On a Clear Day I Can Save General Motors

I see today that GM is extending warranties on 2007 cars and trucks from 36,000 miles to 100,000 miles. Assuming that the goal is to demonstrate product quality and win back buyers from Toyota, Hyundai, et al., I don’t think it will work — there are enough manufacturers pushing 100,000-mile warranties that GM doing a warranty “me too!” won’t matter.

So here is a better idea: GM should skip ahead of its competitors and take warranties out to a million miles. Assuming GM takes my million-mile warranty advice, there are two things that could happen:

  1. GM could go bankrupt, in which case the super-warranties won’t matter.
  2. GM could stay solvent, in which case it might be able to afford the super-warranties. If the super-warranties drive it into bankruptcy, see point 1).

The first point is self-explanatory, if unabashedly cynical. The second point, while somewhat circular, and more than a little tongue in cheek, still has statistics on its side. According to the U.S. Department of Transportation, the average life span of a vehicle is 12 years or 128,500 miles. While that might seemingly imply that huge numbers of car would be in warranty for their entire driving lives, my guess is that the distribution is actually skewed considerably to the left, with the median life of car
considerably lower than 128,500. In other words, increasing warranties from 100,000 miles to a million miles might have less of an effect than you’d imagine.

I could be wrong, of course, and the result might be GM’s bankruptcy. But hey, that’s the alternative anyway, isn’t it?

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Comments

  1. I’ve got a better idea — they should give people money to convince them to buy their cars. Oh wait… they’re already doing that :-)

  2. Franklin Stubbs says:

    But why would a car under permanent warranty ever be junked? At the right price (i.e. close to nothing) I’d buy a car with 250K miles, if I knew the dealership had to keep fixing it… also, those statistics might be skewed by the crappier cars of the 70s and 80s…

  3. True, unless it’s a Hyundai-style 100m warranty — drive-train, not bumper-to-bumper, every component — once you get out past 100,000 miles, etc. A true bumper-to-bumper warranty, while a guaranteed attention-getter, wouldn’t likely ever work.

  4. Rob Lanphier says:

    The 100,000 mile powertrain warranty is necessary but not sufficient. However, it’s still necessary.
    What GM could do that would make a difference is a bumper-to-bumper 100,000 mile warranty. Most of the manufacturers stop short of that. Part of the brand issue is having a fleet of cars on the road with crappy broken door handles and cupholders, even if the engine is purring along. If *everything* down to the little knob to adjust the rear-view mirror was working on all GM cars under 100k, that would change perceptions (even if the owner had to go back to the dealer to keep all of the parts working).

  5. Pete says:

    Your ideas make alot of sense. Though GM would not be GM if they listened to sound reasonings. Thanks Paul. I’m going to share this with my co-workers.

  6. Franklin Stubbs says:

    Maybe the private equity guys could try this idea when they take over Ford…

  7. Kempton says:

    I think GM is beyond repair. When interviewed by Charlie Rose, Warren Buffet said the following of GM, �
    I think it is too tough to figure.� … �The big problem was that they [GM] really entered into contracts with the UAW that were based on the economics of market dominance. And they don�t have that any more.� � … �Basically, General Motors is a hugh annuity and health insurance company with a major auto company attached.�
    I think Warren’s observation is right on. So this “me too” warranty is not going to help them big enough for their core problem. Just my 2 cents.
    Cheers,
    Kempton

  8. optimus says:

    Beyond Kempton’s point about the structural issues faced by GM, I have to squint at this warranty suggestion. Are GM vehicles really made to be million-mile cars? Durability of construction isn’t just a marketing issue, it’s a manufacturing issue. There are tons of 100, 250, 500k Volvos still on the road — I just don’t see that many Buicks of the same era.

  9. Two says:

    Eh speak for yourself. My 91 Ford mustang has 225,000k miles and still purring strong on its orginal powertrain. :)
    Now take for example my last vehicle, a 1996 Bonneville. Plastic intake manifold problems galore. Every 30k miles the damn thing have to be replaced! By 110,000 miles the transmission was shot, the engine knocking and burning oil. Yet my mustang still runs strong. This is why GM is facing the problems they are today, their quality sucks!

  10. keith says:

    is there such a thing as a better car or is it because there is too many too choose from.
    mustangs can be compared to camaros not bonneville
    (family sedans)4 doors??
    every auto maker has its lemon
    people we have to understand not all cars are 4 drags and driver abuse.
    i drove many cars but it would be difficult to say one is the best.