– By Marc Sibbald –
Early in July Holden announced it will introduce an immediate and permanent five year warranty for all new cars sold in Australia. The warranty comes with unlimited kilometres for private and ABN buyers or, a generous 200,000km cap for government, fleet and rental customers.
I’m not sure fleet buyers would consider the offer of different warranty conditions to retail customers as ‘generous’. Fleet buyers are responsible for over 50% of all new vehicle sales and this statistic doesn’t count novated leases properly as they are often are included as private registrations.
So how do Fleet Managers setup their ‘whole of life cost’ models on Holden vehicles knowing that the limited warranty conditions may impact residual values?
In an email to fleet customers obtained by FAN, George Loukas, Director National Fleet at Holden, said “a five year / 200,000 km warranty for large fleets not only demonstrates Holden’s underline confidence in its new product line-up, but will benefit our fleet customers via improved support for in-service vehicles, combined with higher residual values on vehicles de-fleeted within the warranty period – typically after three years”.
Fleet Managers that have spoken to FAN suggested that Holden is only offering unlimited kilometres to retail customers because they know they’ll never claim on the promise. And they’re disappointed because of the support they have given Holden over many decades with their locally manufactured Commodore and Cruze.
Dan Hawkins, General Manager Customer Services at Fleetcare, was surprised when he received the email from Holden. “I’m not sure how it will work with residual values now the warranties are different. If someone is buying a second hand Commodore and one has unlimited kilometres and the other doesn’t; well I know which one I’d pay more for” said Hawkins.
FAN asked Brendon Green, General Manager at Pickles Auctions, about the impact of manufacturer warranties on resale values.
“Difficult to say with authority given Toyota only have three years warranties yet have the largest market share and probably the most consistent and strongest RV’s across range” said Green. “However, I do feel it has helped brands such as Kia and Hyundai increase their RV’s over the past seven to ten years, along with producing a stronger product overall”.
Green did agree that if a Fleet Manager is targeting private buyers at the end of their term they should aim to sell them before the warranty expires.
“Having an element of warranty left for the buyers piece of mind is of great assistance” confirms Green. “Buyers can bid or purchase with confidence knowing that should there be significant issues with a vehicle, they will have support from the brand to have rectified”.
“Most fleet are run for three to four years so I think over time, competition will drive more and more OEM’s will move to five years warranties, just as capped price servicing have been widely adopted”.
So what does Green think about the announcement by Holden to offer different warranty terms for fleet and private buyers?
“As I understand, there is a 200,000km cap on fleet, government and rental buyers under their new five year warranty. I believe 200,000kms enables fleets to operate efficiently and shouldn’t impact there ‘normal usage’. Perhaps having a limit on LCV’s may impact prices a little however, most other vehicles in Holden’s line up wouldn’t ordinarily do 200,000kms over a five year period. This should limit any impact to RV’s”.
