Why GM Extended its Warranty

By Jack R. Nerad

For seven decades General Motors has been the leading carmaker in the world, the acknowledged industry leader and bellweather.  But for the past decade the number one crown has been harder to bear, especially here in the United States, where increased competition, especially from Japanese manufacturers, has continued to dog the auto giant. Over the past five years GM's market share erosion has become increasingly obvious, while the rise of Toyota and Toyota has also been closely chronicled. 

Now, in a move that GM Marketing and Advertising Vice President Mike Jackson told us is "an expression of confidence in our products," General Motors has introduced what it calls "the best warranty of any full-line automaker."  With powertrain coverage of up to 100,000 miles or five years across its entire 2007 car and light-duty truck lineup in the United States and Canada, Jackson says the move reflects the company's success in dramatically improving the quality and durability of its vehicles.

GM's new 100,000 Mile Warranty coverage is a fully transferable five-year, 100,000-mile powertrain limited warranty with no deductible. The customer car package also includes roadside assistance and courtesy transportation programs to match the powertrain warranty term.  Altogether, GM claims it's the best coverage in the auto industry.

So why has General Motors taken this unprecedented step? In recent years manufacturers who were battling reputations for dubious vehicle quality have extended their warranties in an effort to indicate their confidence in their products and to allay the fears of potential buyers who might have heard negatives about their brands.  In the 1990s Korean automaker Hyundai brought itself back from nearly moribund status by introducing a warranty significantly longer than other manufacturers.  The ploy was a big hit, and Hyundai has since charged up the sales charts.  Hyundai's sister brand, Kia, and two Japanese brands, Isuzu and Mitsubishi, have also made significant extensions in their warranty coverage. Their moves were also well-received though they haven't had the dramatic effect that Hyundai's did.

But warranty actions from smaller brands don't have the impact that a move from the market leader does.  GM's no-deductible, fully transferable limited powertrain warranty covers more than 900 components related to the engine, transmission, transfer case and final drive assemblies on all 2007 model-year Chevrolet, Pontiac, Buick, GMC, Hummer, Saturn, Saab and Cadillac cars and light-duty trucks sold in the United States and Canada.  In short, the new coverage is now offered on a significant percentage of all vehicles sold in the United States. GM also extended the existing roadside assistance plan to 100,000 miles or five years, and now provides courtesy transportation for a covered warranty repair. The new warranty will apply retroactively to 2007 GM cars and trucks already sold.

"This is a matter of putting our money where our mouth is," Jackson said, referring to his company's assertions that GM vehicle quality has improved markedly and is now world class.  "For several years now our employees all around the world have put their emphasis on product quality, and the results are there.  Our warranty costs are down 40 percent in the last five years.  Any GM dealer will tell you that."

GM's goal is to send a message that its products are worthy of consideration.  So what should car buyers take away from the move?

"If you currently own a General Motors car, you should be proud," Jackson said, "and if you don't, you should take another look at GM products."

Driving Today Managing Editor Jack R. Nerad has reported on the auto industry for more than 25 years.

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