• Jun 1, 2010
The Detroit News reports that warranty costs for U.S. automakers are down by 40 percent or more since 2007. Part of that decline comes from shrunken sales, but the biggest contributor to the growing trend is improved quality. Ford has seen its warranty costs drop by 40 percent since 2007, while General Motors is at 45 percent and Chrysler has seen a 48 percent decrease. Doug Betts, senior vice president in charge of quality for Chrysler, told DetNews that the Pentastar saw its warranty costs drop by $240 million in 2008 alone, and 2009 saw still more (unspecified) savings. Ford has saved an estimated $1 billion since 2007, and GM's costs have dropped from $917 million in the first quarter of 2009 to $821 million in Q1 of 2010.

Recent J.D. Powers data shows that quality has indeed improved for domestic automakers, but the biggest challenge for the Detroit 3 is to prove to customers that its products are competitive and even class-leading in terms of quality. While that may take many more years and lots more marketing dollars to accomplish, we're thinking Ford, GM and Chrysler are at least happy that the cost to build new cars and trucks will be a little bit cheaper this year.

[Source: The Detroit News | Image: Mark Ralston/AFP/Getty]


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  • 28 Comments
      • 4 Years Ago
      Somehow I doubt that the Big 3 will likewise reduce the profit margins on their extended warranty cash cows. That extra two large is an awful pill to swallow at signing, but it usually pays for itself.
        • 4 Years Ago
        If the warranty pays for itself, then you're saving money... which in turn means the automaker is losing money. So how do you rationalize calling them a "cash cow"?
      • 4 Years Ago
      Or because GM weasels their way out of warranty work... Cracked coolant reservoir? Not covered. Power steering dead? It's a month out of the warranty period. We should not be spending $2K on repairs for an '07 model year vehicle. You'll have to do better, GM.
        • 4 Years Ago
        What vehicle do/did you drive?

        My uncle had a 2005 Suburban that had three different components fail just out of warranty totaling over $2,000 in parts and labor. It seems as if they were all designed to last until the warranty expired.

        No goodwill repair on GMs end either, only 6,000 miles past factory warranty.
      Really
      • 4 Years Ago
      Hard to believe.....I own an 06 H3. Engine light came on, brought it to the Hummer dealer. That told me #3 cylinder not working....nothing I have done. Bought it new..... My mistake fior buying a GM product... Back to Ford!
        • 4 Years Ago
        @Really
        It was probably the issue with the cylinder head valve seats wearing irregularly that the Canyon and Colorado commonly had. If so GM extended the warranty on those engines for 5 years/100k miles so it should be covered.
      • 4 Years Ago
      If there is one lesson detroit makers have taught North American buyers, is that just as fast as "quality" increases, which they've been saying for decades, it can just as easily drop. All three of them have had their shining moments in the past, only to introduce a new model that is going to set a new standard (Cavalier > Cobalt, Escort > Focus, Lumina > Malibu, Stratus > Avenger, the list goes on and on) and the game begins yet again. Any company that has been identified as having changed their ways, add ten years from that date and count how many of that companies cars pass by you while you're eating lunch on a busy downtown street.
        • 4 Years Ago
        Not sure what your point is. Quality has gotten demonstrably better from all manufacturers over the last 10 years. Some of them have improved faster than others, but all you have to look at is the fact that the median age of cars on the road is continually increasing to know that cars are lasting longer.
      • 4 Years Ago
      Congrats to Chrysler, they had the most improvement (and they haven't had much to cheer about lately).

      VP for quality Doug Betts has worked for Toyota (years ago when their quality was stellar) and Nissan before coming to work for Sergio. I think he knows what he's doing.
      • 4 Years Ago
      "improved quality" now why did'nt they think of that 35 years ago. not that anyone did not suggest it to them.
      • 4 Years Ago
      There may be another reason carmaker warranty costs are falling. Consumer sites are reporting it's getting more difficult to get warranty repairs, particularly if the car is not dealer serviced. Owners are being encouraged to sue. Many files are settled in the owner's favor a day or so before the case is due to be heard.
      • 4 Years Ago
      This is especially impressive when you consider that their warranties have been getting better and better.
      • 4 Years Ago
      Better components and quality assembly.. are my hoped.
      • 4 Years Ago
      To me .. from back in my Honda days, it is another misleading indicator.

      Honda and Chrysler now .. try to claim anything under warranty unless it is the first couple years. EVERYTHING is wear and tear or "normal" -- or more recently "unable to determine cause at this time" -- two months after the warranty expires the cause will become apparently and costly no doubt.

      I like Chrysler because whenever I had and squeak or rattle they always would just replace things on it .. no questions asked. My last car, right before the warranty expired I gave them a list of 5 or 6 things -- really just wanting the notation on file to negotiate a lower repair cost down the road -- they just replaced everything on my list. For example the wiper would squeak sometimes .. new wiper motor and oil and grease it all. New alternator, water pump .. things like that.

      Now I have taken my car in 3 times as the wheel has been clicking ever since they "serviced" the brakes .. and they keep saying that can`t hear anything (which is ironic as the stereo was cranked with loud tunes when I got the car back). And to teach me to not keep bring it back they charge $30 inspection charge each time.

      I will choose a company ... if any exist .. that actually lives up in spirit to what a warranty means.
      • 4 Years Ago
      Cool, better products = less warranty claims. Psst.. VW... you listening?
        • 4 Years Ago
        Cool products have nothing to do with warranty, but better design and production certainly do.
      • 4 Years Ago
      Shouldnt they also factor in the fact that their warranty's given on their cars have been scaled back in terms of years/mileage. If I remember correctly 07 was when some of these companies started to shift form 5 years to 3 years worth of coverage, this in turn would also allow their warranty claims to stop and lower right about now.
        • 4 Years Ago
        They should factor the sales, because that's what drives warranty costs.

        If cars sales dropped roughly 50%, and warranty costs dropped by more than 50%, they did good.

        OTOH, if warranty costs dropped, but car sales dropped faster, then they're failing.
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