The Korean Warrant
What Does It Mean for the Competition?
One competitor that must be particularly irked by the latest rankings is Volkswagen, who reigned supreme in the warranty wars during 2018 and 2019. What happened? If you believe Volkswagen’s version of events, they claim that their research has determined that their customers are more interested in regular maintenance coverage than in a long-term warranty.
We may sound skeptical, but in fact Volkswagen has backed up this claim by replacing the chart-topping 6-year/72,000-mile warranty of 2018-19 with a 4-year/50,000-mile warranty in 2020 along with 2 years of regularly scheduled maintenance at no charge to the driver.
Still, Volkswagen is one among many competitors of Hyundai and Kia who now must be seething somewhat in the knowledge that the stark difference in warranties raises a very simple question from potential customers — why don’t you give me a 10-year powertrain warranty, too?
The Impact on End Consumers
Volkswagen would have us believe that their customers don’t want long warranties, and that’s why they offer the free maintenance instead. Volkswagen remains a popular brand, still selling like hot cakes around the world. Their new ID.3 electric model designed to compete with Tesla’s Model 3 was reported by Forbes to have outsold Tesla by 75-fold in 2020. Perhaps they’re right about the warranty thing.
On the other hand, even a cursory glance at how consumers discuss the issue of warranties online, they are still regarded as pretty important. The only area that seems to be debated in terms of worth is an extended warranty. Many have come to regard the extended warranty as mere up-selling nonsense, not worth any of the money they want for it.
Kia and Hyundai are achieving more than VW, though. Hyundai’s sales in Q3 2020 were up 8.5 percent on Q3 2019. In a world still riddled and shaking from COVID-19, how is that humanly possible? Volkswagen in the meantime has been losing ground, as have many other automakers. Would these sales figures have been possible without those warranty numbers? Doesn’t such a generous warranty speak volumes about the company’s confidence in their product? It seems buyers are responding, too.
When the warranties are close, most consumers may brush off minor differences as typical market variation, but when one company can outstrip another by multiple years and tens of thousands of miles, then the consumer starts to take notice.
Hyundai and Kia – It’s About Reliability
Handling routine maintenance is something most can continue to plan for, but what drivers fear is something really crucial breaking down outside of the warranties period of validity. It’s not dissimilar to range anxiety on electric vehicles. Just as people’s fear of losing power in the middle of nowhere stops them pulling the trigger on an EV, so too a shorter warranty makes them think twice about a new car, especially if in these stringent times they may plan to make it last for a longer time than usual.
In these troubled times, Hyundai and Kia have played the game of auto thrones very well indeed.