FCA's shorter warranty could drive service plan sales

Editor's note: An earlier version of this story failed to note that Mitsubishi offers a 100,000-mile powertrain warranty.

Fiat Chrysler's decision last week to reduce its limited powertrain warranty coverage from 100,000 miles to 60,000 miles brings it in line with its Detroit-based competitors.

The automaker's 2016 models will have 5-year/60,000-mile powertrain warranties, instead of 5-year/100,000-mile warranties, FCA US said.

That leaves Hyundai-Kia and Mitsubishi as the largest-volume brands with 100,000-mile powertrain warranties in the U.S. Derek Joyce, a spokesman for Hyundai division, said the warranty "remains an important component of our brand promise to our customers."

FCA's warranty rollback is likely to have a limited impact on sales, argues Blake Helfman, sales manager of River Oaks Chrysler-Dodge-Jeep-Ram in Houston.

"Most people don't ask about the powertrain warranty because there just aren't that many problems anymore," Helfman said. He added that the move could help the dealership sell more extended warranties.

FCA's decision followed a similar change in March by General Motors, which reduced the 5-year powertrain warranties on Chevrolet and GMC vehicles from 100,000 miles to 60,000 miles. 

FCA said in a statement to Automotive News: "Following changes already made by competitors, FCA US is adjusting powertrain warranty coverage for 2016 model year vehicles to be more consistent with industry practices."

Most mass-market brands, such as Toyota, Ford and Honda, carry 60,000-mile powertrain warranties. 

An FCA spokeswoman said the bumper-to-bumper warranty for Chrysler, Jeep, Dodge and Ram vehicles will remain at 3 years/36,000 miles. Fiat vehicles carry 4-year/50,000-mile warranties. She also said powertrain warranty claims after 60,000 miles represented "less than 5 percent" of the company's powertrain warranty-claim total. 

According to Warranty Week, a publication that tracks warranty costs, automakers' warranty costs shot up 20 percent in 2014 to nearly $16 billion largely because of a spike in recalls. 

FCA's warranty costs in 2014 were up 32 percent, compared with a 24 percent jump for Ford Motor Co. and a 41 percent rise for GM, the publication said. 

This is also not the first time FCA or one of its corporate predecessors has juggled the terms of its powertrain warranty. 

Before Chrysler's 2009 bankruptcy, the automaker tried to boost faith in its products by offering a lifetime limited powertrain warranty on its vehicles. That warranty applied only to the vehicle's original owner, however. 

After emerging from bankruptcy in 2009, the automaker dialed back its powertrain warranty to 5 years/100,000 miles, which was in line with some other automakers' offerings at the time. 

The change for the 2016 model year does not apply to the automaker's Fiat, Alfa Romeo or diesel-powered vehicles.