The Chrysler Group recently stated they would now offer 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 or 60,000 km warranty.




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

Conditions

The extended warranty, not transferable if a vehicle is sold, was being offered as of Thursday and supported by a TV and newspaper advertising campaign starting on Friday, the automaker said. Furthermore, the new “lifetime” warranty would also exclude Chrysler’s diesel-driven vehicles and its performance-oriented SRT line of vehicles.

Impact

This is a big statement brought forth by the Chrysler Group and is historical in nature. The author is hesitant whether this “lifetime” warranty program will help the company profit as the majority of their gross margins come from servicing and providing repairs for out of warranty vehicles. The true test is whether the company can put their money where their mouths are and provide sustainable long-term plan of selling improved quality and in turn reliable vehicles to the general public. In the short-term, Chrysler will boost vehicles sales instantly swaying customers from foreign manufacturers and the other big 2 domestic companies. Furthermore, it may also seem that the company is turning itself around as this marketing strategy comes as Cerberus Capital Management prepares to take Chrysler private in a $7.4 billion deal with DaimlerChrysler AG. Whether the company can shed away from its two decades of producing lackluster and scoring below-par in reliability test, remains to be seen.

Related Posts: