Vauxhall Downsizes New-Car Warranty Protection

The end of Vauxhall’s 100,000-mile (161,000-km) “lifetime” new-car warranty could provoke a domino effect, with a major U.K. insurer predicting other automakers will turn their back on long-term cover.

The General Motors subsidiary is scaling back its vehicle-warranty program effective Jan. 1, when all Vauxhall cars and vans will carry a 3-year/60,000-mile (96,600-km) warranty.

Chairman and Managing Director Tim Tozer cites the changing ownership landscape and significant investment in new technology as keys to the change from 100,000 miles.

“In today’s market, 65% of retail sales are supported by a finance package and within that, over 60% are PCPs (personal-contract purchases),” Tozer says in a statement. “This has dramatically changed ownership patterns, resulting in fewer customers retaining their cars beyond three years.”

Couple this with a €4 billion ($5 billion) investment in high-technology powertrains and state-of-the-art new products and Tozer says it no longer makes business sense to invest in 100,000-mile warranty cover.

Existing Vauxhall vehicles with lifetime warranties will continue to be covered for up to 100,000 miles while the vehicle remains with the first owner, subject to annual validation.

Vauxhall says the new 3-year/60,000-mile transferable warranty is fully competitive with benchmarked competition, includes Automobile Assn. roadside assistance in the first year and is available with cost-effective extension options up to four and five years.

Warranty Direct previously has questioned the quality of cover provided directly by automakers for cars over 3 years old, highlighting how protection quickly tapers off and small-print loopholes render policies useless as mileage and age increase.

Several OEMs provide protection beyond the traditional 3-year warranty period, promising comprehensive cover for mechanical mishaps for up to 10 years in some cases.

Warranty Direct is a leading U.K. direct-to-consumer insurer for vehicle mechanical and electrical failure.

“In many ways, it’s a shame for car buyers, but the reality is that the cover was never actually sufficient,” Managing Director David Gerrans says in a statement. The small print in all longer warranties contains a number of caveats that can greatly limit their effectiveness long before the policy elapses, he says.

“Vauxhall’s decision is sure to make other car makers think twice,” he says. “An exodus from the market is possible because, if the cover is less comprehensive than that of aftermarket providers, the customer is not the winner.”