Some Dealers Irked by GM Extended Warranty Offer, Many Buyers Might Not Be

Steph Willems
by Steph Willems
some dealers irked by gm extended warranty offer many buyers might not be

Usually, talk of an extended warranty is waved off as a money-making scam by thrifty buyers in the final moments of a sale. And, usually, it’s the dealer offering the coverage. The buyer sees their total amount owing skyrocket on the finance manager’s computer and quickly signs for the agreed-upon amount, thankful to have escaped the building with his or her original payment calculations intact.

Uncertainty lies years down the road, but the thrill of new vehicle ownership muscles those fears to the back of the mind as the driver motors home, fingers crossed.

General Motors wants buyers to embrace that extra peace of mind, but it wants the coverage to come from the factory, not from a dealer extended warranty or service contract. On Monday, the automaker announced an extended factory warranty for vehicles spanning its four brands, and, right on cue, complaints arose from those tasked with selling the cars.

In short, GM’s so-called “true, extended bumper-to-bumper limited warranty” lengthens the 3-year/36,000-mile term for new Chevrolet or GMC models to 5 years/60,000 miles. It’s a less mileage-intensive climb for Buick and Cadillac models — their warranty extension goes from 4 years/50,000 miles to 6 years/70,000 miles.

Availability of the extended factory coverage starts today. GM was quick to list why buyers might find its warranty preferable over a service contract, with the main perks being no deductible, and no-questions-asked service at all GM dealers. Coverage stays with the vehicle, regardless of who owns it.

What wasn’t listed was what the extended coverage would cost, with Automotive News claiming the automaker will leave it up to dealers. Buyers should expect to see their loan inflate by $1,000 to $2,000, or have their lease payments expand accordingly.

While several dealers complained to the publication that GM’s offer will step on their toes ( “I don’t think they like that dealers can make money on other extended warranties,” one said), the automaker says it’s not trying to make those offers dry up. The automaker sees it as mutually beneficial for both bodies — would-be buyers might be more likely to sign with the warranty in place, and it would encourage service visits from owners over a longer time frame.

Ken Mac, director of Chevrolet-Buick-GMC and Cadillac Protection, said the idea isn’t to take autonomy away from dealers. As a sign of good faith, Mac said GM’s only offering the warranty at the point of sale. Dealers can choose to offer it or not, or offer both their service contracts and the factory extension.

“As you get into things like aftersales and all that, it starts to look more like a vehicle service contract, which is the exact thing we are not trying to do here,” Mac said. Dealers, he added, can expect the company to “very fairly and generously” compensate them with the additional revenue.

In recent years, attractive warranty coverage has earned rival companies quite a bit of positive press. Hyundai’s new vehicle coverage is 5 years/60,000 miles, and last year Volkswagen hiked its bumper-to-bumper coverage on nearly all models to 6 years/72,000 miles.

[Image: General Motors]

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  • Don1967 Don1967 on Oct 16, 2018

    Factory-backed extended warranties are a good idea from a CSI perspective. Few things in life are as unreliable and frustrating as third-party service contracts. That said, buying any extended warranty is a sign that you're in over your head financially. If you can't afford to pay off the car during the original warranty period, and as a result you can't afford repairs when the warranty expires... then you can't afford the car. Pretty simple.

    • Snooder Snooder on Oct 18, 2018

      Not necessarily. Some people can afford the prospective repair costs, but they prefer a known budget amount to a random surprise. And others are banking on their expected repair costs for a known unreliable vehicle to be bankrolled by the saps who get the warranty on more reliable vehicles. Like the famed "DeMuro Carmax Warranty". Paying 2k for a warranty on a 3 year old LandRover or a 6 year old Aston Martin is just financially prudent given the extreme likelihood of getting iver 2k in repairs on those vehicles. Plus it's nice not to feel like you need to haggle because it's paid for no matter what.

  • Fumehood Fumehood on Oct 17, 2018

    What is the cost to the dealer? GM dealers should unite and offer this for free or at cost, and then milk GM for all of the warranty service work they do. Another selling point for sales department, customer piece of mind, more jobs for service department. The dealer should make more in the long run on the service work, and maybe a slight sales boost.

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