Yesterday we had the leader story, today comes the confirmation: Saab have definitely cut their 5-year/100,000 powertrain warranty and folded it in with the 4 year bumper-to-bumper warranty. This is from Automotive News:
DETROIT (Reuters) – To reduce costs, General Motors has cut its warranty terms on Saabs sold in the United States, but will continue to provide free scheduled maintenance to compete with other premium brands, a spokeswoman said on Monday.
GM told dealers on Friday it would cut its Saab warranty effective immediately to four years or 50,000 miles from the extended warranty of five years or 100,000 miles offered on other vehicles, spokeswoman Joanne Krell said.
The carmaker provides free scheduled maintenance for three years, or 36,000 miles on Saab vehicles in addition to the warranty, setting it apart from other GM vehicles, Krell said.
The combination of a four-year warranty and the scheduled maintenance “makes sense to the import premium buyer, which is where Saab fits in the automotive landscape,” Krell said.
Krell said the decision applied only to the Saab brand and did not apply to GM’s Cadillac or Hummer brands. She did not have a dollar figure on the cost savings.
Some thoughts:
I’ve swapped a couple of emails with a few people about this.
One overriding thought was that this probably looks a lot worse than what it is in reality. The fifth year on the powertrain was pretty important, but the high mileage component wasn’t. Anyone who is likely to rack up 100,000 miles in five years is likely to be doing a lot of highway driving, which is pretty kind on the powertrain and less likely to do damage.
But any time you have to offer the customer less (and ask them for more money), you’re going to take a hit. And I think they’re about to take a hit in comments.
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Well I won’t hit them for it. The longer warranty had no effect on sales, or the effect was so light that it was swamped by larger market forces. Why incur the cost for the longer warranty if Saab’s competitors aren’t doing it, and if it has no effect on sales?
Sometimes the beancounters are right.
Actually you sourced the story from my web site but I do appreciate you including a link to my web site in the article.
Gregg, the issue was first covered yeaterday, which is where the link to your site is. You didn’t have a source included in your article, though, which is why I’ve covered it today via Automotive News. – SW
Well, here in Norway the warranty has ‘always’ been 3 years or 100 000 km for SAAB. That’s more or less the same as other automakers have for their vehicles in our region. BMW has only two years warranty, but with unlimited kilometer.
I agree with you Greg, but didn’t Wagoner just say that “Saab has been a critical part of our European portfolio and has the potential to be quite a good moneymaker for us?” How do you attract future customers by making bad PR moves like that? Consumers never forget things like that.
And please Joanne Krell: “The combination of a four-year warranty and the scheduled maintenance “makes sense to the import premium buyer, which is where Saab fits in the automotive landscape,” Krell said.”
C’mon Joanne (can I call you Joanne?), I have been wearing GM underwear for a long time and if you think that ‘intelligent consumers think’ that GM ‘gets’ import buyers then we need to have a long conversation. They have a long way to go in that area.
Well, like Egg’s I am a GM man but man – they are hard to love sometimes.
Swade, I agree that the 100K miles in 5 years assumes 20K miles a year, which was unlikely. I’m not saying that nobody travels more than 20K miles a year as I’m sure there are many, but I believe the average in the U.S. is 15K miles per-year driven.
However, that being said by cutting one year off but HALVING the mileage means that the warranty will likely expire on mileage rather than years, as that’s only allowing for 12,500 miles-per year (50K divided by 4 years) driven. If the average person drives 15K a year in this country his/her bumper-to-bumper warranty will expire in the third year of ownership. Furthermore, I believe the warranty is from date of manufacture, not date of purchase, IIRC.
While this shows greater faith by GM in the car overall (extending the bumper-to-bumper warranty another year), it shows less faith in the powertrain (decreasing the powertrain warranty by a year and 50K miles).
Is GM doing this (reducing the powertrain warranty) across all their brands, or are they just showing less faith in the quality of Saab, exclusive of their other marques?
It just looks like yet another cost-cutting measure by Saab (GM) to me. Doesn’t surprise me. This is the way Saab is going. Soon Saab will just be a tarted-up Opel like everyone believes they are now anyway…
I wasn’t pleased to hear this. My thoughts:
1.) One of the big benefits of the better warranty was that it helped significantly on resale value, particularly on off-lease cars. Some people are hesitant to buy Saab because its resale is mediocre (as I said to a friend…one of the reasons it’s bad is because GM is heavily discounting MSRP…so while most cars lose a chunk of their value as they are driving off the lot, Saabs lose their value even before they get to the lot.)
2.) It implies that GM doesn’t have much faith in the car after 4 years/50,000 miles. This is terrible considering the fact that Saab’s brand is handicapped by a reputation for being expensive to repair (at dealers, true) and being unreliable. A certain amount of this reputation was mitigated by a reputation for longevity, but if GM reduces the warranty before the car reaches the age of longevity, then that does imply that that reputation is not deserved. Again, a reputation (earned) for longevity will help resale value and bring hesitant buyers (who want Japanese quality) to the brand. Saab does not have a brand like BMW, Mercedes, Lexus, etc…particularly for quality, so a better warranty (not just an equal warranty) would go a long way in helping that. (Keep in mind I don’t necessarily think much about BMW and Mercedes quality either, but at least they (more or less) have the reputation for it.)
3.) I understand their decision. Since the vast majority of US Saabs are leased, GM would be paying for warranty repairs for the used car owner, who gave no money to GM. That’s a very “beancountery” way of looking at things. However, since choosy used car owners are willing to fight over good quality used cars…which helps resale value, which helps initial sales, GM is shooting itself in its foot (though I’ll admit that the longer warranty payoff would be long coming–creating a brand known for quality takes years. Then again, GM has had Saab for quite some time now and hasn’t bothered with the quality thing.)
3a.) It’s possible GM is making a rash decision, based on fears that the current Saabs will have the same very expensive problems (DIC cassettes and sludge) that the previous Saabs did. There’s no proof for that.
4.) One nifty thing about having the 5 year/100k warranty was that it was on the entire GM lineup. GM was taking a stand in support of its entire lineup no matter what the car. Now its advertising for said warranty will have to exclude Saab, in some way which may look awkward and make people wonder what’s wrong with the Saab brand.
What about persons who just purchased a 2008 model with 100,000 mile warranty? Is it still valid?
I’d suggest it’s still valid, Dan. You bought it with that, it should stick. This news appears to be applicable to 2009 models, too, so I’d say you’re OK. Call your dealer to make sure, though. – SW
When I bought my 2000 9-5 Aero it was just off a 3 yr lease with about 9 months warranty left. I had a few things taken care of on warranty but nothing major. I decided to buy the GM 2 yr/ 30000 km extended warranty for about $1500 just before the manufacturers warranty ended. Again I had a few things done but nothing major and I don’t think I broke even on the deal.
Maybe the bean counters are on the right track here if they can price the car more competitively especially if the competition is at 4 years or less as well. Certainly the cars are as tough as nails and very reliable so there is little risk.
Anyway I have been driving warranty free for the last couple of years without any issues and have been upgrading. New wheels/tires last year and 3′ downpipe and BSR catback this year. Wish I would have spent that $1500 on upgrades 2 years ago, I would be at stage three by now!
“Olav” mentioned that in Norway SAAB has always had the warranty of 3 years.
Well, I think that in rest of European countries which do belong to EU (including Finland where I live), the warranty has been only 2 years. The western premium brands aren’t really competing with their warranty periods. The brands which will emphasize the warranty in their marketing, are KIA and Hyundai. They’ll promise 5-7 years warranty to their vehicles. And of course the warranty won’t cover normal wear-and-tear so the manufacturers have reserved the right to choose whether they’d cover the repairing costs in such cases or not. Usually not.
There was a company which promised five years warranty to all the brands they were selling (also SAAB) but they required that the cars must have been serviced by themselves. Well, since they were selling so many brands, they had to drop that promise since they were receiving too many warranty claims (I guess).
So if I’d get a SAAB with 4-5 years warranty, I’d be more than happy. Of course it feels awkward to give away that one additional year of warranty but hey, it’s still better than warranty period of 2 years here in EU.
“Certainly the cars are as tough as nails and very reliable so there is little risk.”
There must be some if cutting the warranty by a year saves GM money!
Too true, Turbin. The PR fallout they’ll take for this means that there’s got to have been some level of risk assessed as being present. Otherwise it’s just a boneheaded move.
Nahhhhhhh.
Yep Swade, in fact, if you do google news search this single move has attracted more on-line publicity than any single ‘promotional’ release Saab has put out in recent memory.
I don’t think anyone has mentioned this yet, but perhaps one of the reasons for the reduced powertrain warranty may be due to the higher cost and higher probability of problems with the new XWD system which will be on more cars in 2009. There are a lot more parts to fail and the system is new. I’m sure XWD will stand the test time, though.
Actually BrianL, it’s to prepare for the 9-4x from next year. Nothing against Mexicans, rather that it will be built in a ‘Cadillac’ factory.
In South Africa, we used to get the powertrain warranty for up to eight years provided that the vehicle had a complete scheduled service history from new thru the appointed agents. When the turbo on my MY01 9-5 Aero calved and took the pistons with, GM Southern Africa covered the replacement of a new subassembly under the 8-year engine warranty at cost price. I paid for the labor though. Nowadays, you get a 5 year/100,000km maintenance plan and the mandatory manufacturers warranty. Interestingly, Hyundai and Kia are now offering, wait for this, a 10 year / 150,000km maintenance plans in this part of the world.
@aeronaut
“Certainly the cars are as tough as nails and very reliable so there is little risk. ”
As much as I love my Saab, I don’t associate these terms with it. I’d say it’s reasonably reliable, but it requires a strict maintenance regimen and a very sharp ear and eye. You always have to keep your mind on its needs.
It is interesting that they are doing it one the one company that is releasing a NEW XWD system. Maybe GM knows something about the XWD system that we don’t……
I think TTAC sums it up pretty well:
http://www.thetruthaboutcars.com/gm-reduces-length-of-2009-saab-warranty-huh/
Geeze guys, seems like everyone it trying to work from”memory” on this one…. The 5y/100,000 mile warranty was announced in Sept 2006 and applied to all 2007 & 2008 model year Saabs from from the original in-service date of the vehicle. Generally, this is the date of a customer purchase for vehicles sold as “new.” Exceptions may include consumer purchases of dealership “demo” cars and company-owned vehicles whose in-service dates will reflect the beginning of dealership or company use.
As has been said, the Saab warranty effectively is going right back to what is was in 2006 and is better that many of GM’s other basic warranties.
http://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewmonthlyreleasedetail.do?domain=3&docid=28433
James – well my 9-5 has been very reliable and I would say tough especially when compared to the Honda’s ( Civic, Accord, and Prelude ) that I had previously owned. Those Honda’s all seemed to need suspension work at 90k. I maintain most of my possessions very well so maybe I am not the typical car owner but I have found my SAAB to be dependable and ready to tackle the Canadian roads and winter conditions.
Reducing the warranty will free up paper liability for possible future warranty claims. The bean counters don’t like these unknowns on the balance sheet and being conservative they always over estimate the potential cost. By reducing the warranty they are able to clear the books and offer lower pricing on the new cars. I would rather save the money up front and if you are worried you can always buy an extended warranty.
Very stupid. All of GM should offer the same powertrain warranty and Saab probably needed it the most.
I wouldn’t of bought my car had it not had the longer warranty.
Thanks No. 9, but the best thing about the TTAC article is one of the comments:
“I guess their next step is to poke potential customers with sharp sticks when they enter the Saab dealership.”
A shorter warranty and no leases sure make Saab look more attractive to a new owner(s) that GM may be courting?!?!?
“As has been said, the Saab warranty effectively is going right back to what is was in 2006 and is better that many of GM’s other basic warranties.”
Steven, that as it may be, BUT just when everybody is watching GM and Saab very very closely expecting a sell-off or shutdown, when there is no tangible new product, when there is no significant positive news, GM/Saab anounces the double whammy of no leasing and reduction, or should I say retraction, of warranty. As i mentioned before, this is the most publicity Saab has received in the U.S. for ages and at the worst possible time.
This is in addition to a statement from GM that they’re not too worried about pushing Saab sales in the U.S., and will let them find their natural place given the exchange rates.
In other words GM is reducing the limited value Saab offers to virtually nothing and leaving sales to chance. That way by eliminating as many Saab costs and incentives as possible then when the few cashed-up Saab die-hards buy one it really will be ‘plus’ sales for GM in the U.S.
turbin: unfortunately many of the “cashed-up Saab die-hards” are being turned-off by the generic-ization of Saab. Sell me a REAL SAAB. Please! All I see is cost cutting, cutting corners, cutting warranty, cutting programs (Aero Academy, Euro Delivery), cutting… cutting… cutting. There’s only so much fat that can be trimmed before you start cutting into the meat. I would opine they’ve been doing that since 1993. What of Saab is there left?
How many of you are waiting with baited breath to purchase a 9-4X? I’m sure there are some, but I have the feeling that vehicle is going to be a huge sales flop.
All Saab’s hopes seem to rest on the next-gen 9-5 and NOTHING I’ve heard about that vehicle excites me. No cutting edge technology, no innovative powerplants… how is it an improvement on the outgoing model?
I get you Grip. On the subject of the 9-5 I have heard from a long time Saab employee and current Russelheim local that the 9-5 will have bespoke technology and be more powerful than the Opel Insignia it is related to, and we already know it will have the availability of XWD. Not sure if that excites you or not.
Resale value! Resale value! Resale value!