Quote:
Originally Posted by KMPrenger
This article popped up on Yahoo news as well.
The 5 years not changing should not effect TOO many people, as it still equates to 12,000 miles a year, but some will be affected for sure. What I feel is kind of ridiculous, is GM states that after a survey, their customers told them that the 100,000 mile warranty wasn't a big selling point for buying a GM product, so that was part of the reason they reduced it.
But hello GM...
You are still working on rebuilding your reputation of quality (or lack thereof). This move will only hurt that image. Of course...it won't change my decision to buy another GM vehicle, and I know the quality is on the rise, but there is still the perception out there that GM = unreliable which needs to change.
How many customers are actually going over 60,000 miles over 5 years? Is it really THAT much? Seems negligible to me. I say keep it 100,000. Take the loss, and keep working on that quality reputation. At least the 100,000 mile warranty makes it seem like GM has faith in their powertrains.
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You're completely correct about how this may hurt GM's reputation as building cars with higher quality. Here's the kicker, though:
the customers don't care. I'm not happy about this, especially in an industry where customer understanding of product is on par or worse than the highly uneducated salespeople that market the products. Warranties should matter, and they should be used to explain quality and engineering in layman's terms, but auto industry salespeople are generally too dense to figure that out. When you buy a phone or computer, you generally have access to all kinds of specs and can compare them. With the auto industry, you have all the specs, but salespeople sell you on the same stuff they've been selling since 1970: air bags, crumple zones, fuel economy, and protection packages. As a result, we have these highly advanced driving machines in our garages, and anyone who isn't a car guy doesn't know how combustion works.
There's a lot more to image than this, and I'd guess it has to do more with finance and accounting than marketing as you've suggested. We've all seen posts here and on other car sites about warranty cases. Every car has them. A car breaks, and it isn't because you broke it. The problem is that a factory defect probably shouldn't have forever to be deemed their fault. Eventually, they draw a line, and today that line is 100,000 miles. If a part breaks at 62k miles at Ford, Toyota, or many of GM's other competitors, the customer deals with it. Proof that customers don't care about warranty duration comes in the form of competitor sales.
Here's the deal, GM did some math. X customers buy from GM because of the warranty. Y customers have a warranty problem. They probably break this down to Y1 (problems before 60k) and Y2 (problems after 60k). Let's say we can break down the costs of these warranty problems into Z1 and Z2 on our big, fancy spreadsheet. If Z2 is greater than X, then GM's warranty is a liability. If X is greater than Z2, then GM is still making money on this warranty.
I'm sure the math is more complicated than that, but it's not hard to see that GM has to think about profitability when making these decisions. Perceptions aren't quantifiable, so any suggestion that this hurts their image are hard to put on paper. We'll have to see if sales plummet in the long term. In the short term, I understand that a company that already experiences higher costs in the form of manufacturing and sales than its competitors would want to cut some expenses.