New Car warranty and the scams surrounding them.

We show you how new car car warranty is divided into two distinct categories. Manufacturers warranty and aftermarket warranty. Two very different products, cleverly bundled to give the perception of just one.


Hi everybody, Dannie here from GDL Automotive Services doing another video blog. This morning we’re going to look at manufacturer’s warranties, and what you can and can’t do as the consumer and how the dealers are potentially tricking consumers into coming back to the dealers when they don’t have to, or they could still be using their family-loved independent repairer. I’m going to do this using the whiteboard. Where possible, I’ll try and not to have my back to you but it’s inevitable. So, let’s assume for the argument that a consumer has purchased a new car from what we would just call Dealer A. Years and years and years ago that dealer was able to insist that the consumer bring that car back to them for servicing in order for the warranty to be valid. If you went to an independent repairer, your warranty was void. Consumer affairs got involved, this was potentially 15 years ago, and these laws changed. So now, the customer or the consumer can use an independent repairer to service their car. As long as this guy is a licensed vehicle repairer, Dealer A has to come good on any warranty claim in the warranty period, even if a vehicle’s been serviced here, and this is how it was for a long time. To combat this, the dealers got clever. So let’s say you’ve got 3 years manufacturer’s warranty. The dealers fought this by bringing in another level of warranty called ‘aftermarket’. Now these warranties are offered by a third party. They’re not the warranty of the dealership and they’re not the warranty offered by the manufacturer of the vehicle. I’m not going to use certain makes and models at risk of discriminating against any one particular company but these are third parties. They’ve got nothing to do with the manufacturers of the car. So, the Dealer A says. Here’s your three years that you have to get it legally. Dealer A has to offer. Dealer A sells you with your car two years (of) aftermarket warranty. So you as the consumer now believe you have 5 years warranty, and here’s how the dealer does it. If at any point in that 5 year period, you use this guy, you instantly lose this. Legally they still have to do the 3 year warranty, but you’ve just lost your aftermarket warranty. So it’s pretty clever from the dealer, however here’s what you need to know as the consumer. These aftermarket warranties are not worth the paper that they’re written on. In my time, I’ve worked in both dealers and private shops, and done the work and have been involved in the process of getting payouts for customers for these aftermarket warranties. They don’t warrant to the value of a new part, they don’t warrant to the value of a new genuine part, and they determine the value of what a job is worth. So what does all of this mean? This means that if you for example need a transmission on a car that’s two years old under warranty…Well you’d have to be past your three years to need it… So let’s say you’re at four years and you needed a new transmission. This aftermarket warranty company can say we will only payout to the value of a second hand transmission and we will only payout to the value of four hours at $80 an hour. Now most mechanical workshops operating out of Sydney are running at 110 up to…Some dealers are charging about 240 per hour. So let’s assume then that you’re dealer has put forward the fact that your transmission on your four year old car is going to cost 6k. Your aftermarket warranty company says we’ll pay out a second hand transmission that’s worth $1000 and we’re going to pay out 4 hours at, just to make it easy, $100 an hour. So they’re going to give you 400 bucks labour to do it. You do in most cases have to pay an excess, whatever that is. So let’s assume your excess is 300 bucks. So what are we going to get? 1400. You’ve paid 300 in your excess. Aftermarket warranty is giving you 1100 dollars for a job that’s worth 6…And there’s no way the dealer’s going to do it for 1100 bucks. Guess who’s got to pay the difference? It’s you as the consumer. Your “5 years” warranty on a transmission that’s going to cost you six grand is still going to cost you five. Your independent repairer’s lost out. He’s lost a client for five years. You’ve lost out. You just lost five grand. That’s not five but you get what I’m saying. The only people that win is the dealer. So, my advice to consumers…Don’t bother with aftermarket warranty. Still buy your new cars from the dealers. There’s nothing wrong with them, and in most cases they’re good mechanically reliable cars. Keep using your independent repairers. The guys…Your family mechanic you’ve been using for the last 20 years, and your father’s been using, your grandfather’s been using. Keep the little guy in business. Keeps the dealers in business, they’re still selling cars. And no one’s getting ripped off with stupid warranty claims.

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