Chrysler offers lifetime warranty

Firm says expanded coverage, an industry first, shows confidence in powertrains, gives consumers peace of mind.

Josee Valcourt / The Detroit News

The Chrysler Group upped the warranty ante Thursday by announcing lifetime powertrain coverage for most new models in a bid to push Chrysler, Dodge and Jeep vehicles to the top of consumers' shopping lists.

The automaker said the lifetime warranty, a first for the industry, is a statement of confidence in the reliability of its powertrains and designed to give consumers peace of mind about their vehicles.

"We came to the decision that we don't want to match everybody, we want to go way beyond that," Steven Landry, Chrysler's executive vice president of sales and marketing, service and parts for North America, said during a media conference call.

The extended warranty, available on gasoline-powered 2007 and 2008 models sold beginning Thursday, covers the cost of parts and labor to fix the engine, transmission and drive system. It is limited to the first registered owner or lessee of a vehicle and is not transferable.

The new warranty replaces Chrysler's three-year or 36,000-mile coverage. Until this week, General Motors Corp. and Hyundai Motor Co. offered the most competitive warranty packages with coverage up to 100,000 miles or 10 years. "We wanted to be unprecedented," Landry said. "We want to show the confidence that we have in our products, both at our level and our dealers' level, and provide customers with a level of comfort unprecedented in the industry."

Landry said Chrysler conducted research that supported the extended warranty. The study found that consumers who knew about the lifetime powertrain coverage were more likely to consider a Chrysler product, whether they currently own a Chrysler vehicle or not.

"It helped give us a pretty strong indication that we'd be taking it in the right direction," Landry said.

To qualify for the warranty coverage, car buyers must have a powertrain inspection every five years, which will be performed at no charge by an authorized Chrysler, Dodge or Jeep dealer.

"This is better really than anybody," said Tom Libby, senior director of industry analysis at Power Information Network, an affiliate of J.D. Power and Associates. "It gives them a message that they can use to really promote the brand and company and it's going to cut through a lot of clutter."

Industrywide, new-car buyers typically trade in their vehicles after 5.3 years of ownership, according to J.D. Power. In comparison, the average for those who buy Chrysler, Dodge and Jeep vehicles is five years. By brand, the average is 5.1 years for Chrysler cars and trucks, 4.9 years for Dodge and 5.2 years for Jeep.

The increased warranty also signals that Chrysler's pending new owner, Cerberus Capital Management LP, is "dead serious" about turning Chrysler around. "It says that they're not going to sit around," Libby said. "They're going to be competitive and motivated."

The warranty offer may help the automaker offset its costly incentive spending.

"They're hoping to not have to increase (incentive spending) even more," said Rebecca Lindland, analyst with Global Insight Inc. "It's a way to sweeten the deal without adding more incentives."

Chrysler launched a new ad campaign for the warranty Thursday with one 30-second television spot for each brand.

The decision to increase the warranty coverage stemmed from a meeting with Chrysler's dealer council in January, when retailers' major gripes were discussed. Top issues of concern were stock inventory, marketing and warranties, Landry said. The automaker has reduced inventory levels, and poured millions into advertising at the national level and to support dealers. Now, it is boosting warranties.

Landry said should a new owner decide to sell their vehicle within the first three years of ownership, Chrysler's standard three-year/36,000-mile coverage will replace the lifetime powertrain warranty for the subsequent owner.

Dealers are ecstatic about the program.

"It's a closing tool," said Ron Kutz of Dallas Dodge Chrysler Jeep. "When the customer gets up and says, 'I'm not quite sure that I want to go look at that,' the sales manager can say, 'Don't forget that we're the only car company that's so bullish about our product that we offer lifetime warranty.' "

Dealers say the new warranty package will increase consumers' confidence in Chrysler, Dodge and Jeep vehicles.

"More than anything, to a consumer the warranty means quality," said Doug Wilson, president of Wilson Dodge in Flowood, Miss. "It overcomes any quality perception problem that they might have."

You can reach Josee Valcourt at (313) 222-2300 or jmvalcourt@detnews.com.