Chrysler's offering a lifetime warranty on the engines

Chrysler, the automaker with the most recalls in the industry last year, announced Thursday that it has started offering a lifetime warranty on the engines, transmissions and drive systems for most of the vehicles it makes -- the most aggressive guarantee to be offered by a carmaker.

"It's pretty incredible," Alan Helfman, vice president of Helfman River Oaks Chrysler Jeep in Houston, said of the announcement to dealers, which took effect immediately for Chrysler, Dodge and Jeep brands.

Chrysler has struggled with the perception that its vehicles have lower quality compared to foreign automakers such as Toyota Motor Corp.

Chrysler did poorly in the recent J.D. Power and Associates annual study of new-vehicle quality, and in 2006, Chrysler had 2.3 million vehicles called back in 27 separate recall notices, which was three times as many as in 2005. Chrysler has recalled 975,443 vehicles this year.

Michael Omotoso, senior manager of global powertrain at J.D. Power, said Chrysler has made improvements, including the four-cylinder World Engine going into the Chrysler Sebring and other vehicles and the upcoming V6 Phoenix Engine.

"It's a very big step," Omotoso said. "They have had quality issues in the past. But they've improved their quality recently."

He noted that the new warranty could be costly if the company continues to have quality problems.

"They must be confident or hoping they can take care of those quality issues in the next year or two," he said. "This seems to show confidence."

Chrysler is being acquired by private equity firm Cerberus Capital Management.

Dealers said this new move will strongly combat the perception that the quality isn't there. "It will nullify all concerns. We have the best warranty in the business now. Toyota doesn't give that. Nissan doesn't give that. Put your money where your mouth is, big boy," Helfman said.

Bill Golling of Golling Chrysler Jeep Dodge Inc. in Bloomfield Township says the new warranty will help sell vehicles.

"It does say exactly what we all believe, which is that our products are as competitive as anybody out there," he said. "I know the quality is good in them, and our customers who own them know the quality is good in them. Now we are going to make sure everybody knows how much we believe in it."

Chrysler said the lifetime warranty will cover the cost of all parts and labor needed to repair engine, transmission and drive systems on most 2006, 2007 and 2008 model-year vehicles. The warranty does not apply to diesel and SRT8 vehicles. It is limited to the first registered owner or retail lessee, the company said.

The owner must have the powertrain inspected -- for free -- by authorized Chrysler, Jeep or Dodge dealers every five years.

The warranty "is a statement of confidence to our customers to the reliability of their powertrain. It's peace-of-mind reassurance for as long as they own the vehicle," said Steven Landry, Chrysler executive vice president for North American sales.

It's not a so-called bumper-to-bumper warranty, which covers all issues with a vehicle, but still deals with vehicle parts that are expensive to customers if trouble arises.

Landry said: "The powertrain is the most important part, that's the go-to part of the vehicle that people are more concerned with versus light bulbs and stuff like that."

Chrysler's previous powertrain warranty was for three years or 36,000 miles.

Rebecca Lindland, analyst with Global Insight, said the new warranty is a good marketing campaign. "It is a great way to close a sale," she said. "It is also a very effective way to sweeten the deal without necessarily piling on the incentives."

Speaking of limiting the warranty to the original owners, Lindland added, "It does to a certain extent put a cap on it because it if you sell the vehicle it doesn't go with it."

Hyundai Motor Corp. is an example of an automaker introducing a warranty to help turn around its reputation. Introducing a 10-year, 100,000-mile warranty helped the automaker convince buyers that it was serious about quality.

Landry said Chrysler aimed to do even better.

"When we looked at the quality of our product, the quality of our powertrain and durability and reliability, we came to the decision that we don't want to match everybody. We want to go way beyond that, we want to be unprecedented, we want to show the confidence we have in the product," Landry said.3

source:www.freep.com