5 years warranty – the new gold standard

As mentioned in an earlier article, a colleague of mine just purchased a Peugeot 207 because it is very affordable and because Peugeot is offering a 5 year warranty inclusive of labor and parts which makes it very convenient (not to mention cost saving) for her. The long warranty unfortunately only covers one model in the entire Peugeot line-up. There were quite a number of buyers who’re interested in the 508 who wished Nasim/Peugeot offered a 5 year warranty program to inspire confidence to owners, especially those who have been plagued by the infamous Prince engine knocking issue.

Lo and behold, this was featured in today’s local newspaper. A full page advertisement:

Adding Peugeot to the mix, Malaysia now has 4 car makers offering 5 years warranty. Volkswagen, Kia and Peugeot offers 5 years unlimited whereas Hyundai’s 5 years is limited to 300,000km. This appears to be the new benchmark for automakers to follow. Essentially majority of these 5 year programs are 3+2 where first 3 years is warranty offered by the manufacturer while the remaining 2 is under-written by an insurance company (or, in the case of Volkswagen, it’s the other way around). Automakers can basically use their marketing budget (or any other budget for that matter) to pay for the additional insurance cost.

Also, don’t take it for granted that all 5 years warranty programs are the same. There are exclusions and each manufacturer may include or exclude certain services in their warranty. Do check with the respective manufacturer for a clearer idea.

At the end of the day, this would mean less profits for the manufacturer but more convenience for us buyers. I won’t be surprised when most brands start offering 5 years as standard, they will find ways to UP the ante … such as in the case of Volkswagen where immediate roadside repairs, hotel accommodation/car rental assistance, paid taxi cost, paid vehicle repatriation, paid passenger repatriation and so on.