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Chrysler to Offer 7-Year, 70,000-Mile Warranty

Autos: The company, which lost $1.9 billion last year, tries to boost sales by improving its image for reliability.

July 08, 2002|From Bloomberg News

AUBURN HILLS, Mich. — DaimlerChrysler will offer a permanent seven-year, 70,000-mile warranty as a standard feature on all Chrysler cars and trucks in an effort to improve the company's image for reliability.

The third-biggest auto maker in the U.S. had offered a 100,000-mile warranty on engines and transmissions on a temporary basis since November, Chrysler Chief Executive Dieter Zetsche said in an interview. A longer warranty shows consumers that the company expects its models to need relatively few repairs, he said.

Chrysler said the new warranties also will be transferable at no cost to subsequent owners, a bid to boost vehicle resale values.

"Our quality image is not improving at the same speed, and thereby the gap between fact and perception is widening," Zetsche said. Television, radio and print advertisements promoting the new warranty begin this week.

Chrysler is trying to make a profit after losing $1.9 billion last year. The company's U.S. sales fell 3.3% in the first half of this year, a decline Chrysler wants to end by offering a more extensive warranty than the three-year, 36,000-mile guarantee provided by larger rivals General Motors Corp. and Ford Motor Co.

Complaints about Chrysler cars and trucks dropped 26% from 1998 to 2002, outpacing a 24% improvement for the industry, said Brian Walters, director of product research at J.D. Power & Associates. Chrysler improved to eighth of 20 auto makers this year from 16th in 1998, he said.

"Chrysler engines and transmissions still tend to have more problems than the industry average," he said.

Warranty costs slid 20% in 2002 models from 2001, Zetsche said, without giving details. DaimlerChrysler will have to set aside an unspecified additional amount to pay expenses for the new warranty, he said.

DaimlerChrysler shares have climbed 13% this year. They closed Friday at $46.82 on the New York Stock Exchange.

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