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Genesis puts pressure on luxury rivals over warranty

Hyundai’s luxury car division has the longest warranty coverage among the prestige marques – and all Top 10 brands have consumer protection for five years or more.
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There are renewed calls for luxury car brands to increase their warranty now that Hyundai’s upmarket entrant Genesis has gone on sale locally this week with class-leading five-year coverage.

All Top 10 mainstream brands now have five-year warranty coverage – or more – but, as reported by CarAdvice in January, Audi, BMW, Mercedes-Benz and Jaguar-Land Rover are staying firm with three-year warranties.

Toyota’s luxury division Lexus and Nissan’s prestige offshoot Infiniti are also no closer to increasing their four-year warranty coverage.

Consumer advocacy group Choice said buyers of luxury cars should expect the same if not better warranty coverage than what mainstream brands offered.

“It’s odd to have a situation where cheaper cars have better warranties than expensive luxury cars,” Sarah Agar, Choice’s head of campaigns and policy, told CarAdvice in January 2019.

“Most reasonable people would expect an expensive luxury car to operate functionally and well for more than a few years. You have to ask what are the luxury brands doing? They need to step up their game and do the right thing by consumers.”

Now the Australian Competition and Consumer Commission (ACCC), the body that oversees warranty coverage on consumer goods, has weighed into the debate.

The ACCC says customers may still be able to make a warranty claim outside a luxury-car brand’s designated warranty period if it is not reasonable for a particular fault to have occurred given the age and condition of the vehicle.

A statement from the ACCC to Fairfax Media’s Executive Style website over the weekend said Australian Consumer Law “consumer guarantee provisions” apply for “unspecified but reasonable time”.

“What constitutes a ‘reasonable time’ in relation to a particular vehicle will be determined by a range of factors, including the nature and cost of that vehicle,” the statement from the ACCC said.

“The motor vehicle industry is on notice, from manufacturers to dealers, that consumers must be provided their rights under (Australian Consumer Law) in addition to any warranty rights.”

When asked if Genesis might go to a six or seven year warranty if luxury rivals shifted to five-year coverage, the global head of Genesis, Manfred Fitzgerald, in Australia this week to launch the brand locally, said: “We have set our standards where we believe we have a good proposition. We’ll see what the others do in that respect."

But as for six or seven year coverage, he added: “Not at the moment.”

Each car company holds a portion of their profit margin from the sale of each individual vehicle to go into a pool of funds to cover future warranty costs.

Increasing coverage from, say, three to five years means car companies need to hold back more funds at the time of sale – which means the selling price of the car may increase or the company needs to redirect a portion of their marketing funds to support future warranty claims.

Read the full responses from luxury brands to our questions over warranty coverage at the bottom of this story:

When will luxury cars get five-year warranty?

This reporter is on Twitter: @JoshuaDowling