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Chrysler to offer lifetime warranty

It will cover the engine, transmission and drive systems for the first owner of the vehicle.

July 27, 2007|From Reuters

DETROIT — Chrysler Group said Thursday that it would begin offering a lifetime powertrain warranty on almost all of its new vehicles to increase sales and address a longtime concern of dealers.

The warranty covers the engine, transmission and drive systems on Chrysler, Jeep and Dodge models for as long as a first-time owner drives the vehicle. It replaces the automaker's current three-year, 36,000-mile warranty.

The extended warranty, not transferable if a vehicle is sold, was being offered as of Thursday.

Chrysler and other U.S. automakers have said that improved quality has not been fully recognized by American consumers. It joins larger competitors in offering more generous warranties to raise consumer confidence.

In September, General Motors Corp announced a five-year, 100,000-mile warranty on its 2007 models and then extended the offer in February to its certified used cars.

In July 2006, Ford Motor Co. increased its powertrain warranty on new vehicles to five years or 60,000 miles.

Chrysler's North American sales chief, Steven Landry, said the company's consumer research showed that a larger share of new-car shoppers would consider buying one of its vehicles if offered the new warranty.

The extended warranty answers a call from Chrysler's dealers, who pressed for more effective ads and improved inventory management by the automaker after unsold vehicles piled up on lots last year, Landry said.

"We didn't want to just match what was out there in the market. We wanted to go beyond it," Landry said.

Chrysler's U.S. sales were down about 1% in the first half of this year as it relied on industry-leading incentives, including interest-free financing, to move an aging lineup of pickup trucks and minivans.

The new warranty comes as Cerberus Capital Management prepares to take Chrysler private in a $7.4-billion deal with DaimlerChrysler, its German parent.

Landry said the warranty could allow Chrysler to reduce some of its incentive spending, although that was not its aim.

The Chrysler move drew immediate praise from the chief executive of AutoNation, the largest U.S. auto dealership group.

"When you have good quality, but you have a problem with perception ... you have to do something very dramatic on the warranty side," AutoNation CEO Mike Jackson said. "It worked very well for GM, and I'm sure it will work well for Chrysler."

The new lifetime warranty excludes Chrysler's diesel-driven vehicles and its performance-oriented SRT line of vehicles, the company said.

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