Just bought a 2010 Ford Fusion and it comes with a 3 year/36k mile bumper-to-bumper warranty that covers defects. When the finance guy was pitching the extended warranty he made it a point to elaborate that the extended warranty covers part failures, while the BTB warranty only covers “part defects.” I argued with him that each part is made to last a specified amount of time and if it fails within that time period it should be classified as a defect and not a failure, right before declining the extended warranty.
So how does a dealership service department determine if a part failure is due to a plant or manufacturing-induced defect or not? Seems highly subjective and beyond their expertise to me.
I’m not sure what the finance guy was getting at with his failure pitch.
The warranty covers defects in materials in workmanship for X miles and Y months.
In general if a part fails and there is no obvious outside influence we call it warrantable and replace the part. If I turn down a warranty I get yelled at by the customer, so I need to be on firm ground when I do so. If it is iffy, I will generally go with the customer.
Some parts are considered wear items and if they wear out, well, it is a wear item. they may be covered for a short period of time, but after that, you own it. One example on my line of cars is brake pads. Covered one time for 12 months, 12K miles. Wear them out in 15K, they are on you. Wear them out in 9K the factory will buy one set. Wiper blades is another such limited coverage.
Example of defect (warrantable) vs outside influence (customer pay) Headlight burnt out, vs. headlight not working due to a rock going through it. (yup, get that all the time along with windshields)
Fog light not working due to an electrical failure, vs customer cleaned the fog light off on a parking stop. (just had this one last Thursday)
Door window with a wind leak, has the car been in an accident? If so, see your body shop. (and yes 90% of the time we can tell, the shops that can’t adjust windows properly leave lots of evidence).
Sounds to me like some BS that the salesman invented. A failure is the part breaks. A defect is one of many possible root causes for why the part breaks, others being wear, abuse, improper maintenance, etc.
I worked briefly (3 months) at a dealership. While I was there, we had an incident with an irate customer. He had bought the extended warranty with his new car, and said the salesman told him the coverage was EXACTLY like the factory warranty. Well, here his car is past the factory warranty, has a covered failure, but the service department can’t proceed until they get an approval code from the extended warranty company (a step not required for factory warranty), and it’s late in the day and their switchboard is closed. Have to wait until – I don’t recall, but much longer than the customer wanted – to do anything. This customer was LIVID. He really was a jerk about it, wouldn’t listen to the service manager trying to nicely explain, just kept insisting – shouting, actually – that the salesman told him it was EXACTLY like the factory warranty. Almost had to call the police (he finally calmed down and went on).
Point of story: Salesmen don’t care about being accurate in their wording. Salesmen will say whatever it take to make the sale. Salesmen are not to be trusted as a source of info in these matters. [Yes, I know, not true of all.]
In my opinion, this guy is trying to blow smoke up your ass.
In the opinions of experts I’ve read, these automotive extended warranties are not good deals.
My observation from the field is that the great majority of customers with extended warranties are disappointed when they try to use them because the coverage is not what the salesmen led them to believe.
I deal with these every day, and I would say their worth is directly related to the quality of the product sold. There are some very good extended warranties out there, and some very poor ones.
In my experience the warranties sold with the car maker’s name on them are quality products. The ones you hear ads for on the radio or get calls for on your phone are not.
YM (and opinion)MV
I’m assuming he was pitching a Ford-branded warranty, and not some shady aftermarket thing, right? Do mind sharing what price he was asking, for how long, and what level of coverage?
I’m going to agree with the previous comments, and add an anecdote: I bought a Nissan in 2007 brand new at a dealership here in Dirty Jersey. I’ve subsequently had a laundry list of electrical and sensor problems (the thing is a damned lemon, IMO). Taking it to the dealership where I purchased the car invariably leads to them insisting that nothing is covered by the warranty (and I’m one of those suckers who shelled out an extra $4k or so for the additional coverage). If I take the same car with the same problem to the dealership by my parents’ house (more quaint, and honest area), they cover just about anything but the darned tires.
I agree. I’ve dealt with some good warranty companies that readily approve reasonable costs, cover the repair in a way that satisfies the customer, and work well with the shop. I’ve also dealt with some not-so-good ones that have unrealistically low cost allowances, disappointing coverage restrictions (we’ll cover the cost of the failed part, but the customer has to pay for the gaskets and fluids necessary to make the repair), and awkward systems that require extra time and effort on the shop’s part – and that’s on top of seeming to do everything they can to deny coverage in the first place.
My comment was in a general sense, in that extended warranties are often deemed to be priced so high that they statistically don’t make a good bargain. Often I’ve seen a recommendation to put the money for purchasing a warranty aside as a reserve repair fund, with the note that the overwhelming majority of customers will come out ahead doing that.
Ive been in the meeting when the GM buys a lifetime warranty package from an aftermarket company, keep on mind all aftermarket companies are different and some/many dealers sell aftermarket warranties that they own, increasing their profit margin further.
They charge the dealership 150/new & 300/used for the warranty, and then the dealership charges the sales department 400-500, and then the sales department will charge you whatever they can. Contractually, they’re required to put it on every car they sell. Its a “lifetime” warranty program that pays for almost nothing, and in reality almost no one payed for it – but a few people we caught sleeping and they payed full sticker for it, instead of letting the dealership be kind enough to “eat” the 2,300 and throw the warranty in for free.
And that’s only for the 3rd party aftermarket lifetime, the other ones, that are real warranties (that actually cover stuff).
Just because you never made that kind of money on the back end, doesn’t mean no dealerships do. Keep in mind, unless you’re the GM, you never see the real numbers on F&I and sales. Even F&I managers are often kept in the dark about true cost of the goods they sell, they only know what the dealership charges them and how much they get payed for penetration, usually.
Hell, I’ve seen dealerships where the GM doesn’t even get the real numbers for the dealership. Aldo, that little stick of “touch up paint” that peels off of scratches and doesn’t protect from rust you payed 59.99 for? We payed 4.99.
Yep, I looked up what Consumer Reports had to say about extended warranties just before buying a new car a few months ago. Basically their data shows that most people pay more for the warranty than they save in repairs, except for owners of unreliable cars. Here’s what they have to say:
The thing he was pitching seemed to be like a Ford 5-year bumper-to-bumper warranty (ESP I think it was called) that covered everything except wear items. Since the car came with a 3-year BTB it only seemed like a 2 year extension, but I remember him trying to explain why it provided additional protection beyond the standard BTB warranty.
It cost around $1400, to which I politely declined since the car had good durability ratings. I did go ahead and buy the maintenance plan that covers all my scheduled maintenance costs for 5 years, which was $1295. I’m not sure it’s that great of a deal (in fact Ii’m sure it’s not) but since I took advantage of Ford’s 60-month 0%-APR financing I figured it was interest-free regardless.
It might have been a good deal with older cars that needed lots of regular service, but these days with a new car all you’ll need in 5 years are several oil changes and a some replacement air filters. But, of course, in my case the F&I guy claimed that I’d need several hundred dollars worth of maintenance every 5,000 miles, when the manual only specifies oil changes, filter checks, and general inspections every 10,000 miles. And maybe, by the way, I might want to check the belts at 100,000 miles and replace them at 150,000.
I think Ford is still on a 5,000 mile service interval. I suspect that a 5 year plan would be for 60,000 miles. If this is the case that would be 12 services. Works out to a little over $100/ service.
