Chrysler Announces Lifetime Powertrain Warranty

Chrysler announced today that it is expanding its existing 3 year/36,000 mile basic limited warranty to a lifetime limited warranty on powertrain components on "most" new Chrysler, Jeep, and Dodge vehicles purchased from dealer inventory and delivered on or after July 26, 2007.

I applaud this move - it's likely to get the company noticed by buyers and alleviate many of the quality concerns they may have had. It also can work as an olive branch from Chrysler to its frustrated dealer body, who are still smarting from having sales bank inventory shoved down their throats over the past few years. The company also expects that the better warranty coverage could allow it to reduce its incentive spending, which is among the highest in the industry today.

The details are:

• The warranty covers all parts and labor needed to repair covered powertrain components - engine, transmission, and drive system.
• It applies only to the original owner or retail lessee.
• To continue warranty coverage, the owner must have a powertrain inspection performed by an authorized dealer once every 5 years, within 60 days of each 5 year anniversary of the warranty start date.
• Diesel vehicles and SRT vehicles are excluded from the lifetime powertrain warranty plan.

One key detail isn't clear. Chrysler's press release specifically says that the warranty applies to most new Chrysler, Jeep, and Dodge vehicles purchased from dealer inventory. So, what isn't clear is whether the improved warranty coverage also applies to units ordered, and not purchased from dealer stock.

While the move certainly shows a lot of confidence on Chrysler's part in its products, the move could backfire, because there will probably be some die-hards who kept their 2008 Sebring until 2048 and need a part, which may be nearly impossible to find or repair at that point. As long as the powertrains prove to be reliable and durable, and enough original owners sell or trade in their cars before problems arise, it should be a successful program and possibly inspire competitors to improve their coverage. If Chrysler's 2006 and newer powertrains do have problems in coming years, the company is going to be stuck with a huge bill.

Time to Build Unreliable Cars?

Logic tells you that owning a reliable vehicle that requires nothing more than routine maintenance such as tire rotations, oil changes, and filter replacements should be the equivalent of automotive utopia. Everyone wants a "bulletproof" car, right?

Well, almost everyone. There's a report in today's Automotive News that improved vehicle quality over the past several years has significantly reduced the volume of warranty repairs performed by dealerships. According to GM, their volume of warranty repairs is down 40% since 1998. Ford has seen similar drops. Part of these reductions are from improved quality, but part are from reduced sales (if you sell 40% fewer cars, you'll likely see 40% fewer warranty claims even if the quality remained constant). The oldest data I could find on sales was 1999 - for example, GM sold 2,591,420 vehicles that year, but sold 1,722,871 vehicles in 2006, which is a 33.5% reduction in new vehicle sales over the past seven years.

This reduction in warranty volume has started squeezing some domestic dealers, because fewer repairs per car is not being offset by increased sales per dealership as many import brands have seen. None of the dealers in the article have complained about the fact that cars are better than they were 10 years ago, but that's probably because they didn't want to sound bad in an interview. So I'll say it for them..."please start building crappy cars that fall apart again so that we can make money from the manufacturer for warranty repairs." I recommend an immediate resumption of Quad 4 production. Note to the dealers: keep plenty of head gaskets in stock.