Auto majors churn out vehicles with improved warranty schemes – ET Auto

“Extended warranty is a good way to retain customers profitably”, says Shashank Srivastava, Executive Director at Maruti Suzuki.

As the auto industry gets increasingly affected by Covid which has a direct bearing on vehicle sales, auto majors are looking at innovative measures to attract customers. What is interesting is the fact that companies are launching cars with increased warranty schemes in a bid to woo consumers.

Companies such as Mercedes, Tata Motors and Maruti Suzuki are taking the lead in providing customised and innovative warranty schemes. These include warranties up to 8 years as well on the suspension and engine of their vehicles.

“In that sense, warranty has become a marketing tool. Extended warranty is therefore not only profitable but also a tool to retain customers in your service network . It was found that to adhere to warranty conditions while the customers used to come to authorised workshops in the warranty period he used to abandon OEM network subsequently. Extended warranty is a good way to retain customers profitably”, says Shashank Srivastava, Executive Director at Maruti Suzuki.

The New Mercedes Benz A-Class Limousine and the AMG A 35 saloon is offering the first of its kind 8 years extended warranty. Tata Motors provides warranty options ranging from 2 to 3 years, covering 75,000 to 1,00,000 for its passenger vehicle range. The Safari and Harrier have 2 years/1,00,000 km warranty and the Nexon, Altroz, Tiago and Tigor have 2 years/75,000 kms warranty.

“Extended warranty in addition to driving value to the purchase also gives complete peace of mind and a hassle-free ownership experience to a customer. This decision has been highly appreciated by the customers”, says Martin Schwenk, MD at Mercedes Benz.

“A warranty provided by a car manufacturer helps you to achieve a certain assurance of the quality of your car. Most manufacturers now give longer warranty terms to project good quality image of their products”, said Kaushik Madhavan, VP, Mobility at Frost & Sullivan.

“For most auto makers , the warranty covers all major aggregates/systems of the vehicle (excluding wear and tear parts) along with any manufacturing defects. To enhance customer loyalty, Tata Motors has a wide range of extended warranty products which can be purchased by our customers to have prolonged coverage of their vehicle”, said Dimple Mehta, Head Customer Care, Domestic & International Business, Passenger Vehicle Business Unit, Tata Motors. Tata Motors offers extended warranty on products covering an additional period of 2 to 3 years and kms coverage up to 1,50,000 kms.

Extended warranty in addition to driving value to the purchase also gives complete peace of mind and a hassle-free ownership experience to a customer.Martin Schwenk, MD at Mercedes Benz

The used car segment which is on a growth mode also offers multiple warranties . Ashutosh Pandey, CEO, First Choice says, “Here a one year warranty is most popular, and the trend we see is that the warranty penetration (number of customers opting for warranty) has shot up over the last few months. I see the adoption has suddenly increased”.

Mahindra’s auto division offers highly competitive standard warranty for its range of passenger vehicles that ranges from 100,000 kms to unlimited kms depending on the model. The Mahindra Shield extended warranty program covers power train, suspension, electricals, electronics, and aggregates for the extended number of years or kms whichever is earlier.

Madhavan adds that it is becoming increasingly difficult for manufacturers to strike a balance between quality products and rising complexity in products. As quality improves, so does the complexity and manufacturers are sometimes in a quandary on longer warranties.

However a cross section of auto dealers ET spoke to are not complaining with most of them seeing extended warranty as a clear cut tool by OEMs to perk up their falling sales numbers.


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