Hyundai mulls seven-year warranty

HYUNDAI is considering bolting another two years to its five-year new car warranty, bringing its offering into line with sister brand Kia and putting air between it and key rivals.

With five-year warranties becoming increasingly commonplace among mainstream brands, the South Korean manufacturer is looking for ways to boost its appeal, including more enticing after-sales care as well as improving product performance.

Speaking to journalists, Hyundai Motor Company Australia (HMCA) CEO JW Lee said a longer warranty was just one strategy the company was considering to keep its value proposition ahead of the game.

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“Mazda already announced its five years and nowadays, five-year warranty is not that unique or appealing for the customer so maybe you need to consider how we can differentiate ourselves,” he said.

“So we are starting on that but there are many things we need to take into consideration. Our products – whether to focus on better products and better performance or reallocate our resources to a seven-year warranty.”

Lee explained that a longer warranty was not simply a matter of changing the small-print and “every warranty is not for free”. While he wouldn’t elaborate on the exact capital cost, the sub-text is that extending the factory warranty further could put pressure on pricing.

Lee replied “why not?” to the question of whether Hyundai’s warranty could even extend beyond Kia’s current industry-best seven year term, but that seems unlikely given the cost of honouring such an agreement.

The company does offer a ten-year warranty in North America, but compared with Australia’s comprehensive full-vehicle coverage the American warranty is significantly limited.

“In the case of the US market and ten-year warranty – that warranty is only for first owners and specifically for powertrain,” he said. “A ten-year warranty requires a huge amount of investment… as of now it seems very difficult for us hope for a ten-year warranty”.

Following on from Holden and Ford, Mazda Australia recently announced its move to a five-year warranty, which covers all vehicles (including commercials). While a majority of luxury brands continue on with three-year warranties, mainstream brands with less than five years of cover are becoming the minority in the industry.