Chrysler Lifetime Warranty: Short-Lived Buzz?
August 27, 2007

Chrysler’s recently announced lifetime warranty is quite the buzz in the industry and on the airwaves, but the buzz may be short-lived.

Trade journal Automotive News reports that Chrysler’s lifetime warranty has been met with near universal praise by dealers, who say it is generating showroom and online traffic.

“Our whole dealership is energized by it. Our customers are shocked by it. They don't believe it. You've got to explain it to them," Ralph Mahalak Jr., a Chrysler dealer in Monroe, Michigan, told Automotive News.

Indeed, explanation is required: Lifetime means not the owner’s lifetime but the lifetime of the Chrysler vehicle if that one person owns it. And those buyers are few and far between, according to Edmunds.com.

As Edmunds.com analyst Jesse Toprak told the trade publication, Chrysler's warranty will be most important for long-term owners "who buy a new car and keep it until the wheels fall off." But, he adds, most customers keep their cars for less than five years: "I don't expect a dramatic increase in sales, but it is something that will differentiate Chrysler, at least for the moment."

In addition to second owners, what is not covered by Chrysler's lifetime powertrain warranty are navigation systems, onboard computers, power starters, power windows, electronic mirrors and Chrysler’s popular MyGIG entertainment system.

Dealers told Automotive News they have to figure out new ways to sell extended warranties, which make them as much money as they do financing contracts. The items not covered may provide an opportunity for such warranties. In addition, they said, third-party warranty providers will have to figure out ways to reprice the extended contracts.

Posted by Michelle Krebs at 7:36 AM under Chrysler , Commentary | Comments (0) | digg this | Seed Newsvine