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GM Improves Warranty in a Bid to Woo Car Buyers

August 04, 1988|JAMES RISEN | Times Staff Writer

DETROIT — General Motors, searching for some way to win back customers, announced a comprehensive three-year warranty program Wednesday that will provide repair coverage, minus a $100 deductible, on virtually all components in most of its cars and trucks.

GM officials said it was the most comprehensive warranty coverage the auto maker has ever offered. For three years or 50,000 miles, GM will pay for repairs to virtually every part, except tires.

Oil changes and other normal maintenance items, along with accident-related repairs, won't be covered, however.

GM also said that, after the first year or 12,000 miles of coverage, the customer will have to pay a $100 deductible on the costs of each repair visit to the garage.

The auto maker said its existing six-year, 100,000-mile warranty on rustproofing will continue, along with its five-year warranty on emissions systems.

The new warranty plan is clearly an attempt by GM to turn around a troublesome public perception that the quality of its cars has declined. Like discount financing and rebates, warranties have become new weapons in the marketing wars among the auto makers.

"This is a marketing decision, pure and simple," said an official at a competing domestic company. Both Ford and Chrysler said they were studying the GM offer and were expected to announce plans of their own soon.

But in the past, warranty offers haven't seemed to had much of an effect on sales. In 1986, GM announced, with a big advertising blitz, a six-year, 60,000-mile warranty on engines and transmissions, along with a six-year, 100,000-mile warranty on corrosion protection.

Nonetheless, GM's sales and market share continued to plunge afterward, reaching a low in the fourth quarter of 1987.

One reason extended warranties don't excite buyers, one auto executive said, is that consumers are often suspicious that loopholes will surface in their warranties when it comes time for repairs. Many owners also hate to take their cars back to their dealers, which is always required under corporate warranty programs. Drivers often prefer independent garages, which are frequently cheaper than dealer service departments.

"You see in all of these programs, that after the first year of ownership, the numbers going back to the dealer just drop off the table," said the executive, who asked not to be identified.

Still, GM's new program does represent a big step, by extending coverage to virtually every component. Called "Bumper to Bumper Plus," the new GM warranty covers such items as air conditioning, steering and suspension, electronics and power options. Additionally, the warranty will transfer to a second owner free of charge.

"Every part is covered, from front to back, from road to roof," GM President Robert Stempel said.

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