Volkswagen Australia isn’t yet ready to join the growing club of car companies offering factory warranties of five years or more. It’ll stick with its three-year/unlimited kilometre policy for the time being, though hasn't ruled out expanding this offer eventually.
In short, Australia’s most popular European car brand claims buyers don’t find its current consumer guarantees insufficient — pointing to the sales growth it’s managed this year, and the fact German brands it sees as rivals, among others, offer equivalent three-year terms.
Volkswagen also points to the fact Australian Consumer Law protects people from defective purchases already (true, but not necessarily with the clarity or simplicity of a car company policy) and that the ‘good will’ policies it drums into its dealers oblige them to fix certain unreasonable vehicle issues that may occur, even after the warranty ends.
This is all in contrast to Volkswagen in the United States, which now offers a six-year/75,000 mile policy. That said, it has a few more image problems to contend with these days, over there…
Why are we writing this story? Clearly, warranties are becoming a more widely discussed industry issue, with a number of mass-market OEMs recently expanding their policies to five years. We also wrote a column demanding such moves, and stand by that position.
This week, Australia’s number two brand, Mazda, joined the club, alongside the likes of Ford, Holden, Honda, Hyundai, Jeep, Isuzu Ute, Peugeot, Citroen, and Volkswagen’s own subsidiary Skoda. Kia spanks them all with its seven-year policy, used as a highly effective marketing tool.
In fairness, Volkswagen Australia is keeping company with rivals offering three-year warranties such as market leader Toyota, other top-level OEMs Nissan and Subaru, plus the fellow Euros Mercedes-Benz, BMW and Audi that it sees as rivals here.
Still, we put it to Volkswagen Australia’s managing director Michael Bartsch (above) this week that a five-year warranty would surely make sense all things considered. Why not offer such an extended policy with every new vehicle?
“It's obviously in the thought process, everybody is thinking about it,” he said.
“We’re taking a bit of different approach at this stage. First of all, most of our clients are more motivated by affordability, lease rates, serviceability, drive-ability… [warranty] is not what people are buying our cars for.”
“And I think you have to put that into context. I think the market is pretty well informed at the moment that warranties are all pretty passé, because there's something called Australian Consumer Law, and that already gives customers a five year warranty.
“So I think whilst it looks nice on paper, nothing is for nothing, and we have it anyway without having it, so we are focusing at the moment where customers are putting their priorities when they're making purchasing decisions.”
Bartsch expanded on his view which, again, we do not share, but the company has every right to hold so long as buyers are aware of the discrepancies.
“We’re in sync with all the German brands. I think a five year warranty might be appropriate for brands in other segment positions, but at the moment where we sit, we’re putting our resources somewhere else.
“Toyota hasn't moved, Nissan hasn’t, Subaru, even if you want to talk about the premium segment, [we match] Mercedes, BMW and Audi... That doesn’t mean it won’t happen, but I think at this stage when we see what’s motivating our customers, it’s not a five-year warranty that is ultimately determining who’s buying our cars.”
Bartsch said if the other German brands went with a five-year warranty, VW would follow. He then expanded into territory where many brands, including Volkswagen itself, do not usually tread — talking about past mechanical problems.
“At the moment we have a very strong liberal goodwill policy, our dealers know what is required,” he said.
“If anybody looks at us and they'll know we stand behind the product, something we've been very focused on in the last 2.5 years. We had some challenges with the DSG [transmission], we don't refuse anybody, DSGs are fixed, pistons are fixed, any issues, we fix it.
“… We have a very firm policy with the dealers: we would rather they err on the side of ‘fix it and come talk to us’, it’s very clear what the expectations are with the Australian Consumer Law, and we are completely in tune with it. No argument,” he concluded.
We’d suggest Volkswagen Australia, nevertheless, may not want to be the last major brand here without a five-year warranty. Food for thought.