A Question I've Been Pondering

[CSpec]

I've been thinking about this question for a little bit, and I haven't come to an obvious answer. The question is this: Why are warranties not an optional extra?

Especially on cheap cars. I don't actually know how much a warranty costs, but it must be at least a few hundred dollars on today's reliable autos. A warranty is surely a much higher percentage of the cost of an economy car than a luxo barge, so why is it that very price-conscious consumers have not demanded this? And why have no bargain brands offered it? A warranty is merely an insurance policy on breakdowns; you can always buy one that goes beyond the one provided by the manufacturer. The only possible conclusions I've come up with that all manufacturers feel that consumers are just stupid (unlikely) or there is some sort of regulatory issue and government impediment to "protect" consumers (more likely). Do any of you have any other theories, or an actual answer?

[Intrepidation]

Because to the consumer's mind, warranty = peace of mind. It's why they buy chap new cars instead of nicer used cars for the same price. Not offering a standard warranty is a PR disaster IMO.

[Satty]

I wouldn't spend $50 on a toaster that didn't have some kind of manufacturer's warranty, it would be retarded to spend thousands of dollars on something with literally thousands of moving parts supplied by hundreds of companies with varying degrees of quality control.

[CSpec]

I don't think those are very satisfying answers. You are perfectly free to buy the warranty if you would like; if your guys' theory were correct, the 3-year warranties at Best Buy would also be standard. It's odd that they don't let consumers pick their level of warranty coverage with cars like they do in every other industry I can think of. Chevy uses the 5-year warranty as a selling point for example, but you can always buy an extended warranty from a make with lesser coverage if you want. I'm just surprised that buyers, especially poor buyers, haven't demanded the warranty to be optional.

[Drew Dowdell]

I've been thinking about this question for a little bit, and I haven't come to an obvious answer. The question is this: Why are warranties not an optional extra?

Especially on cheap cars. I don't actually know how much a warranty costs, but it must be at least a few hundred dollars on today's reliable autos. A warranty is surely a much higher percentage of the cost of an economy car than a luxo barge, so why is it that very price-conscious consumers have not demanded this? And why have no bargain brands offered it? A warranty is merely an insurance policy on breakdowns; you can always buy one that goes beyond the one provided by the manufacturer. The only possible conclusions I've come up with that all manufacturers feel that consumers are just stupid (unlikely) or there is some sort of regulatory issue and government impediment to "protect" consumers (more likely). Do any of you have any other theories, or an actual answer?

It's called the used market. If you're price conscious enough to forgo a warranty, you're price conscious enough to not get a new car.

[Drew Dowdell]

A warranty adds value without adding much cost when averaged over the entire line. Also, it gives the incentive to the manufacturer to make reliable vehicles.

[Satty]

Wow, you must be out of touch with reality. Did you not see what happened after Hyundai (selling $9,000 hatchbacks) added their 10-year warranty? Sales shot up, so your "poor buyers" theory is debunked by the fact that "poor buyers" flocked to the brand with the best warranty. Making the warranty optional wouldn't effect the monthly payment more than a couple of bucks, so there is no reason for "poor buyers" to demand it be option. This is probably the stupidest thread C&G has seen in a long time.

[Camino LS6]

Look at it this way Cspec, assume a company did as you suggest.

Even if it drew a bunch of buyers in, when they started having to pay for expensive repairs on a car they were still making payments on, they would blame the manufacturer. You'd lose not only those customers, but all of the potential buyers they would badmouth to about your product. Long gone would be the good feeling of saving a few bucks at purchase.

It would be a total disaster.

[Drew Dowdell]

The only possible conclusions I've come up with that all manufacturers feel that consumers are just stupid (unlikely) or there is some sort of regulatory issue and government impediment to "protect" consumers (more likely). Do any of you have any other theories, or an actual answer?

The government does require longer warranties on emissions equipment about that's about it.

I think the real reason is that it adds value without adding much cost and that it improves customer goodwill

[Croc]

Wow, CSpec...I know you're a huge SAAB fan, but you clearly haven't bought any SAABs or else you wouldn't make such an asinine thread. No manufacturing process is perfect, and as reliable as modern cars are, that warranty exists so everyone can reach a satisfactory conclusion when the unusual defective product is produced.

[pow]

Going by your insurance analogy, the more people with a warranty, the better... as you get to pool costs together, making it inexpensive for more people.