Car warranties mean quality is up but beware the shonks

UNDER Australian law, carmakers must guarantee the cars they sell even without a warranty.

Mercedes S Class Coupe doesn’t get enough recognition.

THERE are two key reasons why today’s cars are better built: warranties and ratings.

We like warranties because they show us how confident a manufacturer is in the quality of its car and they save us money. Dealers like warranties because the maker reimburses them for the work they do and parts. Shonks like extended warranties they sell because they take your money and find ways out of coughing up when you have a problem.

It’s worth remembering that even without a warranty, under Australian law carmakers must guarantee the cars they sell. Most cars (Holden, Ford, Toyota) come with a three-year, 100,000km warranty. Mitsubishi offers five years, 135,000kms; Citroen six years, unlimited mileage, but the standout winner is Kia with seven years and unlimited mileage.

When it comes to extended warranties, be really careful. US Consumer Reports (the equivalent of Choice) says “skip the extended warranty”. “The dealer will probably try hard to sell you one, telling horror stories about the thousands of dollars it can cost to replace an engine or transmission. But the odds are you’ll never need the coverage, and even if you do, the money you’ll save in repairs won’t come close to what you paid for the added warranty”.

If you do buy an extended warranty buy one from one of the main insurance companies. From a short survey of independent mechanics, Allianz and Swann stand out. Be wary of companies that spend big on the internet. Their websites look good but some have more exclusions than an old Jag has oil leaks.

When David Power began researching automotive quality in 1968 he didn’t realise he would transform the industry. Today car companies and consumers use J D Power rankings. So in the US it’s no surprise that, on dependability over three years, the 2011 Honda Civic and Toyota Corolla share the best compact car podium with the surprising winner, the 2011 Chevrolet Volt.

In Britain’s top 10 most reliable cars, VW claimed the top two spots with the UP and the Golf Plus. VW took another two most reliable awards with the Tiguan and Sirocco. Skoda nominated for the Yeti and Octavia. The Mercedes C Class also got a guernsey, but I’m only telling you that because it gives me an excuse to say the current S Class coupe doesn’t get enough recognition as one of the world’s most beautiful cars.

On the other hand the BMW X5 from 2008 and 2009 tops the Forbes list of used cars to avoid. Luckily my X5 is a later model. Forbes says “BMW’s sporty large crossover SUV is cited by both Consumer Reports and J.D. Power and associates for having worse than average reliability”.

While luxury vehicle sales are rising, mainstream new car sales are going down. This year as the economy slows, things will probably get worse as the lower Australian dollar drives both the price of most imported cars and parts up, sales of Australian made models slip below 1953 levels and buyers look at lesser brands on the internet before they purchase.

That’s why some of the biggest car brands are pushing dealers to get absorption rates to 100 per cent. The absorption rate is the amount of a dealer’s overhead covered by his service and parts business. The more service and parts you sell the fewer cars you need to sell. And the more contact with the dealer the more likely you are to buy your next car there.

The problem for us is that some manufacturers will work hard to put independent specialists out of business. Naturally we won’t be able to count on our elected officials and their anti-competition authorities to help. After what the insurance industry has done to panel beaters, small mechanics don’t stand a chance.

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