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What You Need to Know About Your New-Car Warranty

Updated on May 6, 2008

Have you ever wondered why so many things go wrong with a car as soon as the warranty expires? There are several contributing factors. Some are obvious--the car is getting older. Just as a favorite pair of shoes begins to fade, and the sole is a bit more slippery than it used to be, so a car with fifty-thousand miles of driving rough roads begins to show signs of wear. This mileage takes a tole on even the best of cars. But there are other factors that are not so evident.

First we have to take a look at how a car dealership's service department is set up. A dealership's warranty claims are closely scrutinized by those who are paying the bill--the manufacturer. They examine the amount of warranty claims each of their dealers is processing and compare this with other dealerships doing the same amount of service volume. The factory expects all dealers to control their warranty costs. The shop has to be careful of the amount of warranty claims they submit each month. This causes the shop to aggressively sell labor on vehicles that are not under warranty.

Car manufacturers generally feel that if the customer doesn't complain about something, then it isn't a problem. Because of this, when a vehicle under factory warranty is brought into the shop for routine maintenance, it is frowned upon for the technician to point out items in need of repair. This would, however, exclude safety items, or items that would not be covered under their warranty.

Another factor is the amount of pay the technician receives for warranty work compared to if the customer is paying the bill. Almost all automotive technicians are paid on a per job basis. The factory warranty will pay a technician about 60% of what a customer would be charged for the same labor operation on a car that is out of warranty. For example, if a car is in need of having some oil leaks repaired, and the car is still under factory warranty, the technician will be paid 10 hours of labor to perform a certain job no matter how long it takes him. If the same car is out of warranty, then the customer will be charged about 16 hours of labor for doing the same amount of work. With labor rates approximately $100 per hour, this would be a substantial amount of money in comparison to what the factory would pay for the same job. As unfortunate as this is, because the factory warranty time is so low, the only way that the mechanic can make a decent wage is by working on cars that are no longer under factory warranty. These are not questionable charges that the shop adds fraudulently. These are labor times outlined in professional times guides which distinguish a lower time for factory repairs than for cars that are no longer under warranty. So if a vehicle is almost beyond their warranty limits, it is to the technicians advantage to wait until after the warranty expires to sell the job. For this reason, once the car is out of warranty, the car is meticulously looked over to find anything that needs to be repaired. So instead of the car manufacturer paying for the repair, the customer pays.

A vehicle approaching the end of its warranty does not suddenly acquire numerous mechanical problems. The car is experiencing gradual deterioration from age and mileage that many times is overlooked by dealerships while still under warranty. Once out of warranty, the vehicle's problems are then exaggerated by on over-zealous sales staff. For this reason, it is advisable to have a good, working relationship with a quality dealership. If a customer has faithfully had maintenance work done on his car, the factory will sometimes perform work outside the vehicle's warranty. It would be recommended for any car owner whose warranty is approaching its end to have their car looked over by a facility not related to the car manufacturer. This way any problems can be brought to the dealerships attention before the warranty runs out.

Whether a car is new or old, having things repaired right away and performing regular maintenance is always important. The world of automotive repair is not perfect, but there are many fine dealerships and good independent shops with technicians who strive to perform quality work while looking for the customer's best interests. It is always recommended to ask questions and be shown what is wrong. Any shop that is honest will be happy to accomidate.


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      Lori Catz 7 years ago

      Automotive work can become very expensive if you do not have a warranty. A transmission alone cost me $2500 before I learned about auto warranties.