Gm's Business Logic

[Zed Head]

This isn't about ignition switches or anything causing bodily harm, just a view on how business people think.  I had to read it twice to be sure I understood.  The words, not the logic.

 

 

This product's value is not drawing the consumer in.  We need to make it worse.

 

http://finance.yahoo.com/news/gm-cut-chevy-gmc-powertrain-warranty-60-000-143947688--finance.html

[Kurbycar32]

The real mistake was made years ago when they thought people weren't buying their cars because the warranty wasn't long enough.  If they made great cars people would buy them, but they make mostly junk.  Do people ask about warranty periods and free tire rotations when buying a Lamborghini?

 

By the way half of my family lineage works or retired from GM, I get employee pricing and I still wont buy one..

[Mark Maras]

 I was a Chevy kid growing up, with the understanding that the mileage limit on any engine(domestic)& just about anything mechanical was around 125,000 miles. I traded my 69 SS 396 Chevelle in for my 71 Z. It was quite a change. I was skeptical about the quality in the beginning. During the 50s, anything from Japan was known as junk. It took a few years to sink in. But it turned out to be the best car I EVER bought. Ran it for better than 20 years as my DD & it was by far the most reliable car I've owned. Detroit could have been giving us quality all along, but they knew if their cars needed major repairs, the customer would buy a new one, & they did, every three years, religiously. Detroit has stubbornly refused to admit that "Quality is nothing more than basic honesty" People will respond to honesty.

[djwarner]

The first new car I bought was a '68 Datsun 510 2 door. At that time the longest you could finance a new car was 36 months. Used cars max'ed out at 24 months. Car bodies just didn't last that long back then.

 

It wasn't until government mandated safety and pollution controls started ramping up the prices that automakers realized cars had to last longer to allow longer finance terms to reduce the monthly payments.

[Mark Maras]

Wow. That's about the best first car that I can think of. Do you still have it or is there a sad Datsun story?

 I remember the switch to 5 yr. financing. I wondered, at the time, how many cars would be toast before they were paid off.

[djwarner]

I had the '68 for about 18 months and loved it. Enjoyed so much, I decided to trade it on a '70 510 wagon with one of the first Jatco Automatic Transmissions in the USA. 

 

Between the lower horsepower rating caused by pollution controls, the solid rear axle of the wagon, and the less than stellar reliability of the early Jatcos, my experience with wagon was a disappointment.

[Mark Maras]

 Alas, It seems as though every previous Datsun owner has a sad " I wish I would have, tale. I guess that comes with the many fond memories.

[Zed Head]

I had a 1978 B210 coupe with 5 speed.  Carbureted 4 cylinder.  Awesome little car, 38 mpg at a 70 mph, plenty of power, no problems at all over the 4 years I owned it.  Sold it to move cross-country, but should have drove it there and kept it instead.

[Walter Moore]

Having a 10 year warranty worked for Hyundai. People, somewhat justifyably, viewed them with suspision due to a reputation for poor quality. The unusually long warranty that Hyundai provided eased the fears of some people, and helped them overcome the image of poor quality. But the promise only brings people to the table. If the product doesn't live up to the expectation, then the customers will eventually run away.

 

With the notable exception of the V6 Tiburon which ate clutches, Hyundai was able to demonstrate that their cars are worthy of the warranty. Chrysler has tried twice to use very long warranties to attract customers. The first time was in the early 1980's with their 5/50 powertrain warranty (I bought one, and only one1), and after the collapse of 2009 they started letting people buy "Lifetime" warranties. (I know someone who has a truck with that option, and it was a major incentive to buy the vehicle.)

 

G.M. isn't really in either situation. They have a large installed base, and a fairly loyal customer base. (Let that sink in for a moment...) Most of their customers for new cars do not keep a car for 10 years in the first place, so the extended warranty wasn't an incentive. The people who hate G.M. are not going to be swayed by a long warranty either. So far as I know, neither Ford, nor Toyota offer 10 year warranties, and they both weathered the 2008-2009 economic crash just fine.