Chrysler Bows To Dealers With Industry-First Lifetime Warranty

Chrysler's decision to roll out an industry-first lifetime warranty that starts today came as much from an effort to heal relations with dealers as from consumer market research.

"Back in January, we met with the national dealer council to discuss things that are annoying them," says Steven Landry, Chrysler Group's executive vice president-North America, sales and marketing, service and parts. Chrysler aggressively wooed dealers after a firestorm last year when the company, dealing with bloated supply, compelled dealers to accept vehicles they didn't want.

"We asked them what the biggest issues were," he says. Topping the list were dealer inventory, marketing share of voice and competitive warranties. "We fixed dealer stock, we have added significant amounts of dollars--in the millions--to both dealer ad and dealer group advertising and national advertising to improve share of voice and traffic.

"Our [three years, 36,000 miles] powertrain warranty was okay, but not as good as a seven-year warranty dealers suggested. But when we looked at our quality, we came to the decision of not [just] matching everyone but going way beyond it."



Indeed, the new Lifetime Powertrain Warranty goes way, way beyond. The warranty covers parts, labor on powertrain and engine transmission for the life of the vehicle and for the first registered owner. It covers the company's Dodge, Jeep and Chrysler brand gasoline powered vehicles (not diesel). If the original owner sells, the new owner reverts to the old three-year, 36,000 powertrain warranty.

To continue the lifetime warranty coverage, the owner must have a powertrain inspection performed by an authorized Chrysler, Jeep or Dodge dealer once every five years, free of charge.

"In short," Landry says, "it delivers total peace of mind to customers for as long as they own the vehicle."

Chrysler is touting the program with a national integrated TV, print and Internet campaign via BBDO, Detroit, that also gives the warranty its own logo, an infinity symbol bounded by four wheels. Having launched Thursday, the three TV spots--one for each brand--use "firsts" to support a heritage theme.

The Jeep ad touts the brand for bringing out the first SUV, offering the first all-wheel drive. Jeep's theme line: "Have a lifetime of fun out there." The Dodge spot, showing footage from the past, has a voiceover that says: "The first stock car that broke 200 mph, the first minivan, the first pickup truck with side curtain air bags." The Dodge ad uses the theme line, "Grab life, for a lifetime." The Lifetime Warranty spot for Chrysler brand shows vintage footage as well, with voiceover saying: "The first wind-tunnel testing; the first power steering, the first muscle car. Engineered beautifully for a lifetime."

Print launches today with full-page ads in USA Today and The Wall Street Journal, which will also run Monday, and in 60 major dailies this weekend.

Landry says that since dealer and dealer group advertising mirror national advertising in voice, logo and creative texture, dealers will be able to use national advertising assets for local markets.

He says that while lowering incentive costs was not foreseen as a salubrious result of the warranty, "there's truly value to a lifetime powertrain warranty; when you look at it, sniff it, it feels like value, it raises consideration; there may be some rationale for not spending as much on incentives. It could bring incentive spend down, we didn't plan for that, but if it does, that would be great."

Art Spinella, director of CNW Market Research, Bandon, Ore., says that while Chrysler's offering is unique, it's not likely to shake up the market the way Chrysler hopes it will because consumers don't keep their vehicles for longer than 75,000 miles, on average, and because such efforts--particularly those by Hyundai and General Motors--are intended to be symbolic of an automaker's improvements in vehicle quality. And, changing consumer perception of vehicle quality doesn't happen overnight, even with a long-term warranty.

"If the first owner tends to be a traveling salesman, putting 30,000 miles a year on the vehicle, [a lifetime warranty] may be important, but that 75,000-mile mark tends to be first owner's max," he says. "That's why General Motors' and Hyundai's 10-year, 100,000-mile warranties worked so well, because it was more than the common driver would need. But you also didn't see big sales spikes because of it; you saw slow change."

Chrysler offered the first such warranty in the 1980s, with 50,000 miles and five years. Spinella says the company suffered for it because there were vast numbers of people who actually kept their cars for that long. "And the warranty work was staggering."

It's unlikely, per Spinella, that Chrysler will have to worry about that happening with the new offering. "Even with the lifetime warranty, people will change vehicles after 75,000 miles."

Will it stand out in the maelstrom of summer incentives, sales events and promotions? "It depends on how much they want to promote," says Spinella. "It could wind up being a conversation point for three and a half minutes."

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