One of the last car warranty holdouts cracks

Bruce Newton
Oct 02, 2018, updated Oct 02, 2018

Volkswagen has bent to pressure. Photo: Getty

One of the biggest-selling holdouts against offering Australian new car buyers better warranty value has cracked.

Volkswagen, which has stoically insisted three years was all the warranty protection its new vehicle buyers needed, will offer a five-year, unlimited kilometre warranty until the end of 2018.

The offer applies to all Volkswagen passenger cars, SUVs and commercial vehicles sold in Australia.

In announcing the move, VW’s Australian chief Michael Bartsch left open the prospect of making a five-year warranty permanent.

“Customer reaction to five-year warranty will be informative,” he said.

It’s a change of tune for Mr Bartsch from a recent car launch where he defended the three-year warranty.

“If you have a look at what’s putting us on the consideration list, nobody is walking in saying ‘I need a five-year warranty’,” he told The New Daily at the time. “We don’t lose sales at the moment.”

In the new year, VW will revert to a three-year, unlimited warranty. New car buyers will have to pay a fee to go to a five-year warranty.

VW’s move follows other mainstream brands including Ford, Holden, Mazda, Honda, Renault, Peugeot and Citroen in pushing up from three years to five this year.

EV specialist Tesla leads the industry with an eight-year, 160,000km warranty, while Korean brands SsangYong and Kia offer seven years and unlimited distance.

Kia has hinted it is looking to move to a 10-year warranty, which the brand already offers in the US.

It leaves Toyota, which is by far Australia’s biggest sales player with nearly a 20 per cent share of a 1.2 million vehicle market, as the biggest holdout on three years. It also offers less free roadside assistance than most rivals and shorter service intervals, although it is gradually extending them as new models are launched.

Others offering only three years are Nissan and Subaru, while German luxury brands Audi, BMW and Mercedes-Benz is also in this group.

“At this stage, Toyota Australia has no plans to extend its warranty for new vehicles,” Toyota Australia spokesman Brodie Bott said.

“Toyota’s key focus and commitment continues to be on providing outstanding service and compliance with its warranty obligations under the Australian Consumer Law.”

‘Australian Consumer Law’ – a single piece of legislation that protects customers – is a commonly cited reason by holdouts for not increasing the duration of warranty.

“You can be a little bit cynical about it because there is a five-year warranty anyway,” Mr Bartsch had said before the announcement.

“It’s called the ACL. Every car has a five-year warranty.”