Chrysler Warranty Program Shows Promise

Chrysler LLC claims its new lifetime powertrain warranty has significantly increased the number of people who consider the auto maker’s products for purchase.

The program is among the reasons why, despite a devastating housing market downturn, Chrysler remain confident in the wake of August’s sales decline. According to Ward’s data, the auto maker’s sales fell 6.1% compared with year-ago.

“We’re headed for better times,” promises Darryl Jackson, vice president-U.S. sales. “From our perspective, we’re very, very confident in the rest of the year. We definitely have the greatest powertrain warranty.”

Chrysler implemented the benchmark program just over six weeks ago. It excludes commercial vehicles such as the Dodge Chassis Cab, fleet products such as those equipped for police use, plus SRT-brand and diesel-powered vehicles.

But that leaves 88% of Chrysler’s retail lineup, the auto maker says. And “lifetime means lifetime.”

Reaction has been enthusiastic.

“From a dealership perspective, virtually every single dealer we’ve talked to have said they’ve seen a double-digit increase of people considering our product,” Jackson says.

Steve Farrell concurs. He is general manager of Crystal Chrysler Jeep Dodge in Homosassa, FL.

“When they dropped the 7/70, it kind of hurt us a little bit,” Farrell says of the 7-year, 70,000-mile (113,000-km) warranty Chrysler offered until 2005.

This latest deal “just revived the life in everybody,” he adds.

“People are still going to buy the car they want to buy,” Farrell says. “I don’t think it’s going to make them go from a 6-cyl. to the Hemi (V-8). It’s not going to move them that way. But it is going to move them.”

Farrell’s customers run the gamut. First, there are the retirees who drive infrequently and keep their vehicles for 10 years.

“They might keep the car 10 years and trade it back in with 30,000 miles (48,000 km) on it,” he says.

Then there are the high-milers who could shatter a warranty’s cap in a matter of months.

Chrysler’s lifetime plan “helps both customers out,” Farrell says.

“The warranty also underscores our focus on quality and customer satisfaction,” adds Michael Keegan, vice president-volume planning and sales operations.

Jim Hossack, consultant with California-based AutoPacific Inc., suggests a lifetime warranty program could boost quality on its own.

“The fact that it’s there focuses your manufacturing and engineering on making things bulletproof,” Hossack says.

Chrysler could use some help on the quality front. In the latest J.D. Power and Associates Vehicle Dependability Study, which tracks problems per 100 (pp100) vehicles after three years of ownership, Chrysler’s score was 249 pp100 – well below the industry average of 216 and worse than its 2006 tally of 232 pp100.

Chrysler had to beef up its powertrain warranty just to respond to the competition, if only to give its marketers “something to say,” Hossack adds.

Last summer, Ford Motor Co. increased its powertrain warranty to five years or 60,000 miles (97,000 km). Two months later, General Motors Corp. announced a 7-year, 100,000-mile (161,000-km) plan.

“Lifetime is pretty impressive,” he says, noting the non-transferable plan is tailored in such a way so – barring a catastrophic failure – it won’t break the bank.

Excluding diesel-powered vehicles nullifies the risk posed by their inherent longevity, Hossack says. And excluding vehicles from Chrysler’s Street and Racing Technologies division avoids another potential liability.

“They’re purchased by people who drive them like they’re stolen,” Hossack says of the high-performance products.

The Chrysler plan “is a pretty darn good move,” he adds.

Meanwhile, light-truck sales were the auto maker’s undoing in August. While the company’s car deliveries jumped 18.1% to 41,220 vs. year-ago, truck deliveries tumbled by 12% to 126,983.

Year to date, Chrysler sales are down 2.7% compared with the first eight months of 2006.

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