Thursday, April 15, 2021 Detailed Auto Topics
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Most folks are unfamiliar with the new vehicle warranty process.  What is covered by the warranty, what is a recall, what is a TSB and a policy adjustment?  Knowing these answers can save frustration, as well as dollars.

Manufacturer’s warranty

manufacturer's pay dealerships a reduced rate to perform warranty service

The manufacturer’s warranty is included in the price of a new vehicle.  Some people are surprised to learn, warranty is not a service offered, it is a product they have purchased. 

The full cost of offering, administering and paying warranty is included in the price of the vehicle

You can consider warranty as a product you pay for in advance, because that is what it is.  A new car warranty is a contract, with specific terms.  There is always a mileage and time limit on every warranty.  For instance many warranties have a term of  three years or 50,000 miles.  When either term ends, the warranty ends.

Vehicle manufacturers pay dealership technicians a significantly lower amount for warranty repair than the technician is normally paid for the same work, not paid by warranty.  Most technicians in dealerships work on a commission or flat-rate basis.  A labor guide is used to determine how long a job should take.  The technician is then paid for the specified hours, to complete the job.  Warranty work is often priced below the labor guide by 25% or more.  These are the reasons some dealerships try to avoid honoring the warranty, even though the client is entitled to the service for which they paid.

High profit services are sometimes recommended by dealerships, to recoup the loss, when warranty work is done.  Flushes of all sorts are a favorite.  When having warranty service, be very skeptical of additional recommendations that were not requested.

Manufacturer’s warranty work is NOT profitable for dealerships and generally is not popular with the technicians.  During normal maintenance, warrantable items may go unreported to the client, especially if the vehicle is near the end of the warranty.

When a vehicle is under warranty, use a trusted independent shop for non-warranty service

An independent technician, that does not work for a dealership, can point out items that are covered by warranty.  Later they can make certain any warranty service was performed properly.  The independent shop can also make you aware of policy adjustments and recalls.


A recall is a no cost repair, mandated because it affects the safety of a vehicle.  There are mandatory recalls, enforced by the National Highway Traffic Safety Administration or NHTSA.  There are also voluntary recalls, a manufacturer agrees with, to avoid a mandatory recall.  In either case a letter of notification is normally sent, to the last address on file. Beyond standard Postal forwarding, no further attempt may be made to contact the client.

Recalls are often listed on the NHTSA website and sometimes make the news.  The Toyota accelerator pedal issue is an example.  The dealership and most good independent shops maintain a record of recalls.  Before paying for an expensive repair, it never hurts to ask if a recall exist.

Policy adjustments

A policy adjustment is similar to a recall, except it normally does not involve safety and is not mandatory.  This sometimes occurs when it is clear there is a defect in a vehicle.  An example could be the Honda automatic transmission policy.  From around 1998 to 2003 Honda had problems with their automatic transmissions.  A policy adjustment allowed dealers to replace the transmission free of charge for beyond 100,000 miles.

A dealership may not mention a policy adjustment, even though it is available.  Two people can leave a dealership, with the exact problem, one paying full price the other not paying.  Always ask if there is a policy adjustment on any major repair.

What is a Technical Service Bulletins or TSB

A TSB is NOT a warranty or recall.  The technical service bulletin is a notification of a common problem or a suggestion of things to check when there is a problem.  A TSB is NOT an admission of guilt or a warranty extension, beyond the normal terms of the warranty contract.

EPA Mandated Warranties

The Environmental Protection Agency or EPA mandates an eight year or 80,000 mile warranty on the catalytic converter and the engine computer, on most vehicles.  Failures in these components may often be covered at no cost under this warranty.  The dealership is not allowed to charge for diagnosis or replacement.

Exclusions to a Warranty

The manufacturer’s warranty is a contract with specific terms.  Once the time or mileage is exceeded there is no obligation to honor the warranty.  Sometimes, an ongoing problem may be paid for by a policy adjustment.  Remaining calm and keeping the relationship cordial will get more accomplished than getting angry.

Abuse of the vehicle, modifications and lack of maintenance can also cause the warranty to not be honored.  For instance, collision damage to a component is not covered.  Replacing the programming in the engine computer and adding engine accessories may also void the warranty.

Maintenance listed in the owner’s manual must also be completed on time.  For example, oil changes must be done and a record must be kept.  You do NOT have to return to a dealership for maintenance.  You may perform the job yourself or have it done wherever you please. 

Many vehicles also require certain specification fluids be used.  For instance General Motors vehicles from 2011 and up require the engine oil must meet dexos specifications.  Using the wrong product may void the warranty if there is a problem.

Extended Warranties

The client rarely wins with an extended warranty

In our experience extended warranties are merely over-priced term insurance policies.  They are very heavily marketed for one reason, they make the companies that sell them a lot of money.  Extended warranties often exclude a great many things that break.  Many use scare tactics to sell their products. 

Invest your money and self-insure your warranty

Common sense dictates, the warranty company must take in a lot more than they shell out.  Extended warranty companies are professionals and have access to extensive data.  Much like a casino, they will win!

Instead of buying the policy, investing the cost of an extended warranty cost and maintaining the vehicle is a much better plan.  Most vehicles will give over 100,000 miles of service with no major repair, if they are properly maintained.  At the end of the extended warranty term, folks who invested the cost of the policy and paid their own repair, will have quite a bit of money left over.

Understanding the limitation of warranties makes the process easier and allows people to make better choices.  Many smart people today are self-insuring their vehicles, regarding warranty.  They simply buy a late-model used vehicle, invest the savings and warranty their own vehicles.  With good vehicle maintenance, ten years are more service is very common.  Overall lowest cost, it just makes sense.

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