I just came across this survey in the Detroit News and thought its results (although unscientific) were very interesting...
Q: GM will offer a five-year, 100,000 mile powertrain warranty on certified used vehicles sold by its U.S. dealers. Will this make you more likely to buy a used GM vehicle?
A: 72% said No.
What's interesting about this is the overall concept, not just this survey's individual results. So 72% are not going to be more likely to purchase a used GM vehicle, but 28% are? Manufacturer used-car certification programs are very interesting...it's a program where dealers have the option of "certifying" used cars to make them more appealing to consumers by offering a "guarantee" (extended warranty), and dealers are hoping they will generate a higher sale price.
Dealers pay GM for this "certification" - typically around $400. It's the same as buying a GM "uncertified" used car and purchasing the extended warranty option for yourself. The cost isn't much different but GM is just as much in the warranty business, as they are in the car business, so one way to get warranty penetration (sales) up, is by offering dealers to "pre-purchase" warranties (aka "certified used car").
What consumers don't realize though, is the dealer has already paid for the warranty/certification and it's factored into the price of the car (obviously, since their cost in the vehicle went up $400). GM and its dealers needs to really ask the question - would consumers buy more vehicles if we offered a longer warranty, or if we built cooler cars?
While the perception may be that the Japanese quality far surpasses the domestic automakers, this couldn't be further from the truth. A few years ago, perhaps - but now, not so much. Toyota recalled nearly 1 million vehicles in 2006. Check back for my next post on recalls for 2006.