Group bets big on its ability to build high-quality vehicles by extending its powertrain warranty to a lifetime pledge from a previous limit of three years or 36,000 miles (58,000 km).
The move vaults the auto maker to an industry-leading position.
Steven Landry, executive vice president-NAFTA sales, global marketing, service and parts, says in a statement the new, non-transferable warranty “underscores our focus on quality and customer satisfaction.”
An integrated advertising campaign for the new warranty begins today.
officials trace the genesis of the plan back to its dealers, who recently told executives in Auburn Hills the auto maker’s product quality is the best they’ve seen in years and its warranty should reflect the improvement.
“They are our bellwether; they tell us what’s going on in the market place,” a Chrysler spokeswoman tells Ward's.
Dealers greeted the new warranty with enthusiasm.
“Nothing but grins ear-to-ear around here this morning,” says Jeff Lopez, sales manager at Brighton Chrysler Dodge Jeep in Brighton, MI. “It’s an excellent decision, and it instantly reassures my customers.”
Lopez says the warranty gives his staff an added selling point against products from domestic rivals.Corp. offers a fully transferable 5-year, 100,000-mile (161,000-km) powertrain limited warranty, while Motor Co. provides fully transferable, 5-year, 60,000-mile (97,000-km) protection.
“My selling tactic is, ‘Why would we give you a lifetime warranty if we thought something might happen?’” Lopez says.
Unlike warranties fromand GM, however, Chrysler owners cannot transfer the warranty to a second owner. Chrysler officials point out that’s why it nixed its 70,000-mile (113,000-km), 7-year transferable program from two years ago. Most owners either kept their vehicles that long or traded them in, the auto maker says.
Chrysler does not provide an estimate of how long original owners keep their vehicles.
The new lifetime warranty requires owners to get a powertrain inspection every five years from a certified dealer. The inspection is free.
Although the powertrain warranty vaults Chrysler to an industry-leading position, it also pressures the auto maker to keep a sharp eye on quality. In the most recent initial quality study from J.D. Power and Associates, Chrysler products performed at or slightly below the industry average.
Eric Arnum, editor of Warranty Week, a newsletter for warranty management professionals, calls the move exciting, but dangerous.
“There’s two ways of doing it: the(Motor Co. Ltd.) way and the other way,” Arnum says, referring to the successful 10-year, 100,000-mile non-transferable powertrain warranty started by the South Korean auto maker in 1999.
“With theway, you boost your warranty and your quality. With the other way you boost your warranty, leave your quality where it is and pay a big bill down the road,” he tells Ward's.
“Hopefully, they do it the Hyundai way this time,” he says.
Arnum claims that’s why Chrysler stepped back from its 7-year, 70,000-mile pledge. He cites regulatory filings that show DaimlerChrysler AG paid out $6.9 billion in worldwide warranty claims in 2005. The payout led not only all auto makers – GM paid $4.7 billion that year and Ford covered $4 billion – but all manufacturers in general.
Chrysler does not publicly release annual warranty costs apart from its parent company.