Why Is Honda's Warranty So Noncompetitive?

[mithrandir2001]

Why is it that the automaker who is probably more synonymous with reliability than any other has the worst standard warranty in the industry? 3 years, 36000 miles, no roadside assistance. Nissan, Mazda and Toyota have moved to 4/50 at least and even VW now has 4 years instead of the old, crummy 2. GM/Ford/Chysler have stepped away from the old 3/36 standard and now offer roadside assistance. I don't even have to mention the Koreans.

Why is that? Why won't Honda boost their warranty? It's not that I expect to need it - Hondas are Hondas - but buying an extended warranty costs money and I'd rather Honda get with the program.

 

[dave5317]

Maybe it's bcoz they have great quality in vehicles and high in resale value......

 

[notfred]

Why would you need a warranty on a car that never breaks?

 

[Maverick]

if they can still sell cars without having to spend money on warranties, why would they?

 

[Migroo]

Exactly.

If you dont threash a Honda, it wont break easily.

I dont think they need to increase the warranty to sell mare cars, and after all you pay for it all anyway in the cost of the vehicle.

 

[MichaelD]

Good post, Mithrandir2001; I've often wondered about that myself. I have owned three Hondas. One very used (86 CRX), one slightly used (93 Civic SI) and one brand new (98 Accord LX Sedan).

After the first two positive experiences, I had no trouble at all making up my mind to buy a brand-new Honda. When I found out that the warranty was only 3/36K, I was a little concerned. I knew that none of my Hondas had ever given me trouble, but I'm buying a brand-new one, and an expensive (for me, at the time) one.

Also concerning me was the fact that I put about 18-20K miles per year on my vehicles. I do a lot of driving. I bought the Accord and it gave me not a bit of trouble in the 3.75 years and 67K that I put on it.

That warranty thing always concerned me, though.

Now I have an Isuzu Trooper. Came w/a 5/60K bumper to bumper and a 10/120K powertrain. I bought the extended warranty for $1,200 and am covered bumper to bumper w/only a $50 deductible for 10/120K. No worries!

 

[vash]

My Acura warranty is 4 years, 50k miles.

vash

 

[mithrandir2001]

Indeed, if Honda doesn't have problems moving product - and I know they don't - then they might not have the urgency to make their products more enticing by extending the standard warranty. But they will have to change eventually and I'm wondering when that day will come.

I investigated extended warranties through HondaCare, but they are really expensive. Going to 6/75 is about $1100 and I don't think that's a bumper-to-bumper/$0 deductible plan like the standard 3/36 is.

 

[hoihtah]

back in 97 i bought my Integra with 36k warranty.
in less than 12 moth, i ran out my warranty.
i put a lil' over 36k that year.

well... they could've given me 100k and that would've lasted for about 3 years.
needless to say... i drive much.

but i have to say, i haven't had any problems with it... well, at least non that i didn't cause.

honda cars are solid... i must say.

 

[SuperTool]

Because it's a Honduh, and because people are buying their stuff.
They don't feel much pressure to improve their products or services. That is why you get much more with almost any other automaker for your hard earned money.

 

[dullard]

<< Going to 6/75 is about $1100 and I don't think that's a bumper-to-bumper/$0 deductible plan like the standard 3/36 is. >>



That is the answer to your question mithrandir2001! If every Honda had 6/75, it would add $1100 to the base price of all Hondas. With other car companies, you are spending roughly $1100 for the warranty (it is built into the base price). With Honda, you have a choice. Choice is always a good thing. If you don't want the extra warranty, you don't have to spend the extra money. If you do want it, you can get it.

Honda cars are always ranked at or near the top of every reliability ranking I've ever seen. That is one major reason why I just bought a 2002 Honda Civic. Thus I chose not to take it (plus that meant I could barely afford to pay cash for the car).

Honda has one major problem. Their cars are about $1000-$2000 more than equivalent cars from other manufacturers. For example, the Toyota Corolla is virtually identical to the Honda Civic (interior looks, exterior looks, reliability, gas mileage, interior space, engine performance, and safety). Thus Honda cannot afford to add another $1100 to the base price, as everyone would get the Corolla instead. Note: for this reason I really wanted the Corolla (but the wife won the coin toss, she wanted the 1 inch extra leg room in the back seat, oh well).

 

[mithrandir2001]

<< That is the answer to your question mithrandir2001! If every Honda had 6/75, it would add $1100 to the base price of all Hondas. With other car companies, you are spending roughly $1100 for the warranty (it is built into the base price). With Honda, you have a choice. Choice is always a good thing. If you don't want the extra warranty, you don't have to spend the extra money. If you do want it, you can get it. >>


Yes, but no. I wouldn't expect them to move to 6/75...I'm thinking 4/50. If they made 4/50 standard for every car, their costs wouldn't rise by a major amount because of economies of scale (no new adminstration for the warranty program, for instance...just a continuation of the current program). They would end up charging more, sure, but only by about $200-$300 on average...and this is packaged into the financing so your added cost per month may only be $5-$10. The trouble is that a consumer cannot really get a warranty for the 36000-50000 mile range. The ones I have seen are priced about $600, which is ridiculous, but reflects the fixed costs in any extended warranty program. By giving the consumer a "choice" between a short standard or long extended warranty, they've made getting the extended warranty more expense because those fixed costs are spread across fewer participants.



<< That is why you get much more with almost any other automaker for your hard earned money. >>


That statement goes contrary to Intellichoice's TCO ratings. Of course you were being antagonistic.

 

[dullard]

I disagree with your fixed costs arguement. Honda's fixed costs are (1) buildings/land used to repair the Honda cars, (2) basic maintainence of those buildings, (3) utilities at those buildings, and (4) technicians and managers to run those repair shops. Since ALL new Hondas have a warranty, the fixed costs are already spread amongst all new cars.

Honda's variable costs are (1) extra parts for the extra repairs and (2) extra workers - if needed - for the extra repairs.

Extending the warranties will add only variable costs. This can easily be added directly to those cars with the extended warranty only. Your arguement would make sense if Honda would require new buildings to keep up with the added repairs. However, I highly doubt that.

There may be a very slight economy of scale when adding extra repairs. But without any data, it could be just as easily assumed that Honda is past the point where Honda can realize any economies of scale...

Honda charges $1100 since Honda thinks it will cost roughly $1100 for those repairs. Maybe they padded a little profit into that $1100, but Honda will have to raise the car prices if it loses that little bit of profit...

 

[Nitemare]

Personally, I think they are chicken$hit for not having one. It's true you can say they are built to last and don't need them(I own one), but then again ... why not have it for the piece of mind factor to garner and keep new car owners?

 

[Train]

funny thing with warranties, it seems like nothing ever breaks while your covered, then as soon as your coverage expires, something expensive goes bad.

 

[SuperCyrix]

Because no car gets modified more than Hondas. People buy a honda, modify the crap out of it, race the crap out of it, and when something goes wrong, they restore the original parts and goto the dealer with the warranty.

I'm seriously considering a Korean car for my next purchase. They have the best warranty, price, and they seem to be doing better and better on crash tests.

 

[Ryan]

not that bad of a price for a warranty upgrade

 

[CraigRT]

I got Chrysler's 5 year 100,000 KM warranty, now they offer 7 year at 100K miles which is probably like 150K KM's... that's pretty impressive.. the only other good warranty that i know of is Hyundai with their 10 year thing.. whoa! yeah i wonder why their warranties are so bad... hm..

 

[dullard]

<< the only other good warranty that i know of is Hyundai with their 10 year thing >>



You really have to be careful with warranties. Sure I see Hyundai adds everyday metioning a 10 year warranty. Now, lets look what this 10 year warranty gets you (from www.hyundaiusa.com):

Repair or replacement of "selected" powertrain components, originally manufactured or installed by Hyundai that are defective in material or factory workmanship, under normal use and maintenance: 10 years/ 100,000 miles
Emmisions: varies may be 8 year/ 80,000 miles or 7 year/ 70,000 miles or 5 year/ 60, 000 miles
Roadside assistance: 5 year/ unlimited miles
Rust hole through the body panel from inside to outside: 5 years/ 100,000 miles
Radio And Sound Systems (i.e. radio, cassette tape drive mechanism, and compact disc player): 3 years / 36,000 miles
Paint: 3 years/ 36,000 miles
Battery: 3 years / unlimited miles (100% covered 2 years / unlimited miles; after 2 years and within 3 years, 25% cost of battery and 100% labor cost covered)
Air Conditioner Refrigerant Charge: 1 year / unlimited miles
Adjustments: 1 year / 12,000 miles
Wear Items; 1 year / 12,000 miles ( e.g. belts, brake pads & linings, clutch linings, filters, wiper blades, bulbs, fuses)

Wow, the only 10 year part of their 10 year warranty is on their "selected" parts. Everything else looks like it is 5 years or less.

 

[Mikelh]

My wife's 2001 Honda Accord has a 7 year, 70,000 mile warranty and it didn't cost her a cent. The only requirement is to have the service/maintenance done at the Honda Dealership. Oil changes, check-ups, etc. Besides, I don't trust many others with my Honda's anyway. I own three and they are super cars.

One thing to keep in mind: Most manufacturers have had a lemon or two, and have hardly produced a high quality product like Honda or Toyota. Therefore, they need to offer something to at least keep some of the market share.

At a Ford Dealer's convention, one dealer told the Ford Motor Company that Ford needs to produce a Toyota quality vehicle. Enough said?

Michael

 

[Pacfanweb]

<<I disagree with your fixed costs arguement. Honda's fixed costs are (1) buildings/land used to repair the Honda cars, (2) basic maintainence of those buildings, (3) utilities at those buildings, and (4) technicians and managers to run those repair shops. Since ALL new Hondas have a warranty, the fixed costs are already spread amongst all new cars.>>


Wrong. Most dealerships are franchises, so the buildings, equipment, technicians, etc. don't cost Honda a thing. Honda has to reimburse the dealer for warranty repairs, but they don't share in the overhead.

As far as extending their warranty........why? They already build pretty much the best car on the road, and people buy them like crazy. The other manufacturers that are giving longer warranties either need to, because their product sucks (Chrysler), or want to sell more (Toyota) to catch up with Honda.
When Honda thinks it will make a difference, they'll extend the warranty.

If anyone needs to extend the warranty, it's Ford. Talk about poor quality.

 

[CraigRT]

<< Ford needs to produce a Toyota quality vehicle >>



My dad works at a Ford dealer (hates ford - drives a Nissan) he says the quality of Toyotas is nothing compared to the Nissan.. and i agree.. I've been in Camry's and Corolla's and they're not as nice as a Nissan.. Quality wise. The reason he is able to talk like that about Toyota's is because their dealership is affiliated with a local Toyota dealer and all the Toyota body work gets sent to this Ford dealer.. most of the cars he sees are Toyota and Ford.

 

[CraigRT]

<< he other manufacturers that are giving longer warranties either need to, because their product sucks (Chrysler) >>



ok I have to reply to this.. my only and last 2 cars have been Chryslers.. I could not be happier.. they both have been good cars, the last one went 255,000 kms and the engine was running mint.. no oil burning, no power loss, full compression.. very reliable car.. had to sell because it was getting rusty, it was an 88. now my new car is a 2001, but already has 29,000 kms and it has been perfectly fine so far too. I expect this car to be good up until i get rid of it as well. The dealership is very nice, and the people are nice, service is amazing, and their warranty is very good.. Chrysler is going a good job, and they make nice cars.. I will always believe that Nissan makes a better car than Honda too.. just thought i'd add that in.. This is a Nissan/Chrysler household and for good reasons thus far. Experiences are positive!

 

[Pacfanweb]

<<ok I have to reply to this.. my only and last 2 cars have been Chryslers.. I could not be happier.. they both have been good cars, the last one went 255,000 kms and the engine was running mint.. no oil burning, no power loss, full compression.. very reliable car>>

Good for you, but you are unfortunately the exception, not the rule. About the only cars built in the last 10 years that you ever see burning oil out the pipe are Chryslers. Their transmissions aren't very good either.
Ford is right behind them though. I'd bet Ford has twice as many recalls/owner notifications as any other manufacturer.
They have so many that they've now changed the name from "recall" to "field service action".

 

[randomlinh]

ugh.. nissan has left a bad taste in this families experiences.. the dealerships sure didn't help either :|