DETROIT — In a memo issued to dealers on Wednesday, General Motors announced it is rolling back coverage on its Chevrolet and GMC powertrain limited warranty and is reducing the number of visits under its free maintenance program for Chevrolet, Buick and GMC vehicles. The modifications, which will take effect on 2016 model-year vehicles, could be a boon for F&I product penetrations, according to one F&I product executive.
The memo stated that GM will reduce the Chevrolet and GMC extended powertrain warranty, which covers the engine, transmission and transaxle, transfer case, drive systems and emissions control systems, from five years or 100,000 miles to five years or 60,000 miles. The two offerings will continue to include roadside assistance.
GM will also reduce the number of service visits under its two-year, 24,000-mile Chevrolet Complete Care, GMC Pro Grade Protection and Experience Buick Protection maintenance programs from four to two.
According to a company spokesperson, the move was based on consumer research that showed free maintenance and warranty coverage weren’t major purchase considerations. The spokesperson added that internal company data showed a significant drop off in consumer usage of the maintenance program after the first visit.
“We talked to our customers and learned that free scheduled maintenance and warranty coverage do not rank high as a reason to purchase a vehicle among buyers of non-luxury brands,” read a statement GM issued to F&I and Showroom.
The OEM’s research regarding free maintenance contradicts findings in J.D. Power and Associate’s 2014 Customer Service Index Study. Aside from showing that the percentage of vehicle owners with complimentary or prepaid vehicle maintenance more than doubled over the previous five years, the study found that brand repurchase rates were higher among vehicle owners (72%) who had a complimentary or prepaid maintenance program vs. vehicle owners who didn’t (62%).
Regardless, Bob Corbin, president and CEO of IAS, which provides a full suite of vehicle service contracts along with custom aftermarket products, said GM’s move is a positive one for dealership F&I offices. “The claw back on the maintenance program will be a boon for prepaid maintenance plans,” he said, noting that the cut in powertrain coverage should also drive up acceptance rates for vehicle service contracts.
“This builds added value for service contracts and should increase retail F&I penetrations,” he added.
In its statement, GM added: “Even with these changes, our included maintenance and extended powertrain warranty program remain among the most competitive in the industry. We will reinvest the savings in features consumer value more, such as advanced connected vehicle technology."