Warranties get better with cars

Mitsubishi just announced its new 100,000-mile/10-year limited powertrain warranty, the third major company to do so. Back in the late 1990s, Hyundai was the first in the industry to offer such a warranty.

This was unmatched until Suzuki introduced its 100,000-mile/seven-year limited powertrain warranty last year. (By the way, Suzuki’s warranty is the best of the bunch overall. It carries no deductible expenses and is transferable to succeeding owners.)

The reason high-mileage warranties are offered is because a company’s sales are in major decline. This was the case with Hyundai some years ago and — after building a modern factory, redesigning its cars and then offering the “no brainer” warranty — sales took off. Fortunately, the company’s new cars have proved to be quite reliable and no great warranty exposure has resulted. Suzuki and Mitsubishi have joined the 100,000-mile warranty club also, hoping to stem their dismal sales and generate new business. Both companies make very good cars, so the business plan makes sense. We wish them well, but this story isn’t exactly about them, it’s about warranties.

Warranties aren’t all that old an idea. If you bought a new car in 1920, as soon as you left the dealer’s lot you were on your own. If any breakdown occurred, you had to foot the bill, as automobile warranties didn’t exist in any way other than special insurance policies. Even then, costs of such policies were prohibitive for all but the most affluent. Cars were so undependable that no one wanted to undertake the risks.

In the late 1930s automobiles were far more “modern,” but still there were no generalized factory warranties. Some dealers gave 30-day warranties and high-end brands offered factory coverage, but for most buyers it was “thanks, and good luck.”

After World War II and into the 1950s the new-car warranty started taking hold. The main reasons were improvements in mechanical design and stiff competition among manufacturers. Buyers of new 1948 cars could drive home feeling secure in the knowledge that their new machines (well, only the engines, transmissions and rear axles) were protected for a whole six months, or 3,000 miles.

By the end of the 1950s the auto industry was giving better warranties for their cars. Big Three warranties covered one year or 12,000 miles, whichever came first, demonstrating the confidence they had in their products. Interestingly, Detroit spent a lot of advertising money to tout their extended maintenance intervals (some up to 30,000 miles between lubrications and 4,000 miles between oil changes) rather than compete in the warranty arena.

Foreign cars offered warranties of varying times and mileage, with British cars giving the least (due, no doubt, to the short time it took for all the oil to leak out!) There was no such thing, naturally, as a rust-through warranty and whether or not you got any other claim solved depended largely upon your relationship with the dealer.

In 1962 Chrysler was in trouble (a situation destined to be repeated several times in its future.) Its “answer” was to extend the new-car drivetrain warranty to 50,000 miles, thus turning the industry on its heels. It took Ford and GM until 1965 to match the warranty, but the Big Three gave up on the idea in 1968 as repair costs cut into profits.

It was back to the old, reliable “12/12” system throughout the 1970s and warranty claims were handled in mysterious fashion by dealers. Customers could only hope the problems encountered with their new vehicles would be covered, but dealers could “disallow” claims for spurious reasons.

Used cars carried 30-, 60- or 90-day warranties but they were seldom understood or enforced until, in 1978, the Magnussen-Moss Act was made into law. Simply stated, the new law made manufacturers spell out which components were warranted and for how long, as well as what associated costs would be covered.

In addition, the act forbade manufacturers to disallow warranty claims when aftermarket parts were used unless the parts were incorrectly installed. When in doubt, the law sided with the consumer and forced the manufacturer to justify its actions if claims were disallowed.

The new “consumerism” movement — coupled with ever-restrictive emissions regulations, coupled with dramatic levels of foreign competition — forced the industry to build better and better vehicles. The result of those factors is what we take for granted today: three-year/36,000 mile, (or longer in the case of luxury cars) bumper-to-bumper warranties and lots of after-the-sale service.

We have a huge choice of extended warranties, not only on our vehicles but also on nearly every household appliance. They are offered because they make a lot of profit for manufacturers.

Statistically, extended warranties generally aren’t worth the money but, what the heck, if it makes you feel better, go ahead and spend the money.