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Volkswagen Hopes This Change Will Attract New Customers

Industry News / 2 Comments

It will certainly make owning a VW less expensive.

Even prior to Dieselgate, Volkswagen's reputation for reliability was never ranked highly alongside Japanese automakers like Toyota. To give consumers more confidence in the brand, VW expanded its factory warranty to six years/72,000 miles bumper-to-bumper. The improvement made VW's warranty even longer than Kia and Hyundai's 10-year/100,000-mile warranty (which isn't bumper-to-bumper), and unlike the Koreans, the German brand's warranty was transferable to new owners.

Even though the new warranty program only began in 2017, VW is already making changes to it for 2020 in order to help it attract new customers. According to Automotive News, VW will reduce its warranty to four years/50,000 miles but will throw in two years of scheduled factory maintenance to sweeten the deal.

Reducing the warranty length may seem counterintuitive but the move is supposed to bolster confidence in the cost of ownership for VW products. "We felt that a combination of a strong warranty with a service and maintenance package and the co-op program for our dealers, which is where we netted out, was the best way forward," said Duncan Movassaghi, senior vice president of sales and marketing with the Volkswagen brand's North American region.

Movassaghi said the company ran an analysis of the current warranty program and learned it didn't persuade enough people to buy a VW. Lease customers, for example, would never use the full six-year/72,000-mile warranty. "It was a good package, but we felt that there was a better way to use the resource," he explained.

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Lease customers will now enjoy two years of scheduled maintenance, and the four-year/50,000-mile warranty will still be transferable to the new owner. Dealerships may lose some revenue due to lost service contract sales but will make it up because the included maintenance will be paid at the warranty rate. Along with the warranty adjustment, VW will also offer a new Tier 3 advertising program to help struggling dealerships "develop their local markets." This change will begin in the first quarter of 2020 while the warranty change will affect all 2020 VW models.