Mercedes-Benz has become the first German luxury car maker to introduce a five-year warranty across its entire range – a move certain to put pressure on rivals such as Audi, BMW, Volvo, Jaguar and Land Rover to increase their three-year coverage which is now well below the industry average.
To date, 14 of the Top 15 car brands have introduced five-, six- or seven-year warranties over the past three years.
However, luxury marques have been slow to adopt longer coverage despite pressure from the Australian Competition and Consumer Commission (ACCC) and numerous inquiries into how the automotive industry honours its warranty obligations under Australian Consumer Law (ACL).
The Mercedes-Benz five-year warranty has unlimited kilometre coverage on privately owned cars, SUVs, AMGs, passenger vans and utes.
A 200,000km limit is imposed on any Mercedes cars, passenger vans and SUVs used for commercial purposes (such as hire cars and ride-share vehicles). Vans have a five year/250,000km warranty.
As part of the overhaul, all Mercedes vehicles will now come with free roadside assistance for five years, whether they are used for private or business purposes.
Audi Australia told CarAdvice it has “no plans to move to a five-year warranty, but we are constantly monitoring the market”. A statement from BMW Australia said it has "no plans to change its warranty offering at this point."
A spokesman for Jaguar and Land Rover vehicles (pictured below) said “we always monitor the competitive environment but have no plans (to introduce five-year warranty) at this time”. Volvo Australia said there are "currently no plans to introduce a five-year warranty" but it is "monitoring local trading conditions".
One translation to all of the above responses by brands yet to offer a five-year warranty, according to an industry insider: "They're all waiting for the first luxury brand to break ranks, now the others will have to follow."
CarAdvice understands Mercedes-Benz Australia will pay for the increased coverage from three to five years out of its local marketing budget (as many other car companies do) because, in this instance, the factory only covers the first two years of warranty globally.
Mercedes-Benz wouldn’t speculate whether or not a longer warranty might lead to an increase in sales, however it is likely to encourage owners to stay within the dealer network for routine maintenance, especially as the company also offers prepaid servicing packages.
The longer coverage also means Mercedes customers may be more inclined to trade-in their cars when their leases are up after three to five years of ownership, while there is still some warranty remaining.
Mercedes dealers were informed of the new five-year warranty earlier this week. Although the increased coverage officially comes into effect from 1 April 2020, Mercedes has automatically backdated it to any vehicle sold or delivered since 1 March 2020.
In a media statement, Mercedes-Benz CEO and managing director, Horst von Sanden, said the five-year warranty would “enhance the customer ownership experience”.
“With a five-year manufacturer’s warranty across our entire cars and vans range, supported by our existing capped price servicing and (pre-paid) service plans, customers can have increased flexibility,” said Mr Von Sanden.
Mercedes-Benz Vans Australia-Pacific managing director Diane Tarr said the five-year warranty would provide “greater certainty for fleets, owner-drivers and private users alike”.
“We understand our commercial customers in particular are looking closely at whole-of-life costs, and that transparency in servicing and running costs is crucial. The new five-year manufacturer’s warranty further solidifies the value proposition in our compelling product line-up,” said Ms Tarr.