Are Manufacturer Add-on Warranties Good for Dealers?


General Motors rolled out a new warranty option on October 15th of this year, that is unlike any extended warranty currently in the market. GM touts that the new warranty is a “true, extended bumper-to-bumper limited warranty” that is added directly to the vehicle, not to the owner.

That is to say, instead of a separate service contract that goes into effect after the standard new-vehicle warranty expires, GM promotes the revamped plan as a seamless extension of the original coverage. Cindy McColley, manager of the protection division, said the program is designed “to be very easy to sell,” as it’s integrated into GM’s current systems and doesn’t require additional paperwork.

“It keeps the GM customer experience pure, inside the GM system,” said Ken Mac, director of Chevrolet-Buick-GMC and Cadillac Protection. “We really believe the more pure you keep your GM experience, the better it is for you the consumer and the GM dealer.”warranty

The offering is simple, without the typical menu of coverage levels and term lengths. In short, the program lengthens the factory’s 3-year/36,000-mile bumper-to-bumper limited warranty on Chevrolet and GMC vehicles to 5 years/60,000 miles. For Buick and Cadillac models, the extension goes to 6 years/ 70,000 miles from 4 years/ 50,000 miles.

The bumper-to-bumper coverage is designed to match GM’s current powertrain warranty coverage for the four brands, which were cut from 100,000 miles for Chevrolet and GMC back in 2015.

The suggested price for the warranty extension ranges between $1,000 and $2,000 depending on the type and price of the vehicle, and dealers have full autonomy to set the selling price. The cost is added to the vehicle and could be rolled onto the monthly payment.

As expected, this new offering has some dealers up-in-arms, claiming it will cut into the business of selling their own service contracts. This kickback is understandable, as a factory-backed warranty extension will considerably lessen demand for 3rd party service contracts. While this might be true, it is not to say the net benefit to dealers is going to be negative.


Other dealers are applauding the offering, citing increased difficulty in retaining service customers in the current environment of vehicle reliability and intense competition from independent shops.

In an interview with Automotive News, Craig DeSerf, executive general manager of Gulf Coast Chevrolet-Buick-GMC in Angleton, Texas said that “The warranty, I think, is the best thing General Motors has come up with in a long time, I think this personally helps us as a dealer group sell more cars and retain more service customers.”

It is important to note that GM is not forcing dealers to sell its new extended warranty. Dealers can choose whether to sell the new offering, continue to sell the service contracts already offered, or they can sell both.

So, is this new warranty good for dealers, or not? The answer probably depends on how you look at it. One thing is for sure. We live in the information age and buyers demand more transparency and they also demand easier transactions. This new warranty from GM provides both.