Originally posted by: njcoig
It's common knowledge that as a rule of thumb, the longer the warranty a company offers, the shoddier the quality of their products. Of course, this isn't a hard and fast rule, but does generally hold true.
Odd, but I learned that in on my my MKT classes.
-N
Not exactly-it's more that companies that have produced shoddy products need one to rebuild confidence in their reliability.
Realize though, that in the LONG term, offering a long warranty means that you *have* to be building reliable products, or your warranty liabilities will just stack up until you go bankrupt.
So in the auto industry at least, a long warranty just means a company is trying to rebuild it's image after perhaps having produced some cars that weren't quite up to spec.
However, if you're buying some free after rebate sound card, that lifetime warranty is probably a joke, and the company might not even be around after 3 years, or if it is it's warranty will be almost unclaimable.
Anyways I really see this as more like GM trying to catch up to the competition-their powertrain warranty has been shorter than Toyota's for years now, and it sure doesn't help if you have a crappier warranty AND people think your cars are less reliable to begin with.
So they've basically matched Toyota's 5 years and raised them 40K-which is just enough that it doesn't scream "desperately extending warranties" like 10/100.
You know what probably really doesn't help? That Daimler Chrysler went to 7/100 and then had to back down, lol. That almost looks like their powertrains kept failing and they couldn't shoulder the costs.
BTW, Hyundai's own 5/60 and 10/100 warranty actually cost them a LOT of money in the initial years-but that put quite the fire under their ass to get their cars reliable...so basically it was "make our cars reliable or go bankrupt". Great motivator for your own company if you basically force yourself to hit a standard just to survive.
Finally, not everything you learn in class is going to be totally true. I totally had a psych professor who thought Rainbow parties were more than urban legend and that kids everywhere were doing it all the time lol.