Ram/Stellantis to announce 10 year/100.000 mile powertrain warranty for 2026 model year.

[gfh77665]

The question is how is Stellantis paying for this new warranty?

Has that question ever been asked of any of the others warranties?

 

[gfh77665]

Great move. They might to consider to fix that oil filter housing on Pentastar. It might do them some good by not being in the news.

I will take an oil filter housing issue any day over Ford cam phasers or Chevy AFM issues.

 

[Skippy722]

I always did find it odd they’d warranty a new car for 5/60k but their CPO vehicles are warrantied for 7/100k.

 

[edyvw]

I will take an oil filter housing issue any day over Ford cam phasers or Chevy AFM issues.

True. But, their media handling of those police departments that complained about it is abhorrent.

 

[gfh77665]

True. But, their media handling of those police departments that complained about it is abhorrent.

The media hates Stellantis just like some here do...

 

[GON]

Has that question ever been asked of any of the others warranties?

Has that question ever been asked of any of the others warranties?

If it hasn't it should be. One should review the financials of the organization on any item or service they plan on purchusing.

If some one offered me ten to one odds on a $50k USD bet that Stellantis will be able to avoid bankruptcy in the next ten years, I would not take that bet. Stellantis, like Renault- Nissan - Mitsubishi- Alliance, Jaguar- Range Rover, and numerous other auto manufacturers are not demonstrating nor providing confidence they will be able to avoid bankruptcy in the next ten years.

 

[JoelB]

My dad financed his new GC because he got it at 0% for 84 months (and I got him dealer cost on the vehicle). It's basically free money and he's paying it off using investment income, rather than dipping into his savings to buy it outright, which would remove that cash from his investment portfolio, reducing his investment cashflow.

This is the same method my friend that owns the dealership employs when they have a 0% thing going on. Why dip into his cash, which makes him money, because it's invested, when Chrysler will give him the money for free and he can pay on it using cashflow from the investments without penalty?

That case really doesn't apply to my point. I'm stating if you have to finance longer to afford a car that inadvisable.

If you get some good deal due to a certain financing length then there would be no reason not to take it.

 

[andrew_j]

Sales are way down and certain buyers this appeal. Powertrain issues are so rare in the 10 year/100k period. Bumper to bumper another story and guessing more then half buyers who this appeals to won’t understand the difference and buy it.

 

[eljefino]

I always did find it odd they’d warranty a new car for 5/60k but their CPO vehicles are warrantied for 7/100k.

Marketing. They want an advantage for selling a car twice.

I remember 1983ish when dodge came out with the 5/50 warranty. Their cars were stunningly terrible then so they can swing this 10/100 thing now.

 

[OVERKILL]

That case really doesn't apply to my point. I'm stating if you have to finance longer to afford a car that inadvisable.

If you get some good deal due to a certain financing length then there would be no reason not to take it.

My point is simply that somebody financing something for a specific duration may not be due to affordability, but people like to assume it is, particularly on here.

 

[JoelB]

My point is simply that somebody financing something for a specific duration may not be due to affordability, but people like to assume it is, particularly on here.

I don't have any data to back it up but I would guess a large majority of the time people do extended financing it's for affordability reasons. I would see the case you mentioned as a small minority.

 

[CKN]

I always did find it odd they’d warranty a new car for 5/60k but their CPO vehicles are warrantied for 7/100k.

It's marketing and nothing more. They have to inspect used vehicles for safety any way. I mean vehicles with minor accidents can still be certified. So......

 

[OVERKILL]

I don't have any data to back it up but I would guess a large majority of the time people do extended financing it's for affordability reasons. I would see the case you mentioned as a small minority.

Sure, but that doesn't change the fact it happens, which is consistent with the point I was making. Sales also always increase whenever the 0% deals or 0.99% deals are offered, though I'd argue those people just typically get hosed by losing the incentives that are typically available as an alternative.

 

[JoelB]

Sure, but that doesn't change the fact it happens, which is consistent with the point I was making. Sales also always increase whenever the 0% deals or 0.99% deals are offered, though I'd argue those people just typically get hosed by losing the incentives that are typically available as an alternative.

I'm thinking you misunderstood my post. I stated that if you have to extend financing to afford something that's inadvisable. I also mentioned that around the 6 year length is a sweet spot for me.

I didn't state or imply that it never makes sense to finance for longer terms. There are really no absolutes with finances.

 

[OVERKILL]

I'm thinking you misunderstood my post. I stated that if you have to extend financing to afford something that's inadvisable. I also mentioned that around the 6 year length is a sweet spot for me.

I didn't state or imply that it never makes sense to finance for longer terms. There are really no absolutes with finances.

I'm just going by what you wrote:

Kind of a tangent to the OP but I'm curious what percent of loans are over 6 years at this point. In my head a 6 year car loan in the max that makes sense. Beyond that if you can't afford the payment you can't afford the car (not a fact just my opinion).

I'm just pointing out that there are reasons to finance beyond your cited 6 year "max that makes sense" that aren't related to being unable to afford the payment but are instead due to incentives, like the example I provided. I appreciate that this won't be the case in most instances, but felt it warranted being put out there.

 

[JeffKeryk]

The question is how is Stellantis paying for this new warranty?

Is the warranty booked as a liability and accounted for? Is the warranty insured but an independent carrier in case Stellantis goes bankrupt? Is Stellantis setting aside reserves for the warranty claims? Or will Stellantis promise everything to sell a vehicle today, but no real viable plan to make sure they are able to financial cover the liability of the warranty.

For standard warranty:
In cost accounting, "warranty reserve" or "warranty holdback" is generally booked as a liability. Of course warranty cost is an estimate.
It is a cost component in the margin calc so it is recognized at time of sale.

Extended warranty is a different animal and revenue is recognized over the warranty period.

That's my recollection from my cost accounting software.

 

[JeffKeryk]

If RAM-Stellantis walked on water, people here would then accuse them of failing to swim.

Now, a more generous warranty is a bad thing? Seriously?

Sounds like great marketing to me.

Well, they probably aren't offering this fantastic warranty out of the goodness of their hearts...
It's a good thing for the customer; perhaps not so good for the manufacturer.
Will it help sales over the competition? Likely. Will it help the bottom line? Perhaps.

Just my 2 cents...

 

[nobb]

This is a move that companies make when they're falling behind.

Realistically, what most likely happened here was that accounting and marketing got together and determined that offering this warranty had more benefits to revenue (due to PR) than spending money redesigning a better drivetrain.

Most modern vehicles shouldn't have much problem going 10 years/100k miles with minimal service.

 

[Danno]

I have a feeling the RAM dealer is just gouging because their lot has been filled to the gills for months now with very little movement of inventory.

I work at a Ram dealer, and attend the daily sales meeting. Your statement is not what I would be hearing in our meeting. It would be more like our GM telling us how many times that day he's called the Stellantis rep to get pricing competitive with GM.
Factory incentives drives sales. It's that simple.
TBH, HD is a minor part of Sales. 1500 is where the volume is.

 

[JoelB]

I'm just going by what you wrote:


I'm just pointing out that there are reasons to finance beyond your cited 6 year "max that makes sense" that aren't related to being unable to afford the payment but are instead due to incentives, like the example I provided. I appreciate that this won't be the case in most instances, but felt it warranted being put out there.

I agree. Finances are unique between different people. Some inadvisable things for someone new to money management can actually help build wealth when you have experience.