Five-year warranties should be standard

It’s time we start asking car companies to up their written warranties . There is simply no good reason a Kia Sportage should have a seven-year warranty while a Toyota RAV4 is offered with only three.
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Is Toyota suggesting its product is not as good as a Kia? Is that the reality, in 2017?

No, Toyota has it easy, knowing it can sell the RAV4 in high numbers through its reputation for quality, durability and reliability. No surprise, then, that it doesn't offer a longer warranty and its associated financial costs.

If that’s all it is, though, and if Toyota backs its product, it shouldn't simply ask buyers to believe the product is durable and reliable long-term - it ought to offer that as a written promise it will stand behind.

Of course, Toyota is not alone in this strategy. The majority of manufacturers offer a three-year warranty and that has, for a very long time, remained the default period we expect a car to be warranted. Why?

Why has a warranty period longer than three years become a marketing tool, rather than an industry standard?

Under Australian Consumer Law (ACL), the warranty period needs to be 'reasonable'. In fact, under Section 54 of the ACL, any product has to be acceptable in appearance and finish, free from defects, safe and durable, all according to what a 'reasonable consumer' would think.

These days, a reasonable consumer would surely think their car should maintain a high standard of appearance and condition longer than three years, barring obvious mistreatment by the owner.

Look, forget cars for a minute. The popular Apple iPhone has a two-year warranty under ACL. Yes, it’s true. Apple will never tell you that, of course. It will continue to push its AppleCare extended warranty product (which does has the benefit of extended global warranty), but if you take your iPhone into an Apple store with a defect and it's less than 24 months old, they will more than likely fix it. You can even see this buried deep inside Apple’s website here.

In fact, the company even says on its own website that "Apple acknowledges that the Australian Consumer Law may provide for remedies beyond 24 months for a number of its products."

So, put yourself in the shoes of a consumer who owns a four-year-old Volkswagen, Mazda, Toyota, Holden, Subaru, Ford or, hell, even a Mercedes-Benz vehicle that has had a major mechanical issue. You take it back to the dealership and they give you this enormous bill for the fix because ‘it is out of warranty’ by 12 months.

Is that reasonable? Not even remotely.

I cannot imagine any small claims court would take the manufacturer’s side in that regard. Because, why is it reasonable for a Kia to have a seven-year warranty, or Hyundai and Renault to offer a five-year warranty, but not Mercedes-Benz or Audi?

The answer is simple. It’s not reasonable, and it’s time the consumer demands what is reasonable. Car companies need to stop treating longer warranties as a selling tool or as a closing incentive to get the deal done.

To be fair, this is exactly why Kia introduced its industry-leading warranty. Its seven-year warranty was undoubtedly introduced to give its potential buyers the peace of mind to take a bet on a South Korean car.

That, in itself, is a marketing tool - but it demonstrates that manufacturers can, and should, back their product for a longer period.

Kia's sales are up more than 30 per cent this year, and a lot of that has to do with the simple fact that when you’re cross-shopping, say a Sportage with a Mazda CX-5, knowing the warranty is four years longer with a Kia than it is with a Mazda (and it's transferrable), is a good enough reason to try some kimchi. (Actually, there is absolutely never, ever a good reason to try kimchi.)

So, if you’re buying a new car, ask the dealer to throw in an extended warranty at no extra cost to close the deal. Five years should now be the standard for car warranties, and it’s about time we start asking for it.

Nearly all manufacturers offer extended warranty products as an extra cost, but much like AppleCare, it’s a product that is already essentially offered by the power of the Australian Consumer Law to a reasonable degree.

In reality, the majority of manufacturers do tend to fix a car when it’s slightly out of warranty, especially if the vehicle has always been serviced at an authorised dealer.

What seems to be the case at the moment is that this extended reasonable warranty period is already in effect, but it only works when the consumer asks for it and it remains the grace of the dealership and car company, not as a written promise, to make it happen.

It’s time we changed that.