Wednesday, September 20, 2006

GM extends warranty to 100,000 miles

Thursday, September 07, 2006
GM extends warranty to 100,000 miles
Bill Vlasic / The Detroit News

DETROIT -- General Motors Corp. rolled out a 100,000-mile warranty Wednesday designed to convince skeptical consumers of the improved quality of its 2007-model cars and trucks.

The five-year extended warranty covering engines and transmissions was touted by GM Chairman Rick Wagoner as the latest evidence that the automaker's corporate turnaround is gaining traction.

"We're putting our money where our mouth is," Wagoner said at a press event outside GM's headquarters on the Detroit River.

The warranty, which covers all GM models, reflects the automaker's new emphasis on marketing the value of its vehicles rather than relying on costly incentives to pump up sales.

Wagoner cited independent surveys that rank GM's vehicles higher in quality than many of its competitors. Two GM brands -- Cadillac and Buick -- recently finished among the top five in a vehicle-dependability study conducted by J.D. Power and Associates.

"The bottom line is GM now has the best (warranty) coverage in the industry," Wagoner said. "It's something the customers want and something our employees and dealers want to offer."

Joe Serra, a large GM dealer based in Grand Blanc, said the enhanced warranty speaks volumes about the automaker's confidence in its quality.

"It's a tremendously positive step," Serra said. "GM really stepped up at the right time. Every customer we talked to wants to know what the warranty is. So it can only help."

GM's warranty on parts other than engines and transmissions will stay at 36,000 miles for most vehicles, which is the standard for many automakers. In July, Ford Motor Co. began offering a five-year, 60,000-mile warranty on powertrains for its Ford and Mercury models, and a six-year, 70,000-mile warranty on Lincoln models.

Chrysler discontinued its seven-year, 70,000-mile powertrain warranty last year after offering it for three years. It now offers a three-year, 36,000-mile powertrain warranty.

Japanese automakers Toyota, Honda and Nissan offer five-year, 60,000-mile warranty coverage on engines and transmissions.

Other automakers, notably the Korea-based Hyundai, have seen extended warranties pay off in increased sales. Expanded coverage can subtly alter a brand's image and boost showroom traffic, said one industry expert.

"GM recognizes that it needs to improve the perception of their vehicle ownership experience," said Jeremy Anwyl, president of the auto-research Web site "That will take time, but it is an important component in the company's effort to grow market share."

Stabilizing its U.S. market share is a critical component in GM's corporate turnaround effort. The company had a 24 percent share of the U.S. market through the first eight months of this year, compared to 26 percent in the same period in 2005.

Mark LaNeve, GM's North American marketing chief, said the automaker needs to promote its improved quality levels -- if only to erase previous perceptions of poor quality.

"Our quality and durability is world-class," LaNeve said. "We've taken that idea (of bad quality) off the table so customers can now evaluate our products on design and performance."

GM will promote its new warranty with an advertising blitz that kicks off tonight on the NBC broadcast of the National Football League's season opener between the Pittsburgh Steelers and Miami Dolphins.

The theme of the campaign is "Elevate," and features GM cars and trucks floating high above gridlocked traffic. The company also wrapped its Renaissance Center headquarters with a large illustration of cars hovering in the clouds as part of the campaign.

The ads promise consumers they will get a "new level of confidence" when driving a GM vehicle.

That's an important message for GM as it seeks to build confidence in its overall turnaround.

After losing $10.6 billion last year, GM accelerated its cost-cutting efforts by offering buyout or retirement packages to all of its U.S. hourly workers, and slashing costs throughout the company.

More than 34,000 manufacturing workers signed up for the so-called "accelerated attrition" program. By the end of this year, GM expects to cut an estimated $9 billion from its operating costs in North America.

"The (turnaround) story is far from complete, but it has helped build a strong sense of confidence within the GM team," Wagoner said Wednesday.

You can reach Bill Vlasic at (313) 222-2152 or

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