what is the catch with the lifetime warranty on new cars

[joekingcorvette]

It's hard to have a dealership cover warranty items under 30,000 miles much less for the life of the vehicle. It seems anytime anything major that is EXPENSIVE the dealerships try to weasel their way out of not covering their products. Especially when it comes to weird engine ticks or noises or transmissions that do not shift properly. Dealerships like to say it's normal when actually they are waiting for the vehicles to come out of warranty. The auto forums are full of complaints with vehicles within warranty and dealerships refuse to make them right.

 

[billt460]

Originally Posted by WhyMe
when i was shopping for a vehicle i bumped into a few of the dealers giving lifetime warranty with new vehicles. not just one, but quite a few speaking to them its an aftermarket warranty of course. So i am curious what the catch is. how can they give a lifetime warranty on a vehicle and make money.

There really is no "catch". But rather simple mathematics coupled with the law of averages. That's the way insurance works in regard to cost. An unlimited lifetime warranty will last until the cost of the said repair exceeds the Blue Book value of the vehicle. At that point they will cut you a check for that amount, and you're on your own.

At least that's the way Chrysler Max Care works. It's not much different than a health care plan, only for your car. There is a deductible. (I forget, but I think with Max Care it's $100.00 for each repair). Like I said, it's nothing more than health insurance for your car. Like personal health care, the insurance company knows the odds and the costs for everything. If the numbers are manageable enough, they'll write a lifetime time and mileage warranty. If not, they won't.

For example, on my 2015 Jeep Grand Cherokee, a Chrysler Max Care unlimited time and mileage warranty cost me $2,100.00 and change when I bought the car new. It would have been more later. My engine is the 5.7 HEMI V-8, which has been around a while, and has a relatively good track record repair wise. If I had purchased the Eco Diesel, (Which I would have liked to), they would not offer that warranty at any price. The odds would not have been in their favor. Diesels cost a fortune when they go down beyond the manufacturers warranty.

Back to health care. If you smoke and skydive, you'll pay more because your a bigger risk. It's what sent me packing from both BMW and Mercedes. No unlimited warranty is offered from anyone on either of those vehicles, regardless of model or engine combination. Same reason. Too high and frequent repair cost. 7 years was the max. (At least it was back in 2015 when I was shopping). For me that is nowhere near long enough.

I intend to keep my Jeep for a very long time. And I don't rack up a lot of miles. So unlimited time was very important to me. Jeep, coupled with Chrysler Max Care was the only one that offered lifetime time and mileage on a SUV that was in the ballpark of what I wanted.

Now there is "Car Shield". I don't know how long it lasts, or what it costs. But they are advertising it more than, "Flex Seal". As cars become more expensive and complicated, and people pay more for them and keep them longer, these type of long term warranties are only going to become more popular. Again, much like health care, it becomes too expensive of a risk for most people to go without it.

 

[supton]

Even if they don't charge extra for it, I suspect they won't lose much money on it. It's my belief that most new car buyers are 5 and done, if not sooner. Not only that but most people, once they hear of a big repair, get cold feet and want to move on too. Once in the dealership with the potential of having to get a new engine or trans, I'm guessing that person will immediately head out on the sales floor "just to see what is out there".

I also think there is a bit of a hook here. Give people a good incentive to come back to the dealer for regular service. They might not make good money on it, but they will make some. And then: carfax et al will have "lots" of good records on the car. Build a relationship with the customer, try to get them to come back in 5 years or so. Have them trade in a good vehicle with good resale value. Lather rinse repeat.

 

[javacontour]

As others have mentioned, most require servicing at the selling dealer and possibly on THEIR, not the carmaker's schedule. So if the carmaker says 5k OCI, the dealer may say 3k.

Another shortcoming is that once the repairs exceed the value of the car, they will no longer repair the car. So once your car has spaceship mileage and needs a new engine, transmission or some other expensive replacement that exceeds the $1.27 value of said car (as valued by them) they will no longer repair it.

 

[Aichiguy]

Our local Toyota dealer is providing a free non-transferable 200,000 warranty on all the drivetrain components covered by the factory warranty. Maintenance must follow the book but can be completed ANYWHERE. I think this is good marketing. This is a low risk proposition for the dealer as the people who are not inclined to take care of their vehicle will disqualify themselves.

 

[ARCOgraphite]

It was a selling point for my wife's Subaru Crosstrek.. I've discussed this before. I read the fine print of the contract. It DOESNT cover GRADUAL wear and loss off compression and oil usage. So it doesn't cover wear-out of valve guides and rings and pistons.

It doesn't not require the selling dealer or any dealer for that matter to do the service, but it does require the Subaru service schedule be followed. IIRC, Subaru's severe service schedule is not as universally applicable to normal driving as KIA/HYUNDAI may be.

We just a got a FREE good will 120K mile extended warranty on the CVT from Subaru of America, so the wife is good to go 120K with no big repair worries. But thats only a bit over 4 years driving total for her. Too bad she feels the car is too small for her. Its a decent car - if the paint will stay on. Which it isn't inclined to do ....

 

[Rumble]

"What kind of strings are attached to the extended warranty, cotton or nylon?" That's how I respond to people offering these things with whatever I buy these days. That usually shuts them up.

 

[anndel]

No thanks. In the end you end up paying more than if you bought an extended warranty.

 

[y_p_w]

Originally Posted by anndel
No thanks. In the end you end up paying more than if you bought an extended warranty.

Most dealerships seem to include it with a new car sales. If they're price competitive with other dealers, then why not?

 

[Garak]

Originally Posted by demarpaint
At extremely inflated prices, and even then they have terms & limitations.

Just like every similar warranty, if the price of the repair exceeds the value of the vehicle, you'll get a payout and not a repair. The only lifetime warranty I have seen offered directly from an OEM was when Chrysler was doing it on Cummins for a year or two up here.

The "lifetime" engine warranty for my G37 offered by the used dealer was, as mentioned elsewhere in this thread, me getting every oil change done at the dealer. When I bought the car it was two litres overfilled, so that lifetime warranty ended immediately.

 

[billt460]

Originally Posted by javacontour
Another shortcoming is that once the repairs exceed the value of the car, they will no longer repair the car.

They won't repair it, but you will receive the amount the car is worth at that time. How could they be any more fair? Collision insurance works the same way. They won't repair crash damage if it exceeds the value of the vehicle. Regardless of it's age. They'll total it out, and cut you a check. These unlimited time and mileage lifetime warranties run in the $2K to $3K range if purchased with the new vehicle.

So even if you keep a $45K SUV for 15 years or longer, you'll break even with a single $2,500.00 out of warranty repair. Or, if in 15 years your transmission takes a dump, and it's going to cost $4,500.00 to replace it, but the Blue Book value of the vehicle at the time is only $3,500.00, you still get back the cost of the warranty at that point. Then you can either junk it, or else kick in another $1K to get it repaired, and your back on the road.

 

[JTK]

Originally Posted by WhyMe
when i was shopping for a vehicle i bumped into a few of the dealers giving lifetime warranty with new vehicles. not just one, but quite a few speaking to them its an aftermarket warranty of course.

So i am curious what the catch is. how can they give a lifetime warranty on a vehicle and make money




Yeah, like said, there's a huge difference between a dealer offering one of these, the manufacturer or a 3rd party carrier. The dealer ones are the worst. The other two you can typically do all the servicing yourself or where ever you want. Ram used to offer "MaxCare" lifetime warranties $3-4K (yikes), but that ended towards the end of 2018.

 

[Ws6]

Usually you need to have the item you are considering repairs on to have a proper service history. If you service your vehicle as you should, this won't be an issue. A lot of people fret over the warranties provided by dealers that detail how the vehicle should be worked on only at said dealer. I personally only go to my dealer, because they are cheaper than or similarly priced to independent shops, and they do better work, unless you get into specialty shops, and then pricing is no-longer competitive. When I owned a Chrysler, I tried being a cheap [censored] and went to an independent shop that did LCA replacement on my worn out LCA's for about 1/3 the price the dealer wanted. I paid for it in having lots of suspension noises (and potentially unsafe conditions) until I crawled under the jeep and tightened the nearly hand-tight-only bolts myself several days later.

I got a 10 year/150k mi bumper-to-bumper warranty on my current vehicle, purchased through the dealer, and my dealer has done GREAT! by me in the past (they replaced my rear diff in my last car, on them, even though it was my user-error, as I unknowingly had water intrusion from crossing a stream, which killed it some months later) so I have all the faith in the world that they will properly back the warranty they sold me, as well.

 

[Rmay635703]

These warranties sometimes aren't so picky but usually they are parts OR labor not both so you get raped on the shop fees but get "free" parts

 

[DGXR]

Maybe someday when I have sufficient expendable income, I'll buy a vehicle with one of these "lifetime warranties"... I will keep up on the maintenance 100%, done at their location as required, and also I will drive the ABSOLUTE SNOT out of it. That's the only way this could possibly be worth the cost.

 

[billt460]

Originally Posted by DGXR
Maybe someday when I have sufficient expendable income, I'll buy a vehicle with one of these "lifetime warranties"... I will keep up on the maintenance 100%, done at their location as required, and also I will drive the ABSOLUTE SNOT out of it. That's the only way this could possibly be worth the cost.

I'm getting everything except the, "Driving the ABSOLUTE SNOT out of it", part. What is that going to accomplish? Are you hoping you will deliberately break or damage something in the process, so you will get your money out of the warranty in some convoluted way?

 

[TiredTrucker]

Originally Posted by SirTanon
There is a dealership near me that offers lifetime engine warranties on all cars they sell, with the catch that for the life of the car, you have to bring it to them for oil changes and all standard maintenance. Sure, you get the lifetime warranty on the engine, but you'll pay for it via the cost of the changes and maintenance.


All that is true. But it works for some folks. Like my mother in her 80's. She got a 2012 Equinox from a local Chevy dealer that has the "warranty forever" deal. Yep, vehicle needs to go into the dealership for all maintenance on their schedule, but ti works for my Mom. They do not charge exorbitant pricing for service. But she has the peace of mind that she will never pay for a motor or trans if either goes out. And the Nox 2.4L is known for several issues that are cause for major engine repairs.

The warranty forever gig is a quid pro quo deal. It is a private third party extended warranty that is paid for by the dealer, but it requires all service to be authorized by the Warranty Forever office and all the work to be done by the selling dealer, unless one is traveling away from home. So while the dealer is out on the cost of the warranty forever, they stand to make up for it several times by being the exclusive servicing shop. Not a terrible idea. I never saw it is as a good thing for me, but for others like my mom, it can be something beneficial. Especially since my Mom is notorious for keeping vehicles a long, long time. I can't recall a vehicle she didn't take over 200,000 miles before getting another. And her being in her 80's is a non issue. That gal does more than many folks in their 60's. She is a gardening fool and she will take road trips to Florida and Colorado still from Iowa. She is involved in fitness classes and many activities. The dealership is likely to have to make a major repair to her vehicle before she slows down.

 

[y_p_w]

It might be a violation of Magnuson-Moss to make continued validity of an extended warranty contingent on servicing at a specific dealer or even specifying that it needs to be an authorized dealer.

I'd think the big exception would be motor oil guarantees. But that generally makes sense.

 

[Garak]

Most of these aren't underwritten by the OEM, but offered by a specific dealer. So, I'd wonder what the law would say about that sort of thing.