many of our customers may have limited access to vehicle servicing during these extraordinary times." - Jun Heo

The new warranty replaces the brand’s previous three-year warranty structure and covers the entire passenger car range, including Mercedes-AMG models, provided the vehicle is solely for private purposes. 

Mercedes-Benz passenger cars used for commercial applications, such as a taxi or ride-share vehicle, will be covered by a five-year, 200,000km warranty. 

Complimentary roadside assist will also be extended to five years for the brand’s cars, vans and utes, whether the vehicle is used for private or commercial purposes. 

Mercedes-Benz CEO and Managing Director Horst von Sanden said introducing a standard five-year manufacturer’s warranty reinforced the company’s enduring commitment to enhancing the customer ownership experience.

“With a five-year manufacturer’s warranty across our entire cars and vans range, supported by our existing capped price servicing and service plan portfolio, customers can have increased flexibility and certainty throughout their journey with Mercedes-Benz,” he said.

On the same day (6 April), British brand Jaguar-Land Rover also announced a five-year, unlimited kilometre warranty on all its new and demonstrator models, with the rider that it’s a limited offer available only on vehicles sold between the start of April and the end of June this year. 

Korean brand Hyundai, meanwhile, has introduced a limited warranty extension policy for its vehicles worldwide. 

A statement from the car maker said the program was designed to support customers who may face difficulties in getting vehicle repairs due to restricted access to service centres during the COVID-19 pandemic. 

Dubbed Hyundai CARE, the policy provides extended warranty coverage for Hyundai vehicles with warranties that expire between 1 March and 30 May 2020. 

The warranty extension to 31 May 2020 covers more than 1.21 million passenger vehicles worldwide, and some 27,000 in Australia, but does not cover commercial vehicles like the iLoad. 

“We appreciate that many of our customers may have limited access to vehicle servicing during these extraordinary times,” said Jun Heo, Chief Executive Officer of Hyundai Australia. 

“With Hyundai CARE, we wish to set their minds at ease regarding eligibility for warranty repairs and related services in coming months. 

“Not only do we care about our customers’ health and safety, we aim to remove the added stress where customers are unable to have repairs completed before their warranty expires.”