The main purpose, it would seem, of auto warranties is not to make sure that your car runs as well as it possibly can, for as long as it can. That might be why you’re interested in them, but it’s not why the auto companies are.
To be honest, if the car companies could find a way to make your car fall apart the second you drove it off the lot, and yet somehow keep you coming back with a smile on your face, they would probably do it. That’s not to speak ill of auto manufacturers – it’s simple business.
So, why do auto manufactures offer the sorts of warranties that they do? Because warranties are one of the items that not only bring in new customers in one form, but they make money for the company in the other.
The one form is the manufacturer’s warranty, and this is what brings in new customers. People are wary of new cars. They’ve heard horror stories from their friends and family of repairs gone wrong, and all sorts of expensive problems.
But if you have a warranty, then none of that is your problem. Any mechanical work that needs to be done will happen, and the costs will go back to the dealership.
Unless, of course, you void your warranty by not properly maintaining your car. Or unless the problem your car develops happens to be on a part that’s not covered by the standard warranty.
But for the most part, yes, any major hiccups will be taken care of, and the owners drive away happy, because they know that for two/three/five years or 20,000 to 100,000 miles, they won’t have to worry about major repair bills.
The other form of warranty is the one that allows auto makers and third market parties to make some money back – extended warranties. These are pricey extras that a buyer can tack on to the end of their manufacturer’s regular warranty, as a sort of insurance against some future problems.
The mark-ups on these warranties are fairly high, and they tend to offer much more limited coverage than the original warranties did. As such, they tend to be pushed fairly aggressively by car sales staff, some of whom may even try to disguise the extended warranty as something that is required, rather than an option.
But even if they don’t make a cent, auto warranties are doing their job simply by bringing you through the door. That promise of worry-free maintenance has always been a draw, and will continue to bring in new and repeat customers to the auto industry.
Since 2005, Gregory Nelson and his company, Motor Vehicle Services, have helped over 11,000 car owners protect their vehicle and gain financial peace of mind.