The Best New Car Warranty: Buyer Beware!

All automakers seem to claim to have the best new-car warranty, but while many manufacturer’s advertised warranties sound spectacular, they often seem far less impressive when you get down to the fine print. Find out which extended auto warranty company we recommend.

For example, the American automaker Chrysler has begun offering a "lifetime" warranty on the powertrain of its vehicles.  To consumers shopping for a reliable car, "lifetime" sounds like a pretty sweet deal.  However, when you read the fine print, and add up the numbers in relation to how long the average consumer will keep a car, Chrysler's "amazing" warranty ends up looking about the same as any of their competitors.

One manufacturer that has made significant gains when it comes to warranties is the Korean Hyundai, and its offshoot brand, Kia.  Back in the 1990s, Hyundai introduced the 10 year, 100,000 mile powertrain warranty.  The company continues to offer the same warranty package, and it has proved to be a substantially better deal than its competitors.

General Motors has also begun to compete in the "warranty wars."  The company's 100,000 mile powertrain warranty is exceptional in that it is completely transferable to any new owner of the vehicle.  A transferable warranty is important because it generally increases the value of the car when sold used.  And in theory, the transferable warranty should save consumers a lot of money, unless they plan on keeping the car for life.

But in practical application, things don't always work out that way.  JD Power and Associates report that the average consumer sells their car after 5 1/2 years.  This means that even with a transferable warranty, the new buyer will only have a maximum of six months of coverage.

Another problem with many of the "fabulous" warranties now being offered by manufacturers is in what they don't cover.  Modern automobile engineering has improved to the point where engine and transmission problems are rare in new vehicles.  In today's more complex cars, electrical systems are more likely to cause trouble than the large mechanical parts of the drive train.  Unfortunately, many of these electronic systems are not included under standard powertrain warranties of any length. 

Instead, electrical systems and parts are usually covered under the car's basic warranty, which is usually far less comprehensive, and can be valid for as little as three years or 36,000 miles.

Because large mechanical parts no longer break down as often as they used to, the smaller electronic or parts and systems become a greater liability with most new cars.  And because these systems are normally covered for only three years, the buyer can be left footing the bill for expensive worn-out electronics when the basic warranty expires.

For this reason, powertrain warranties are becoming less and less important, and basic warranties are becoming far more important.  Interestingly, of the major US market car manufacturers, all offer essentially the same three-year, 36,000 mile basic warranty, with the exception of Hyundai and Kia, which offer a five-year, 60,000 mile bumper to bumper warranty.

All this just proves that you should never buy a car for the warranty alone.  With very few exceptions, most manufacturers offer essentially the same deal.  So getting the best new-car warranty might not be as critical as once thought when deciding on a new vehicle.

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