Chrysler may up warranty coverage

The Chrysler Group may extend its warranty coverage on new vehicles t
better compete with 100,000-mile offers by rivals Hyundai Motor Co
and General Motors Corp

Chrysler told employees it is considering changes to its warrant
program in a recent online question-and-answer session

"With the recent increases in warranty coverage by some of ou
competitors, sales and marketing will likely re-evaluate the busines
case for our warranty coverage and act accordingly," according t
a copy of the Q&A obtained by The Detroit News

Chrysler spokesman Jason Vines confirmed the company is considerin
increasing warranty coverage. "We are doing some studies wit
customers to see if there is a level that makes sense," Vine
said

Automakers typically use warranty packages as a selling tool t
convince car and truck shoppers that their vehicles are well-made an
reliable

But stretching its existing warranty coverage from 36,000 miles o
three years to 70,000 or even 100,000 miles would be a strategi
reversal for Auburn Hills-based Chrysler, which was purchased las
month by Cerberus Capital Management

In 2002, the automaker introduced a seven-year/70,000 mile warrant
for all Chrysler, Dodge and Jeep models after
seven-year/100,000-mile limited offer helped spark sales in the wak
of the September 11 terror attacks

But the "7/70" deal ended in 2005 after internal researc
showed the package was no longer swaying consumers. It was replace
with a basic three-year, 36,000-mile warranty that covers engines
transmissions and other powertrain components

Chrysler is reconsidering as South Korean automaker Hyundai continue
to aggressively market its 10-year/100,000 mile protection and GM i
touting its five-year/100,000 mile package, launched last year

While Chrysler's earlier 7/70 offer helped dealers close sales, it di
not significantly boost sales. The company ended it so it could spen
the money to fund other programs, according to the Q&A

GM says its program has been a success. However, as more automaker
follow the move the impact could be diminished, said Jack Nerad o
Kelley Blue Book, a guide for car buyers

"With each succeeding manufacturer that does this, it wil
probably have lesser and lesser effect," Nerad said. "Ther
was a time when the general warranty was one year. And now we'r
seeing more of the norm with even longer warranties, starting wit
Hyundai" and now including Kia and GM

Longer warranties have been more of a defensive move by companies suc
as Hyundai to change consumer perceptions of their vehicle quality
The Chrysler, Jeep and Dodge brands were all rated below average i
the recently announced 2007 J.D. Power and Associates Initial Qualit
Survey

"It's a closing tool or an in-dealership tool," Nerad said
"It might help get you on the consideration set. And then i
you're considering two similar vehicles, one of which has a much mor
attractive warranty, that might sway you.

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