The demise of Vauxhall’s 100,000-mile ‘lifetime’ new car warranty could provoke a ‘domino effect’, prompting other automakers to turn their back on promised long-term cover, an independent warranty provider said.
Warranty Direct said several OEMs provide protection beyond the traditional three-year warranty period, promising comprehensive cover for mechanical mishaps for up to 10 years in some cases.
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But it has previously questioned the quality of cover provided directly by manufacturers for cars over three years old, highlighting how protection quickly tapers off and small print loopholes render policies useless as mileage and age increase.
Warranty Direct managing director, David Gerrans, said: “In many ways, it’s a shame for car buyers, but the reality is that the cover was never actually sufficient. The small print in all these longer warranties contains a number of caveats that can greatly limit their effectiveness long before the policy elapses.
“Vauxhall’s decision is sure to make other car makers think twice – an exodus from the market is possible because, if the cover is less comprehensive than that of aftermarket providers, the customer is not the winner.”
Vauxhall has blamed its decision on the rise of PCP (personal contract purchase) and other tempting financing offers which now account for 65% of new car sales. After three years, most buyers simply choose to replace their car with a new one, rolling the finance deal over into a new three year period.
Vauxhall said earlier it had had “revisited” its lifetime warranty programme and, from January 2015, would revert to a three year/60,000 mile warranty (100,000 miles for vans) “with cost effective options for extension”.
Chairman and managing director Tim Tozer cited “the changing ownership landscape and significant investment in new technology” as key reasons for the change.
“In today’s market, 65% of retail sales are supported by a finance package and within that, over 60% are PCPs. This has dramatically changed ownership patterns resulting in fewer customers retaining their cars beyond three years. Couple this with a EUR4bn investment in high technology powertrains and state of the art new products and it no longer makes business sense to invest in 100,000 mile warranty cover.
“We will continue to focus our investment on providing our customers with a high quality and satisfying experience, both at dealer and company level, throughout their purchase and ownership period.”
Existing vehicles with lifetime warranty will continue to be covered for up to 100,000 miles while the vehicle remains with the first owner, subject to annual validation.
Vauxhall said its new three year/60,000 mile transferable warranty “is fully competitive with benchmarked competition, includes AA roadside assistance (with home start and full European cover) in the first year and is available with “cost effective” extensions options up to four and five years.
