NEW CAR
WARRANTIES
RICHARD F. KAHLE, JR.
Assistant Researcher
Report No. 1, 1972
i UNIVERSIV OF HAWAII
State Capitol
Honolulu, Hawaii 96813
Price $1.00
FOREWORD
T h i s s t u d y of new c a r w a r r a n t i e s h a s been made i n r e s p o n s e
t o House R e s o l u t i o n 2 0 , which was adopted d u r i n g t h e Regular
S e s s i o n o f 1970.
The R e s o l u t i o n e x p r e s s e d concern w i t h t h e w a r r a n t y s e r v i c i n g
t h a t consumers w e r e r e c e i v i n g on t h e i r c a r s and t h e c o n d i t i o n o f
t h e cars d e l i v e r e d . The r e p o r t a t t e m p t s t o p i n p o i n t t h e r e a s o n s
f o r p o o r l y c o n d i t i o n e d c a r s and i n a d e q u a t e s e r v i c e and s u g g e s t s
p o s s i b l e s o l u t i o n s t o t h e problem.
To a g r e a t e x t e n t , t h i s r e p o r t c o u l d n o t have been completed
w i t h o u t t h e c o o p e r a t i o n and a s s i s t a n c e o f t h e new c a r d e a l e r s ;
M r . James Remedios, I n f o r m a t i o n s Systems, C i t y and County of
HonoLulu; and Miss J a n i c e LeDoux, Survey Research, U n i v e r s i t y
o f Hawaii. I t i s hoped t h a t t h i s r e p o r t w i l l a i d t h e l e g i s l a t u r e
i n s o l v i n g some o f t h e problems o f new c a r w a r r a n t i e s .
Henry N. Kitamura
Director
This study of new car warranties shows that throughout the
nation, over a seven year period, 34.4 per cent of domestic car
buyers were dissatisfied with their cars upon delivery. For 1969
cars in Hawaii, that figure was higher at 45.5 per cent. A smaller
percentage of foreign car buyers are dissatisfied with their cars
with the national figure for 1970 being 20 per cent. (No comparable
figures are available for 1969.) The Hawaii rate for 1969 cars is
23.3 per cent. Although there are no national figures for dis-
satisfaction with the car as finally received after the correction
of predelivery defects, in Hawaii such dissatisfaction averaged
24.9 per cent for the domestic car buyers and 10 per cent for the
foreign car buyers.
In the area of warranty servicing, throughout the nation during
the period 1963 to 1970, 25 per cent of those persons asking for
warranty repairs were dissatisfied with such repairs. Nationally,
there are no separate figures for domestic and foreign cars. In
Hawaii, 23.8 per cent of domestic car owners and 17.5 per cent of
foreign car owners, or an average of 20.7 per cent, were dissatisfied
with the warranty repairs made on their 1969 cars.
The apparent reasons for such consumer dissatisfaction are set
forth in the report and possible solutions for relief of the consumer
are suggested.
iii
TABLE OF COXTEXTS
Page
OE OD
F RW R ....................... ii
U MR
SM AY . . . . . . . . . . . . . . . . . . . . iii
I . INTRODUCTION . . . . . . . . . . . . . . . . . . . . . 1
P a r t I . H i s t o r y of W a r r a n t i e s . . . . . . . . . . . 1
Domestic Manufacturers ............ 1
Foreign Manufacturers ............. 4
P a r t I1 . Warranties as a Selling Point . . . . . . . 5
I1 . THE WARRANTY ..................... 7
P a r t I . Manufacturer and Consumer . . . . . . . . . 7
P a r t I1 . Manufacturer and D e a l e r R e l a t i o n s h i p s . . . 8
Predelivery Servicing . . . . . . . . . . . . . 9
Warranty Reimbursement . . . . . . . . . . . . 9
M a n u f a c t u r e r ' s Requirements Concerning
S e r v i c e Space . . . . . . . . . . . . . . . 10
M a n u f a c t u r e r ' s Aid t o Dealers . . . . . . . . . 10
1 .
1 1 WARRANTY EXPERIENCE .NATIONWIDE ........... 12
Part I . Consumer Experience . ........... 12
Part I1 . D e a l e r Experience . . ........... 14
Predelivery Servicing . . ........... 14
Warranty Reimbursement . . . . . . . . . 15
IV . WARRANTY EXPERIENCE .STATE .. ... .... ... . 18
Part I . Consumer Experience . . . . . . . . . 18
Predelivery Servicing . . ... .... ... . 20
Warranty S e r v i c i n g . . . ... .... ... . 23
Warranty Understanding . ... .... ... . 26
Predelivery Servicing ............. 28
Warranty Reimbursement. Policies. and
Procedures
.
...
. . . . .. .. .. ..... .. .. .. .. . . .
...
29
a
b
c
.
.
Labor
Parts ................
Reimbursement Process Time . .
29
29
30
d. Replacement of Car .......... 30
e. Warranty as a Sales Item . . 30
V . LEGISLATIVE ATTEMPTS TO SOLVE WARRANTY PROBLEM . 31
Part I . State Attempts . . . . . . . . . . . . . . 31
.............
leli- Fry Servicing 31
crant Reimbursement ........... 32
.rrant Requirements............ 33
-scellaneous................ 34
Part IS . Federal Attempts . . . . . . . . . . . 34
rt . Conclusions ................ 38
.ttisfaction ............ 39
~ o n s r Dissatisfaction ........... 40
APPENDICES
A . 1971 Pontiac Pre-Delivery Service and Adjustment
....................
Checksheet 46
B . Consumers Union Statistics . . . . . . . . . . . . . . 47
C . Questionnaire .................... 50
D . Statistics Derived from Questionnaire . . . . . . . . 55
CHAPTER I
INTRODCCTION
The f o l l o w i n g r e p o r t on new c a r w a r r a n t i e s i s s u b m i t t e d i n
r e s p o n s e t o House R e s o l u t i o n 20, p a s s e d d u r i n g t h e 1970 l e g i s l a t i v e
s e s s i o n . House R e s o l u t i o n 20 r e q u e s t e d t h e L e g i s l a t i v e R e f e r e n c e
B u r e a u t o c o n d u c t a comprehensive s t u d y on new c a r w a r r a n t i e s t h a t
a r e a v a i l a b l e t o t h e r e s i d e n t s o f Hawaii. The s t u d y i n c l u d e s a n
a n a l y s i s o f t h e i s s u e s i n v o l v e d and recommendations f o r l e g i s l a t i o n
t h a t w i l l e n a b l e a u t o m o b i l e owners i n Hawaii t o a v a i l themselves
o f m e a n i n g f u l p r o t e c t i o n under t h e i r w a r r a n t i e s .
During t h e Regular S e s s i o n o f 1971, t h e Bureau s u b m i t t e d a
p r o g r e s s r e p o r t on t h e s t u d y t o t h e l e g i s l a t u r e . T h i s r e p o r t
c o n c l u d e s o u r s t u d y o f new c a r w a r r a n t i e s .
Part I. History of Warranties
D o m s t i c Manufacturers
F o r t h i r t y y e a r s p r i o r t o the 1 9 6 1 model c a r year1 d o m e s t i c
m a n u f a c t u r e r s (Ford, G e n e r a l Motors, C h r y s l e r , and American Motors)
o f f e r e d a s i m p l e , s h o r t - t e r m w a r r a n t y on a l l new c a r s . The w a r r a n t y
on new c a r s i n c l u d e d g u a r a n t e e s a g a i n s t d e f e c t s i n m a t e r i a l and
workmanship f o r 90 d a y s o r 4,000 m i l e s , whichever o c c u r r e d f i r s t . The
w a r r a n t y c o v e r e d a l l i t e m s i n t h e c a r , e x c e p t t i r e s which were
g u a r a n t e e d by t h e t i r e m a n ~ f a c t u r e r . ~ During t h e p a s t t e n y e a r s ,
w a r r a n t y t e r m s and c o v e r a g e have been s u b j e c t t o numerous changes.
I n 1960, t h e f o u r d o m e s t i c m a n u f a c t u r e r s announced t h a t t h e
w a r r a n t y on 1 9 6 1 cars would be e x t e n d e d t o 12 months o r 12,000 m i l e s ,
w h i c h e v e r c a m f i r s t . The t e r m s , c o v e r a g e , and e x c l u s i o n s o f t h e
f o u r m a n u f a c t u r e r s ' w a r r a n t i e s were i d e n t i c a l a s a p p l i e d t o most
cars3 and became known a s t h e " b a s i c warranty". The b a s i c w a r r a n t y
remained unchanged f o r t h e 1961 and 1962 cars and i s s t i l l i n u s e
today. This b a s i c warranty covers a l l i t e m s i n the c a r , s u b j e c t to
t h e f o l l o w i n g e x c l u s i o n s : p a r t s and l a b o r c o n s i d e r e d t o b e p a r t o f
norma* maintenance o r p a r t s which need r e p l a c i n g o n l y b e c a u s e o f
wear.
The b a s i c w a r r a n t y d o e s n o t a p p l y t o v e h i c l e s s u b j e c t t o m i s u s e ,
n e g l i g e n c e , a l t e r a t i o n , a c c i d e n t , o r a l t e r a t i o n o f t h e odometer. 5
NEW CAR WARRANTIES
T i r e s a r e n o t c o v e r e d by t h e b a s i c w a r r a n t y , b u t by a s e p a r a t e t i r e
manufacturer's warranty. 6
I n 1962 C h r y s l e r proclaimed t h e "power t r a i n " w a r r a n t y which
w a s o f f e r e d i n a d d i t i o n t o t h e b a s i c w a r r a n t y . The power t r a i n of
a l l 1963 C h r y s l e r c a r s and t r u c k s was g u a r a n t e e d f o r 5 y e a r s o r
50,000 m i l e s , whichever came f i r s t . The power t r a i n w a r r a n t y
covered i t e m s s u c h a s t h e e n g i n e b l o c k , head and i n t e r n a l e n g i n e
p a r t s , w a t e r pump, t r a n s m i s s i o n , d r i v e s h a f t u n i v e r s a l j o i n t s , r e a r
a x l e , d i f f e r e n t i a l , and r e a r wheel b e a r i n g s . ' The power t r a i n
w a r r a n t y was n o t o f f e r e d on 1963 c a r s by Ford, General Motors, and
American Motors. These companies, i n s t e a d , e x t e n d e d t h e i r b a s i c
w a r r a n t y t o 2 4 months o r 24,000 m i l e s , whichever came f i r s t . Between
1963 and 1 9 6 6 , w a r r a n t i e s remained e s s e n t i a l l y t h e same f o r a l l
domestic manufacturers.8
I n 1 9 6 6 Ford, General Motors, and American Motors a l l followed
C h r y s l e r ' s example and o f f e r e d a 5 y e a r s o r 50,000 m i l e s w a r r a n t y
on t h e power t r a i n of 1967 c a r s . Ford and General Motors went
e v e n f u r t h e r t h a n t h e 1963 C h r y s l e r power t r a i n w a r r a n t y and
e x t e n d e d t h e i r power t r a i n w a r r a n t y t o s t e e r i n g and s u s p e n s i o n
components. C h r y s l e r , i n 1966, f o l l o w e d Ford and General Motors by
expanding i t s power t r a i n w a r r a n t y t o s t e e r i n g and s u s p e n s i o n components
and a l s o e x t e n d e d i t s b a s i c w a r r a n t y t o 2 4 months o r 24,000 m i l e s ,
whichever came f i r s t . 9
U n t i l 1968, b o t h t h e b a s i c w a r r a n t y and t h e power t r a i n warranty
o f f e r e d by d o m e s t i c m a n u f a c t u r e r s were a v a i l a b l e t o t h e o r i g i n a l
owner o f t h e c a r . I n a d d i t i o n s u b s e q u e n t owners of t h e c a r r e c e i v e d
t h e b e n e f i t s o f b o t h w a r r a n t i e s , s o l o n g a s t h e w a r r a n t y had n o t
e x p i r e d due t o l a p s e o f t i m e o r mileage. N o t i f i c a t i o n o f change i n
ownership was n o t r e q u i r e d , n o r was any f e e charged f o r t r a n s f e r
of t h e w a r r a n t y t o t h e s u b s e q u e n t owner.
I n 1 9 6 7 , d o m e s t i c m a n u f a c t u r e r s began t o r e d u c e t h e w a r r a n t y
p r o t e c t i o n t o o t h e r t h a n t h e o r i g i n a l owner. While r e t a i n i n g t h e
same terms and c o v e r a g e , C h r y s l e r ailowed i t s b a s i c w a r r a n t y t o be
t r a n s f e r r e d t o second owners o n l y and announced t h a t t h e power
t r a i n w a r r a n t y on t h e 1968 c a r s would n o t be t r a n s f e r a b l e . S u b s e q u e n t l y ,
t h i s announcement was changed t o a l l o w t n e p u r c h a s e of t h e unexpired
p o r t i o n o f t h e power t r a i n w a r r a n t y f o r $25 by t h e second owner.
Ford allowed a i l s u b s e q u e n t owners t o p u r c h a s e t h e unused p o r t i o n of
t l e b a s i c w a r r a n t y f o r $15, b u t r e s t r i c t e d p u r c h a s e o f t h e power
t r a i n w a r r a n t y t o second owners f o r a f e e o f $25. General Motors
allowed a f u l i t r a n s f e r o f b o t h t h e b a s i c and power t r a i n w a r r a n t y
d u r i n g t h e p e r i o d of t h e b a s i c w a r r a n t y w i t h f e e s of $2 and $25
r e s p e c t i v e l y . A f t e r t h e b a s i c w a r r a n t y had e x p i r e d , General Motors
r e s t r i c t e d t h e p u r c h a s e o f t h e u n e x p i r e d power t r a i n w a r r a n t y t o
t h e second owner f o r a f e e o f $25. Americm Motors allowed a ?
NEW CAR WARRANTIES
From 1961 t o 1968, a l l f o u r d o m e s t i c m a n u f a c t u r e r s , i n v a r y i n g
terms, g u a r a n t e e d t h a t t h e i r c a r s were f r e e from d e f e c t s . For
example, i n 1966, a l l m a n u f a c t u r e r s used language t o t h e e f f e c t
t h a t each new v e h i c l e o r p a r t t h e r e o f was g u a r a n t e e d t o be f r e e
from d e f e c t s i n m a t e r i a l o r workmanship.17 References t o t h e c a r
o r i t s p a r t s were dropped by Ford i n 1969 and t h e w a r r a n t y was
changed t o r e a d t h a t d e f e c t s would be r e p a i r e d o r r e p l a c e d . 1 8 In
t h e 1970 w a r r a n t i e s , General Motors, C h r y s l e r , and American Motors
adopted language s i m i l a r t o Ford. P r e s e n t l y a l l d o m e s t i c manu-
f a c t u r e r s , e x c e p t Ford, s t a t e t h a t d e f e c t s w i l l b e r e p a i r e d o r
r e p l a c e d a t any a u t h o r i z e d d e a l e r . 1 9 "Any a u t h o r i z e d d e a l e r " i s n o t
used by Ford; i n s t e a d , Ford r e s t r i c t s r e p a i r s , w i t h e x c e p t i o n s , t o
the s e l l i n g dealer. A d d i t i o n a l l y , i n 1970, Ford made i t s w a r r a n t y
a j o i n t o f f e r i n g from Ford and t h e s e l l i n g d e a l e r . 2 0
F o r e i g n Manufacturers
Due t o t h e v a r i e t y of f o r e i g n c a r s b e i n g s o l d i n t h e S t a t e of
Hawaii, o n l y t h e t h r e e b e s t s e l l i n g c a r s were covered i n t h i s
s t u d y - Datsun, Toyota, and Volkswagen. While t h e r e have been
s e v e r a l n a t i o n a l s t u d i e s on w a r r a n t i e s , none have covered t h e
f o r e i g n c a r m a n u f a c t u r e r s . A s t h e r e i s no e a s i l y a v a i l a b l e d a t a ,
t h e new c a r w a r r a n t i e s o f f e r e d by f o r e i g n m a n u f a c t u r e r s were o n l y
t r a c e d back t o 1 9 6 9 .
S i n c e 1969, b o t h Datsun (manufactured by Nissan Motor Company)
and Toyota have o f f e r e d a b a s i c w a r r a n t y o f 12 months o r 12,000
m i l e s , whichever comes f i r s t . Volkswagen, on t h e o t h e r hand, h a s
o f f e r e d a w a r r a n t y o f 2 4 months o r 24,000 m i l e s , whichever comes
first. None o f t h e f o r e i g n m a n u f a c t u r e r s have o f f e r e d a s p e c i a l
power t r a i n w a r r a n t y such a s t h a t of t h e domestic m a n u f a c t u r e r s .
I n a d d i t i o n t o t h e m a n u f a c t u r e r ' s w a r r a n t y , i n 1971, Datsun of
Hawaii o f f e r e d an a d d i t i o n a l w a r r a n t y of 1 2 months o r 12,000 m i l e s ,
whichever came f i r s t - t h u s w a r r a n t i n g t h e c a r f o r 24 months o r
24,000 m i l e s . T h i s a d d i t i o n a l w a r r a n t y i s a d e a l e r w a r r a n t y and
i s p r e s e n t l y b e i n g o f f e r e d o n l y t o p u r c h a s e r s on t h e i s l a n d of Oahu.
The b a s i c w a r r a n t y o f f e r e d by f o r e i g n m a n u f a c t u r e r s i s s i m i l a r
t o t h a t o f f e r e d by t h e d o m e s t i c m a n u f a c t u r e r s i n t h a t i t c o v e r s
t h e e n t i r e car, subject t o l i s t e d exclusions. The e x c l u s i o n s ,
w h i l e v a r y i n g between t h e m a n u f a c t u r e r s , a r e s i m i l a r t o t h o s e s e t
f o r t h f o r domestic manufacturers. The w a r r a n t i e s f o r Toyota and
Volkswagen i n c l u d e b o t h t i r e s and b a t t e r y , w h i l e t h a t o f Datsun
e x c l u d e s t i r e s and b a t t e r y b u t t h e m a n u f a c t u r e r ' s waxranty on t h e
t i r e s and b a t t e r y i s p a s s e d on t o t h e consumer.
The w a r r a n t i e s o f t h e f o r e i g n m a n u f a c t u r e r s use language
s i m i l a r t o t h a t used by domestic m a n u f a c t u r e r s . That i s , a l l
t h r e e f o r e i g n m a n u f a c t u r e r s s t a t e t h a t t h e v e h i c l e i s f r e e from
INTRODUCTION
d e f e c t s i n m a t e r i a l and workmanship and t h a t t h e m a n u f a c t u r e r ' s
o b l i g a t i o n i s l i m i t e d t o r e p a i r i n o r r e p l a c i n g p a r t s a t an
a u t h o r i z e d d e a l e r without charge. 31
F o r e i g n m a n u f a c t u r e r s a l s o r e q u i r e maintenance o f t h e v e h i c l e
a t r e g u l a r i n t e r v a l s and proof t h e r e o f i n c a s e o f a w a r r a n t y c l a i m .
I n a d d i t i o n t o r e q u i r i n g p r o o f o f maintenance, i n 1969, Volkswagen
a l s o r e q u i r e d a y e a r 1 v a l i d a t i o n by t h e d e a l e r t h a t s u c h m a i n t e -
n a n c e was performed. 2T T h i s v a l i d a t i o n r e q u i r e m e n t was d i s c o n t i n u e d
a f t e r 1969.
Part 11. Warranties as a Selling Point
The r e a s o n f o r t h e e x t e n s i o n o f t h e b a s i c w a r r a n t y and t h e
a d d i t i o n o f t h e power t r a i n w a r r a n t y i n 1962 is t h e c o m p e t i t i v e
a s p e c t s of new c a r s e l l i n g . I n 1960, t h e n a t i o n was i n a
r e c e s s i o n and new c a r s a l e s had s t a r t e d t o s l i p . T h i s l e d t o t h e
announcement o f t h e e x t e n d e d b a s i c w a r r a n t y by a l l major d o m e s t i c
new c a r m a n u f a c t u r e r s . 2 3 S a l e s c o n t i n u e d t o d r o p i n 1 9 6 1 , b u t i n
1962 b o t h General Motors and Ford began s e l l i n g more new c a r s t h a n
i n a n y p e r i o d o t h e r t h a n 1955, t h e boom y e a r f o r new c a r s a l e s .
C h r y s l e r ' s s a l e s , had n o t s u b s t a n t i a l l y i n c r e a s e d i n 1961 and 1962
and i t s s h a r e o f t h e market had d e c r e a s e d by almost 5 p e r c e n t .
T h i s l e d t o t h e i n t r o d u c t i o n by C h r y s l e r o f t h e 5 y e a r s o r 50,000
m i l e s power t r a i n w a r r a n t y on i t s 1963 c a r s . C h r y s l e r changed i t s
a d v e r t i s i n g campaign t o c e n t e r on i t s new w a r r a n t y and i n 1963
C h r y s l e r ' s new c a r s a l e s i n c r e a s e d by 4 0 p e r c e n t . 2 4 By 1966,
C h r y s l e r ' s s h a r e o f t h e new car market had i n c r e a s e d from 9 . 6 p e r
c e n t i n 1962 t o 15.4 p e r c e n t w i t h p r o d u c t i o n o f t w i c e a s many
c a r s t h a n i n 1963.25
The r e a s o n f o r C h r y s l e r ' s i n t r o d u c t i o n o f t h e power t r a i n
w a r r a n t y can b e g a t h e r e d from t h e f o l l o w i n g e x c e r p t from t h e
Chrysler-Plymouth S e r v i c e Manager's S o c i e t y Meeting Guide o f
December, 1964:
I ' m s u r e y o u ' v e wondered from t i m e t o t i m e j u s t
why C h r y s l e r C o r p o r a t i o n came o u t w i t h t h e 5/50 Warranty
and C e r t i f i e d Car C a r e . . .and y o u ' v e probably come up w i t h
e
some p r e t t y i n t e r e s t i n g answers, t o o : W a l l know t h a t t h e
C o r p o r a t i o n had c o n f i d e n c e i n t h e e n g i n e e r i n g and
production q u a l i t y they p u t i n every c a r . . .or they
c o u l d n ' t a f f o r d t o g i v e t h i s o u t s t a n d i n g Warranty!
-
But when you b o i l i t a11 down, t h e r e ' s o n l y o n e
r e a s o n f o r 5/50 and C e r t i f i e d Car Care - and t h a t r e a s o n
i s s i m p l e . . . t o SELL CAE~S:~~
NEW CAR WARRANTIES
I n 1966, t h e o t h e r t h r e e d o m e s t i c m a n u f a c t u r e r s adopted t h e
power t r a i n w a r r a n t y and t h e y i n t u r n a d v e r t i s e d t h i s f a c t ,
although not as extensively as did Chrysler.
A s i m i l a r w a r r a n t y o f f e r i n g may be found i n an a d v e r t i s e m e n t
by Datsun o f Hawaii. fiatsun h a s extended t h e m a n u f a c t u r e r ' s
12 months o r 12,000 m i l e s w a r r a n t y by a n o t h e r 1 2 months and 12,000
m i l e s i n o r d e r t o g i v e a 24 months o r 24,000 m i l e s w a r r a n t y . The
a d d i t i o n i s b e i n g p a i d f o r by Datsun of Hawaii and n o t t h e manu-
facturer.27
The l a t e s t a t t e m p t t o s e l l c a r s through t h e u s e o f w a r r a n t i e s
may b e s e e n i n American Plotor's a d v e r t i s e m e n t i n t r o d u c i n g t h e
"Guaranteed Car". The a d v e r t i s e m e n t c l o s e s w i t h t h e s t a t e m e n t ,
" S i n c e w e ' r e g i v i n g American car-buyers e x a c t l y what t h e y s a y
t h e y want, we s h o u l d s e l l more c a r s t h a n we've e v e r s o l d b e f o r e . " 2 8
The w a r r a n t y s a l e s r a c e between t h e m a n u f a c t u r e r s h a s been
very c o s t l y t o t h e manufacturers. This high c o s t , i n t u r n , has
l e d t o t h e r e d u c t i o n i n w a r r a n t y t e r m s as evidenced by t h e 1 9 6 9 ,
1970, and 1971 w a r r a n t y o f f e r i n g s . Except f o r C h r y s l e r , t h e
i n d u s t r y had a w a r r a n t y c o s t o f between $50 and $60 p e r 1966 model
car. I n 1 9 6 7 , t h e f i r s t y e a r Ford i s s u e d t h e power t r a i n w a r r a n t y ,
F o r d ' s e s t i m a t e d w a r r a n t y c o s t f o r 1967 models was between $110
and $120 p e r c a r . To some e x t e n t t h e i n c r e a s e d c o s t was due
t o consumer awareness o f t h e w a r r a n t i e s , i n f l a t i o n , changes i n
mechanics' compensation and f l a t r a t e s , and i n c r e a s e d complexity
of t h e c a r s involved. But a s u b s t a n t i a l p o r t i o n o f t h e i n c r e a s e
w a s due t o t h e p a p e r work r e q u i r e d f o r p r o c e s s i n g w a r r a n t y c l a i m s
and t h e number of a d d i t i o n a l y e a r s t h a t a m a n u f a c t u r e r and d e a l e r
i s r e s p o n s i b l e f o r a c a r . 2 9 For i n s t a n c e , t h o s e c a r s s o l d i n
1967 h a v e a v a l i d power t r a i n w a r r a n t y u n t i l 1972.
The i n c r e a s e d l e n g t h of t h e w a r r a n t i e s h a s c r e a t e d a heavy
b u r d e n on t h e d e a l e r who must s e r v i c e t h e c a r s . I n some c a s e s ,
t h i s has caused much d e a l e r and consumer d i s s a t i s f a c t i o n which w i l l
b e d i s c u s s e d i n C h a p t e r s I11 and I V .
CHAPTER 11
THE \VARRASTY
Part I. Manufacturer and Consumer
Automobile w a r r a n t i e s are e x p r e s s w a r r a n t i e s o f f e r e d d i r e c t l y
by t h e m a n u f a c t u r e r t o t h e consumer. The w a r r a n t y i s l i m i t e d i n
i t s terms and d i s c l a i m s b o t h t h e e x p r e s s and i m p l i e d w a r r a n t i e s o f
t h e Uniform Commercial Code and any o t h e r i m p l i e d w a r r a n t i e s t h a t
m i g h t a r i s e d u r i n g t h e c o u r s e o f d e a l i n g . 1 The new c a r w a r r a n t y
makes c e r t a i n promises t o t h e consumer and c r e a t e s c e r t a i n d u t i e s
and r e s p o n s i b i l i t i e s f o r f h e d e a l e r . The w a r r a n t y makes t h e
e x p r e s s promise o f r e p a i r o r r e p l a c e m e n t o f d e f e c t i v e p a r t s o r
workmanship. The remainder o f t h e new c a r w a r r a n t y is d e v o t e d
t o l i m i t i n g t h e m a n u f a c t u r e r ' s and d e a l e r ' s exposure t o l i a b i l i t y .
L i m i t s are p l a c e d on t h e t i m e and m i l e a g e o f a v e h i c l e d u r i n g which
t h e w a r r a n t y is e x t e n d e d . The m a n u f a c t u r e r ' s l i a b i l i t y f o r r e p a i r
o f t h e v e h i c l e and t h e o w n e r ' s remedies f o r such r e p a i r a r e l i m i t e d
t o a n a u t h o r i z e d d e a l e r , o r i n t h e c a s e o f Ford t o t h e s e l l i n g
d e a l e r . I f t h e Ford owner, however, h a s moved o u t o f t h e v i c i n i t y
o f t h e s e l l i n g d e a l e r he may go t o t h e d e a l e r n e a r e s t him.2 A s
p o s i t e d i n C h a p t e r I t h e w a r r a n t i e s e x c l u d e c e r t a i n p a r t s , com-
p o n e n t s , o r maintenance from c o v e r a g e .
Although t h e m a n u f a c t u r e r ' s e x p r e s s w a r r a n t y c o v e r s t h e r e p a i r
o r r e p l a c e m e n t o f d e f e c t i v e p a r t s o r workmanship, t h e w a r r a n t y
document g i v e n t o t h e consumer d o e s n o t mention how t h e w a r r a n t y
w i l l be applied t o a p a r t i c u l a r item with a d e f e c t . A l l manufacturers
have e x t e n s i v e p r o c e d u r e s t h a t must b e followed i n p r o c e s s i n g a
c l a i m under a w a r r a n t y . B a s i c a l l y , t h e p r o c e d u r e s e s t a b l i s h e d
by t h e m a n u f a c t u r e r a r e i n much more d e t a i l t h a n a consumer sees
i n h i s one page w a r r a n t y . Some examples o f such p r o c e d u r e s and
services are:
( I f D e f e c t s i n a c a r ' s p a i n t , g l a s s , c a r b u r e t o r , o r en i n e
v a l v e s , might a p p e a r t o be covered by t h e w a r r a n t y ? and
s u b j e c t t o immediate r e p a i r o r r e p l a c e m e n t by any autho-
r i z e d d e a l e r . But w a r r a n t y c l a i m s f o r t h e s e i t e m s may
n o t be a c t e d upon by t h e d e a l e r w i t h o u t t h e a p p r o v a l
of t h e d e a l e r ' s zone manager. The zone manager i s a n
o v e r s e e r f o r t h e m a n u f a c t u r e r t o whom t h e d e a l e r may
o
go f o r h e l p o r a u t h o r i z a t i o n s . N p a i n t r e p a i r may be
made 60 d a y s a f t e r s a l e o f t h e c a r w i t h o u t p r i o r zone
approval. F u r t h e r , a l l g l a s s replacement r e q u i r e s p r i o r
a u t h o r i z a t i o n no m a t t e r when i t o c c u r s , and t h e r e p l a c e -
ment o f c a r b u r e t o r n e e d l e s and s e a t s a l s o r e q u i r e s
p r i o r zone a u t h o r i z a t i o n . d Such a u t h o r i z a t i o n may he in
NEW CAR W A R M T I E S
writing, or by telephone, or in the case of one local
General Motors dealer, by a zone inspector who is
available once a week.
(2) A service provided but not mentioned in the warranty
is towing charges. General Motors will pay towing
charges if (1) the vehicle cannot be driven, (2) the
necessity for towing results from the vehicle being
inoperable due to a defect that is covered by the
warranty, ( 3 ) the towing charges are reasonable, and
( 4 ) zone approval has been ~ b t a i n e d . ~
(3) Other services may even be provided which appear to
be subject to the exclusions listed in the warranty.
Decorative bright metal trim is excluded from the
warranty if the replacement or repair is necessitated
because of normal wear or exposure. The determination
of such wear or exposure is made by the dealer and
if he determines that replacement is not due to wear or
exposure, then the dealer may replace such part under
the warranty with prior zone approval.6
The above examples illustrate that although warranties are
supposed to provide some protection to the consumer, they, in
fact, may be.rendered ineffectual through detailed policy and
procedural manuals which are not freely available to the consumer.
Furthermore, these manuals appear to be written by the manufacturers
more for their own self-protection than for assistance to the
consumer in providing warranty services.
Part 11. Manufacturer and Dealer Relationships
While the manufacturer offers the warranty to the consumer,
it is the dealer who must service the consumer and perform under
the warranty. Dealers are given extensive instructions by the
manufacturers in the policies and procedures that must be followed
in (1) inspecting and preparing new cars for delivery to the
purchaser, (2) honoring warranties, and (3) processing claims for
reimbursement from the manufacturers for work performed under
the warranty.7
The importance of good service and customer satisfaction to
the reputation of the manufacturer and to the business of the
dealer is stressed in manufacturers' manuals. Dealers are
informed that they are to perform conscientiously and fairly under
the warranty.
THE WARRANTY
predelivery Servicinq
A l l c a r s must b e p l a c e d i n c o n d i t i o n f o r d e l i v e r y t o t h e
consumer. Thus, p r i o r t o t h e sale o f a car, the d e a l e r is r e q u i r e d
t o p e r f o r m e x t e n s i v e p r e d e l i v e r y s e r v i c i n g and i n s p e c t i o n . For
example, P o n t i a c d e a l e r s must perform s i x t y - o n e s e p a r a t e s e r v i c e
and i n s p e c t i o n f u n c t i o n s . These r e q u i r e m e n t s may be found i n t h e
1 9 7 0 P o n t i a c p r e d e l i v e r y s e r v i c e and a d j u s t m e n t check s h e e t i n Appendix A .
I n making the p r e d e l i v e r y s e r v i c e s and a d j u s t m e n t s , t h e
d e a l e r may be reimbursed by t h e m a n u f a c t u r e r f o r p a r t s and l a b o r
involved i n replacing defective p a r t s during predelivery servicing.8
The g e n e r a l p r a c t i c e , however, i s t o p a s s on t o t h e consumer i n t h e
s u g g e s t e d r e t a i l p r i c e a l l p r e d e l i v e r y s e r v i c i n g made a t t h e d e a l e r ' s
e x p e n s e . The s u g g e s t e d r e t a i l p r i c e may i n c l u d e c o s t s v a r y i n g between
$50 t o $150 f o r p r e d e l i v e r y s e r v i c i n g , depending on the model and
t y p e of c a r . I n 1971, General M3tors i n s t i t u t e d a reimbursement
program f o r i t s d e a l e r s on a s l i d i n g s c a l e based on t h e t y p e and model
o f the c a r s e r v i c e d . Thus, i n a d d i t i o n t o o b t a i n i n g some r e t u r n f o r
p r e d e l i v e r y s e r v i c i n g from t h e consumer, t h e G e n e r a l Motors d e a l e r
a l s o r e c e i v e d reimbursement from t h e m a n u f a c t u r e r . 9
W a r r a n t y Reimbursement
S i n c e t h e w a r r a n t y o f f e r e d by t h e m a n u f a c t u r e r p l a c e s t h e
b u r d e n of s e r v i c e upon t h e d e a l e r , the d e a l e r s a r e reimbursed f o r
w o r k done under t h e w a r r a n t y . D e a l e r s a r e reimbursed f o r p a r t s
r e p l a c e d under t h e w a r r a n t y a t t h e n e t cost o f p a r t s t o the d e a l e r ,
p l u s 25 p e r c e n t . T h i s reimbursement r a t e i s g e n e r a l l y t r u e f o r
b o t h d o m e s t i c and f o r e i g n m a n u f a c t u r e r s . 1 0
The d e a l e r i s reimbursed f o r t h e l a b o r i n v o l v e d i n making a
w a r r a n t y c o r r e c t i o n a t t h e dealer's w a r r a n t y l a b o r r a t e by b o t h
f o r e i g n and d o m e s t i c m a n u f a c t u r e r s . C h r y s l e r , f o r example, d e t e r m i n e s
t h e d e a l e r ' s w a r r a n t y l a b o r r a t e which i s 220 p e r c e n t o f t h e m e c h a n i c s '
a v e r a g e h o u r l y wage p l u s 150 p e r c e n t o f t h e d e a l e r ' s p o r t i o n o f
t h e c o s t f o r t h e f o l l o w i n g a l l o w a b l e f r i n g e b e n e f i t s f o r t h e mechanics:
p a i d v a c a t i o n ; pay i n l i e u o f v a c a t i o n ; h o l i d a y pay; s i c k pay;
s e p a r a t i o n allowance; h o s p i t a l insurance; r e t i r e m e n t o r pension p l a n ;
u n i f o r m s and l a u n d r y ; and group l i f e i n s u r a n c e . T h i s formula
d e t e r m i n e s t h e w a r r a n t y l a b o r r a t e whenever t h e w a r r a n t y l a b o r
r a t e d o e s n o t exceed t h e d e a l e r ' s s t a t e d customer r e t a i l l a b o r
c h a r g e . 1 1 The rate o f d e a l e r reimbursement i s s u b j e c t t o change
a s t h e d e a l e r ' s e x p e n s e s change and a s s u c h changes are a c c e p t e a by
t h e manufacturer .
The d e a l e r ' s reimbursement i s sometimes l i m i t e d by t h e use o f
a " f l a t rate time". F l a t r a t e t i m e i s based on t h e m a n u f a c t u r e r ' s
s t u d y which d e t e r m i n e s t h e t i m e w i t h i n which a mechanic, w i t h an
NEW CAR WARRANTIES
a v e r a g e mechanical a p t i t u d e working a t a normal r a t e o f s p e e d ,
t a k e s t o perform a r e p a i r o p e r a t i o n . The t i m e t a k e n t o perform
t h e r e p a i r a l s o includes t h e manufacturer's determination of a
r e a s o n a b l e t i m e a l l o w a n c e f o r d i a g n o s i s o f t h e r e p a i r problem.
Thus, a mechanic may t a k e f i f t e e n o r f o r t y - f i v e m i n u t e s on a
r e p a i r job which, under t h e f l a t r a t e t i m e , i s d e t e r m i n e d t o
r e q u i r e one-half hour. Whether t h e mechanic r e q u i r e s f i f t e e n
o r f o r t y - f i v e m i n u t e s , t h e d e a l e r i s reimbursed f o r o n l y t h e
f l a t r a t e t i m e o f one-half hour.12
M a n u f a c t u r e r ' s Requirements Concerning S e r v i c e Space
As p a r t o f t h e i r f r a n c h i s e w i t h m a n u f a c t u r e r s , d e a l e r s a r e
r e q u i r e d t o have s u f f i c i e n t s e r v i c i n g s p a c e and mechanics t o perform
p r e d e l i v e r y and w a r r a n t y s e r v i c e , i n a d d i t i o n t o r e g u l a r main-
tenance s e r v i c e . Both American Motors and C h r y s l e r p r o v i d e
s p e c i f i c s t a n d a r d s f o r p h y s i c a l f a c i l i t i e s used f o r s e r v i c i n g ,
r e l a t i n g s p a c e r e q u i r e d f o r s e r v i c e and p a r t s t o new c a r s a l e s . 1 3
N e i t h e r Ford n o r General Motors h a s e s t a b l i s h e d s p e c i f i c s t a n d a r d s
f o r s e r v i c e a r e a , p a r t s , inventory, o r personnel f o r t h e i r d e a l e r s ,
b u t d e a l e r s a r e a s s i s t e d i n d e t e r m i n i n g t h e f a c i l i t i e s , manpower,
and o t h e r n e c e s s i t i e s needed f o r a s e r v i c e o p e r a t i o n . 1 4
When t h e F e d e r a l Trade Commission asked d o m e s t i c m a n u f a c t u r e r s
how many o f t h e i r d e a l e r s d i d n o t meet t h e m a n u f a c t u r e r ' s s t a n d a r d s
c o n c e r n i n g s p a c e and equipment i n t h e i r s e r v i c e a r e a s , American
Mctors and C h r y s l e r answered t h a t most o f t h e i r d e a l e r s met t h e
requirements. Ford d i s c l o s e d it knew o f no d e a l e r which d i d n o t have
t h e s t a l l s and mechanics needed t o h a n d l e w a r r a n t y work, w h i l e
General Motors s t a t e d t h a t i t d i d n o t m a i n t a i c r e c o r d s o f d e a l e r s
who d o n o t meet t h e c o r p o r a t i o n ' s s t a n d a r d s . None o f t h e m a n u f a c t u r e r s
indicated t h a t they s t r i c t l y enforced s e r v i c i n g standards.15
Manufacturer ' s Aid t o D e a l e r s
I n r e t u r n f o r meeting t h e demands of t h e m a n u f a c t u r e r s ,
d e a l e r s a r e p r o v i d e d w i t h c o n s i d e r a b l e a s s i s t a n c e by t h e manu-
f-zturers. A l l m a n u f a c t u r e r s m a i n t a i n an e l a b o r a t e n a t i o n w i d e
o r g a n i z a t i o n t o a s s i s t d e a l e r s i n p r o c e s s i n g w a r r a n t y c l a i m and i n
making d e t e r m i n a t i o n s on whether a p a r t i c u l a r c l a i m i s a w a r r a n t y c l a i m .
!4anufacturers review r e c u r r i n g maintenance problems i n p a r t i c u l a r
c a r models and t h e s e problems a r e e x p l a i n e d t o a l l d e a l e r s . Non-
r e c u r r i n g maintenance problems which a d e a l e r i s u n a b l e t o d i a g n o s e
may be s o l v e d by c a l l i n g on h i s m a n u f a c t u r e r f o r h e l p . A l l b u t two
o f t h e t h i r t y - f o u r new c a r d e a l e r s i n t e r v i e w e d t h r o u g h o u t t h e S t a t e
o f Hawaii i n d i c a t e d t h a t t h e y c o u l d c o u n t on t h e i r m a n u f a c t u r e r
f o r d i a g n o s t ~ ca s s i s t a n c e . 1 6
I n a d d i t i o n t o h e l p i n maintenance, d i a g n o s i s , and c l e r i c a l
work, m a n u f a c t a r e r s .cake e x t e n s i v e e f f c r t s t o a s s i s t t h e dealers
THE WARRANTY
i n m e e t i n g t h e i r n e e d s f o r t r a i n e d mechanics and s p e c i a l i z e d e q u i p -
m e n t . American Motors h a s a t r a v e l i n g t r a i n i n g program t o t r a i n
m e c h a n i c s and o t h e r s e r v i c e p e r s o n n e l t h r o u g h o u t the c o u n t r y .
C h r y s l e r h a s many programs and f i l m s it d i s t r i b u t e s t o i t s d e a l e r s .
I n a d d i t i o n , C h r y s l e r m a i n t a i n s twenty-two p a r t s d e p o t s and p l a n t s
i n k e y l o c a t i o n s t o s u p p l y d e a l e r s . Ford a l s o h a s many s p e c i a l
programs f o r i t s d e a l e r s . G e n e r a l Motors m a i n t a i n s a network o f
t h i r t y t r a i n i n g c e n t e r s around the n a t i o n and i n 1967 t h e s e
c e n t e r s t r a i n e d 514,000 p e r s o n s . Of this amount, 120,000 t o o k
c o u r s e s d e s i g n e d t o improve mechanical s k i l l s . 1 7
CHAPTER I11
WARRANTY EXPERIEKCE-XATIOS'11'11)E
Part.1. Consumer Experience
The consumer who makes e x t e n s i v e o u t l a y s t o p u r c h a s e a new
c a r s h o u l d be a b l e t o e x p e c t a v e h i c l e s u b s t a n t i a l l y f r e e from
d e f e c t s . U n t i l 1969, domestic m a n u f a c t u r e r s promised t h e consumer
a v e h i c l e f r e e from d e f e c t s i n m a t e r i a l and workmanship. N w o
d o m e s t i c m a n u f a c t u r e r s no l o n g e r promise a d e f e c t - f r e e v e h i c l e ,
a l t h o u g h a d e f e c t - f r e e v e h i c l e i s s t i l l b e i n g o f f e r e d by f o r e i g n
m a n u f a c t u r e r s i n t h e i r w a r r a n t i e s . The domestic m a n u f a c t u r e r s '
w a r r a n t i e s p r e s e n t l y promise t o r e p a i r o r r e p l a c e any p a r t t h a t
i s d e f e c t i v e i n m a t e r i a l o r workmanship.
Many consumers have become d i s e n c h a n t e d w i t h m a n u f a c t u r e r s '
w a r r a n t y promises. The r e a s o n f o r t h i s d i s s a t i s f a c t i o n becomes
a p p a r e n t when t h e r e s u l t s o f n a t i o n w i d e consumer s u r v e y s and o t h e r
indices are studied. 1
A summary r e p o r t o f t h e s u r v e y s conducted y e a r l y by Consumers
Union i s p r e s e n t e d below. These a n n u a l s u r v e y s a r e o f major
magnitude s i n c e t h e y c o v e r between 40,000 and 50,000 c a r owners.
The c a r owners r e s p o n d i n g t o t h e s u r v e y were s u b s c r i b e r s t o t h e
Consumers Union p u b l i c a t i o n , Consumer R e p o r t s . Consumers Union
asked t h r e e questions i n order t o determine t h e e x t e n t of warranty
and w a r r a n t y r e l a t e d problems. The f i r s t q u e s t i o n asked whether
t h e new c a r t h e consumer r e c e i v e d was i n a s a t i s f a c t o r y c o n d i t i o n
when d e l i v e r e d . T h i s q u e s t i o n was used t o d e t e r m i n e t h e l a c k of
q u a l i t y c o n t r o l by m a n u f a c t u r e r s and i f poor d e a l e r p r e d e l i v e r y
servicing existed.
Consumers Union found t h a t d u r i n g t h e p e r i o d 1963 through 1970
an a v e r a g e o f 34.3 p e r c e n t of t h e new c a r p u r c h a s e r s were
d i s s a t i s f i e d w i t h t h e c o n d i t i o n o f t h e i r new c a r upon d e l i v e r y . 2
I f t h e a v e r a g e i s a p p l i e d t o 8,223,392,3 t h e t o t a l number of new
c a r s produced by d o m e s t i c m a n u f a c t u r e r s i n 1 9 6 9 , a t o t a l o f
2.8 m i l l i o n c a r owners r e c e i v e d t h e i r c a r s i n what t h e owner f e l t
t o b e an u n s a t i s f a c t o r y c o n d i t i o n .
Consumers Union f i r s t r e p o r t e d on f o r e i g n m a n u f a c t u r e r s i n
1 9 6 9 . F o u r t e e n p e r c e n t of t h o s e p e r s o n s r e p l y i n g t o t h e 1 9 6 9 s u r v e y
on Volkswagen f e l t t h e i r Volkswagen was d e l i v e r e d i n an u n s a t i s f a c t o r y
condition.4 I n 1970 Consumers Union d i d n o t have a breaksown of
f o r e i g n m a n u f a c t u r e r s , b u t s t a t e d t h a t 20 p e r c e n t o f t h e b u y e r s of
imported c a r s were d i s s a t i s f i e d w i t h t h e c o n d i t i o n o f the c a r when
received.5
WARRANTY EXPERIENCE - NATIONWIDE
The second q u e s t i o n asked by t h e Consumers Union s u r v e y was
d i r e c t e d a t t h o s e p e r s o n s h a v i n g had w a r r a n t y work done on t h e i r
car, The q u e s t i o n a s k e d i f t h e w a r r a n t y work performed was
s a t i s f a c t o r y . Twenty-five p e r c e n t o f t h e p e r s o n s having w a r r a n t y
w o r k performed on their c a r s were d i s s a t i s f i e d w i t h t h e work when
c o m p l e t e d . 6 Those p e r s o n s d i s s a t i s f i e d w i t h the work were f u r t h e r
asked: " I f t h e w a r r a n t y work was n o t performed s a t i s f a c t o r i l y , what
was t h e t r o u b l e ? "
S e v e n t y p e r c e n t o f t h e owners o f 1966 c a r s r e p o r t e d t h a t t h e
d e a l e r could not f i x t h e c a r ; 1 per cent s a i d t h e d e a l e r d i d n o t
1
c o o p e r a t e ; 7 p e r c e n t s t a t e d t h a t the i t e m t o b e r e p a i r e d was n o t '
c o v e r e d by t h e w a r r a n t y ; and 10 p e r c e n t of t h e owners gave o t h e r
reasons for t h e i r d i s s a t i s f a ~ t i o n . ~ The problem of w a r r a n t y work
t h e n , from t h e consumer's p o i n t of view a p p e a r s t o c e n t e r i n c r e a s i n g l y
on t h e i n a b i l i t y - and p e r h a p s u n w i l l i n g n e s s - o f t h e d e a l e r t o
p e r f o r m r e p a i r s r e q u e s t e d on t h e c a r .
A Newsweek magazine s t u d y o f 1967 c a r owners, based on a
s c i e n t i f i c s a m p l i n g o f 371,014 r e g i s t r a t i o n s , i n d i c a t e d t h a t w h i l e
more than h a l f o f t h o s e r e s p o n d i n g found t h e i r c a r s e x t r e m e l y
r e l i a b l e , more t h a n 9 p e r c e n t found them t o b e m e c h a n i c a l l y
u n r e l i a b l e . When q u e s t i o n e d on t h e s e r v i c e s o f f e r e d by t h e d e a l e r s ,
86 per c e n t responded t h a t t h e d e a l e r s e r v i c e s were s a t i s f a c t o r y ,
w h i l e 1 4 p e r c e n t responded t h a t t h e s e r v i c e s r e c e i v e d were
unsatisfactory. 8
A t h i r d s t u d y on w a r r a n t i e s was conducted between J u n e , 1968, and
S e p t e m b e r , 1969, by O p e r a t i o n s Research, I n c o r p o r a t e d , f o r t h e
N a t i o n a l Highways S a f e t y Bureau. O p e r a t i o n s Research found t h a t
i n w a r r a n t y r e p a i r s i n v o l v i n g s a f e t y - c r i t i c a l subsystems, more t h a n
2 2 per c e n t o f t h e v e h i c l e s were r e t u r n e d by t h e consumer t o t h e
d e a l e r because of inadequate r e p a i r . 9
A s a f u r t h e r i n d i c a t i o n o f a consumer w a r r a n t y problem on a
n a t i o n w i d e s c a l e , t h e F e d e r a l Trade Commission h a s r e c e i v e d more t h a n
3 , 0 0 0 c o m p l a i n t s on w a r r a n t i e s . T h i s number i s t h e l a r g e s t volume
of c o m p l a i n t l e t t e r s r e c e i v e d r e g a r d i n g a s i n g l e t o p i c s i n c e the
Commission was e s t a b l i s h e d i n 1914.10
A f i n a l i n d i c a t i o n of t h e q u a l i t y of c a r s b e i n g r e l e a s e d from
b o t h d o m e s t i c and f o r e i g n m a n u f a c t u r e r s i s t h e number of c a r s
i n v o l v e d i n s a f e t y r e c a l l s under t h e N a t i o n a l T r a f f i c and Motor
V e h i c l e S a f e t y A c t o f 1 9 6 6 . 1 1 Between t h e t i m e t h e Act t o o k e f f e c t
i n 1966 t h r o u g h 1969, 14,124,108 v e h i c l e s ( c a r s and t r u c k s ) have been
recalled. During t h e y e a r 1969 a l o n e , 7.9 m i l l i o n v e h i c l e s ,
7,502,440 d o m e s t i c v e h i c l e s , and 405,744 f o r e i g n v e h i c l e s , were
recalled. S i n c e t h e t o t a l r e g i s t r a t i o n o f p a s s e n g e r c a r s i n 1969 i n
t h e U n i t e d S t a t e s was 87,153,381,12 a s i g n i f i c a n t p e r c e n t a g e o f
p a s s e n g e r c a r s were r e c a l l e d .
NEW CAR WARRANTIES
While many o f t h e d e f e c t s i n v o l v e d i n t h e r e c a l l s w e r e caused
by m i s t a k e s made on t h e assembly l i n e , o r by u s e o f d e f e c t i v e
m a t e r i a l s , a s i g n f i c a n t p o r t i o n were caused by f a u l t y d e s i g n o r
e n g i n e e r i n g . 1 3 i t s h o u l d b e k e p t i n mind t h a t t h e g r e a t number
of r e c a l l s do not: n e c e s s a r i l y mean t h a t a l l c a r s r e c a l l e d had
s a f e t y d e f e c t s , s i n c e more c a r s t h a n n e c e s s a r y a r e u s u a l l y r e c a l l e d
i n o r d e r t o d i s c o v e r a l l p o s s i b l e d e f e c t i v e c a r s . Moreover, many
of t h e c a r s s u b j e c t t o r e c a l l were s t i l l i n t h e d e a l e r ' s i n v e n t o r y
and n o t y e t i n t h e hands o f t h e consumer.14 Even w i t h t h e above
c a v e a t s t a k e n i n t o c o n s i d e r a t i o n , t h e number of v e h i c l e s r e c a l l e d
i n d i c a t e t h a t c a r s a r e n o t l e a v i n g t h e f a c t o r i e s f r e e from d e f e c t s .
These d e f e c t s may l a t e r t u r n i n t o w a r r a n t y problems.
Thus, t h e r e s u l t s o f major consumer s u r v e y s and o t h e r i n d i c i e s
p o i n t toward a d e f i n i t e c a r q u a l i t y and w a r r a n t y problem f o r t h e
new car owner t h r o u g h o u t t h e n a t i o n .
Part 11. Dealer Experience
Although m a n u f a c t u r e r s appear t o make e x t e n s i v e e f f o r t s t o
h e l p t h e d e a l e r i n t h e a r e a s o f maintenance, d i a g n o s i s o f r e p a i r
problems, c l e r i c a l work, and q u a l i t y c o n t r o l , l 5 w a r r a n t y performance
i n t h e f i n a l a n a l y s i s i s up t o t h e d e a l e r . The d e a l e r ' s r e s p o n s i -
b i l i t y commences upon r e c e i p t of t h e c a r from t h e m a n u f a c t u r e r and
continues u n t i l t h e warranty expires.
Predelivery Servicing
The f i r s t s t e p i n t h e w a r r a n t y p r o c e s s , once t h e c a r i s r e c e i v e d
by t h e d e a l e r , i s p r e d e l i v e r y s e r v i c i n g . I n p r i n c i p l e , a thorough
p r e d e l i v e r y s e r v i c i n g and i n s p e c t i o n could r e d u c e t h e number o f
w a r r a n t y c l a i m s , s i n c e many w a r r a n t y r e l a t e d d e f e c t s c o u l d b e
c o r r e c t e d d u r i n g s u c h p r e s e r v i c i n g . I n p r a c t i c e , however, t h i s i s
n o t always t h e c a s e . Some o f t h e r e a s o n s why w a r r a n t y c l a i m s a r e
n o t s u b s t a n t i a l l y reduced by p r e d e l i v e r y s e r v i c i n g w i l l be
e x p l o r e d below.
P r e d e l i v e r y s e r v i c i n g and i n s p e c t i o n p l a c e s a burden on t h e
d e a l e r i f t h e c a r s he receives a r e not i n excellent condition.
According t o t h e t h i r t y - f o u r l o c a l d e a l e r s i n t e r v i e w e d , o n l y
n i n e r a t e d t h e c o n d i t i o n o f c a r s r e c e i v e d from t h e i r m a n u f a c t u r e r
a s e x c e l l e n t . Many o f t h e d e a l e r s s t a t e d t h a t t h e c a r s t h e y
r e c e i v e d were i n good, f a i r , o r poor c o n d i t i o n . The poor c o n d i t i o n
o f t h e s e c a r s i s i n some i n s t a n c e s due t o s h i p p i n g , such a s n i c k s
i n p a i n t and d e n t s , b u t t h e m a j o r i t y o f tine t r o u b l e i s due t o
poor f a c t o r y q u a l i t y c o n t r o l , such a s door a l i g n m e n t . 1 6 I f t h e
W R A T EXPERIENCE
AR NY - NATIONWIDE
c a r s a r e r e c e i v e d by t h e d e a l e r s i n less t h a n an e x c e l l e n t c o n d i t i o n ,
c o u p l e d w i t h t h e l a r g e amount o f new car sales made i n Hawaii ( t h e
a v e r a g e d e a l e r i n Hawaii sells a p p r o x i m a t e l y 385 c a r s a y e a r l 7 ) , -e &
w o r k l o a d and t i m e burden on mechanics d o i n g p r e d e l i v e r y s e r v i c e i s
g r e a t l y increased. A s a r e s u l t , t h e q u a l i t y of predelivery
s e r v i c e i s a f f e c t e d and t h e t i m e s p e n t on such s e r v i c e is r e d u c e d .
The second problem c o n c e r n i n g p r e d e l i v e r y s e r v i c e i s t h e
d e a l e r ' s compensation f o r s u c h s e r v i c i n g . The s u g g e s t e d r e t a i l
p r i c e of a new c a r may i n c l u d e s e r v i c i n g c o s t s which v a r i e s from
$50 t o $150 p e r c a r , depending on t h e make and model. This
s u g g e s t e d r e t a i l p r i c e i s e s t a b l i s h e d by t h e m a n u f a c t u r e r , b u t
d e a l e r s c l a i m t h a t t h e s e r v i c i n g c o s t which i s p a s s e d on i n t h e
s u g g e s t e d r e t a i l p r i c e , i s i n a d e q u a t e f o r compensation p u r p o s e s .
Compensation i s i n a d e q u a t e b e c a u s e it i s i n c l u d e d i n t h e r e t a i l
p r i c e , and t h e r e t a i l p r i c e i s seldom t h e s e l l i n g p r i c e . 1 8 Instead,
t h e r e t a i l p r i c e i s t h e s t a r t i n g p o i n t f o r dealer-consumer
b a r g a i n i n g . The b e t t e r t h e b a r g a i n i n g o f t h e consumer, t h e less
t h e d e a l e r w i l l r e c e i v e on t h e s a l e o f t h e c a r . S i n c e t h e r e d u c e d
s a l e s p r i c e h a s t o c o v e r the c o s t o f p r e d e l i v e r y s e r v i c e , which
c o s t i s a l r e a d y i n a d e q u a t e , p r e d e l i v e r y s e r v i c i n g i t s e l f may n o t
be performed a d e q u a t e l y due t o t h e d e a l e r ' s need f o r p r o f i t . 1 9
Thus, i n t h e f i r s t s t a g e o f t h e w a r r a n t y p r o c e s s , t h e c a r
r e c e i v e d by t h e customer may have d e f e c t s t h a t s h o u l d have been
c o r r e c t e d d u r i n g t h e p r e d e l i v e r y s e r v i c i n g b u t were n o t c o r r e c t e d
f o r t h e reasons s t a t e d .
Warranty Reimbursement
Although d e a l e r s a r e reimbursed f o r w a r r a n t y l a b o r and p a r t s
r e p l a c e m e n t , a s p r e v i o u s l y s t a t e d , d e a l e r s f e e l t h a t such
reimbursement i s v e r y i n a d e q u a t e and does n o t c o v e r t h e a c t u a l
c o s t s involved. Warranty reimbursement i s based upon t h r e e s e p a r a t e
elements: (1) payment f o r p a r t s used i n w a r r a n t y r e p a i r : ( 2 ) t h e
f l a t r a t e s c h e d u l e s o f t i m e allowed f o r r e p a i r o p e r a t i o n s ; and
( 3 ) t h e h o u r l y r a t e p a i d f o r w a r r a n t y work.
A s d i s c u s s e d i n Chapter 11, d e a l e r reimbursement f o r p a r t s
r e p l a c e d under t h e w a r r a n t y i s n e t c o s t of t h e p a r t p l u s 25 p e r c e n t .
The F e d e r a l T r a d e Commission found t h a t d e a l e r s f e e l such reirnburse-
ment t o be t o t a l l y i n a d e q u a t e s i n c e t h e c o s t t o Ws d e a l e r f o r a
p a r t i n c l u d e s f a c t o r s o t h e r t h a n t h e i n i t i a l c o s t o f t h e p a r t , and
t h e 25 p e r c e n t i n c r e a s e i n reimbursement by t h e m a n u f a c t u r e r d o e s
n o t meet t h i s c o s t . I n some i n s t a n c e s t h e c o s t o f s h i p p i n g p a r t s
t o t h e d e a l e r i s p a i d by t h e d e a l e r , which is an a d d i t i o n a l c o s t
a t t r i b u t a b l e t o t h e p a r t . Moreover, once r e c e i v e d , t h e p a r t must
NEW CAR WARRANTIES
b e h a n d l e d and s t o r e d . The N a t i o n a l Automobile D e a l e r s A s s o c i a t i o n
(NADA) e s t i m a t e s t h a t h a n d l i n g and s t o r a g e o f p a r t s i s 23 t o
25 p e r c e n t o f t h e t r u e c o s t o f t h e p a r t . Thus, t h e m a n u f a c t u r e r ' s
compensation a l l o w s t h e d e a l e r l i t t l e i f any p r o f i t on p a r t s used
i n warranty repair.20 Of c o u r s e , d e a l e r s s h o u l d n o t make a p r o f i t
under t h e m a n u f a c t u r e r ' s w a r r a n t y reimbursement program, b u t o n l y
o b t a i n f u l l c o s t r e c o v e r y . N e v e r t h e l e s s , f u l l c o s t r e c o v e r y does
n o t seem t o b e o c c u r r i n g i n p r a c t i c e . 2 1
A m a n u f a c t u r e r ' s " f l a t rate t i m e " e s t a b l i s h e s t h e t i m e allowance
f o r t h e performance o f w a r r a n t y r e p a i r s and i s based on a c t u a l
time s t u d i e s . ( F l a t r a t e t i m e i s t h e time it t a k e s an a v e r a g e
mechanic working a t a normal r a t e o f s p e e d t o complete a r e p a i r . )
I n addition, manufacturers maintain t h a t t h e f l a t r a t e t i m e includes
r e a s o n a b l e t i m e a l l o w a n c e s f o r d i a g n o s i s and job p r e p a r a t i o n .
Dealers c l a i m t h a t t h e f l a t rate t i m e i s much t o o s h o r t , p r i m a r i l y ,
due t o i n a d e q u a t e t i m e allowed f o r d i a g n o s i s . D e a l e r s a l s o s t a t e
"hat t h e s y s t e m d o e s n o t p r o v i d e f o r l e a r n i n g time allowances when
new c a r s a r e i n t r o d u c e d . M a n u f a c t u r e r s , on t h e o t h e r hand, i n d i c a t e
t h a t p r o c e d u r e s f o r t h e a d j u s t m e n t o f t h e f l a t r a t e t i m e have been
e s t a b l i s h e d and a r e o f t e n used.22 A NADA s u r v e y r e v e a l e d t h a t i n
o n e - t h i r d o f t h e r e p a i r s r e q u i r i n g one hour o r l e s s o f l a b o r t i m e ,
the mechanic c o u l d n o t complete t h e job i n t h e f l a t r a t e t i m e .
The r e a s o n s g i v e n were t h e t i m e i n v o l v e d i n moving t h e c a r t o and
from t h e vork s p a c e and p r e p a r i n g t h e job r e p o r t . T h i s same s t u d y
t i l s o showed t h a t t h e a v e r a g e mechanic does 9 . 4 hours of work based
on t h e f l a t r a t e t i m e f o r each 8.0 h o u r s he works. The s t u d y
f u r t h e r i n d i c a t e d t h a t i n e l e c t r i c a l and a c c e s s o r y r e p a i r j o b s t h e
~ . e c h a n i c sc o u l d do 7 . 4 and 6 . 6 h o u r s o f work, r e s p e c t i v e l y , based on
f l a t r a t e t i m e i n an 8 .O-hour day . 2 3 The e x c e s s o f 1 . 4 h o u r s f o r
n o n e l e c t r i c a l and nonaccessory r e p a i r j o b s would appear t o o f f s e t
t h e s l o w e r r a t e o f work on e l e c t r i c a l and a c c e s s o r y r e p a i r s . W e
d o n o t have, h ~ w e v e r , any p e r c e n t a g e s o f work performed between
-at? two c a t e g o r i e s o f r e p a i r work n o r how many j o b s t a k e less t h a n
or.xrer i s unaware cf. This sometimes
l e a d s t o a n i s u n d e r s t a n d i ~ q r e s u b t i n ? in consurter d i s s a t i s f a c t i o n *
~
D e a l e r s themselves have c r a b l e n s i n t n e i r d e a l i n g s w i t h t i e
m a n u f a c t u r e r s , which i n t u r n may a f f e c t t h e r e l a t i o n s h i p between
t h e d e a l e r and t h e c o n s u e e r , D e a i e r s t h r o u g h o u t t h e n a t i o n and i n
Hawaii a r e n o t reimbursed f o r t h e i r f a l l c o s t of p r e d e l i v e r y s e r v i c i n c j
and, i n some c a s e s , must a b s o r b c o s t s due t o poor f a c t o r y q u a l i t y
c o n t r o l . Also, d e a l e r s a r e underpaid f o r t h e i r l a b o r c o s t s because
o f t h e i n a d e q u a t e " f i a t r a t e t i n e " and low h o u r l y r c h b u r s e n e n t r a t e
s e t by t h e m a n u f a c t u r e r . These underpaynents c a y c a u s e some d e a l e r s
t o p e r f o r 2 helm par i n p r e d c l i v e m and w a r r a n t y s e r v l c l. n c .
-
.
CONCLUSIONS L I D RE;COMHENDATIONS
To a l l e v i a t e some o f the w a r r a n t y problems p o i n t e d o u t i n t h i s
r e p o r t , s e v e r a l a l t e r n a t i v e recommendations a r e d i s c u s s e d i n the
following section.
Pan 11. Recommendations
Consumer d i s s a t i s f a c t i o n w i t h t h e d e a l e r , and d e a l e r d i s s a t i s f a c t i o n
w i t h t h e m a n u f a c t u r e r ' s reimbursement p o l i c i e s r e p r e s e n t two a r e a s
i n which problems may be c o r r e c t e d through l e g i s l a t i o n .
Dealer D i s s a t i s f a c t i o n
i
Those s t a t e s which have adopted s t a t u t e s r e q u i r i n g m a n u f a c t u r e r s
t o s p e c i f y t h e d e a l e r ' s p r e d e l i v e r y and p r e p a r a t i o n o b l i g a t i o n s and
t o e s t a b l i s h a s c h e d u l e o f compensation f o r t h e performance o f
o b l i g a t i o n s a p p e a r t o have had good r e s u l t s . I n Hawaii o n l y G e n e r a l
Motors h a s adopted a method o f payment a c c e p t a b l e under this t y p e
o f s t a t u t e . T h i s form o f reimbursement r e q u i r e s d i r e c t reimbursement
t o t h e d e a l e r from t h e m a n u f a c t u r e r f o r p r e d e l i v e r y s e r v i c i n g
i n s t e a d o f reimbursement from t h e consumer t o t h e d e a l e r based on
the list price. For example, t h e M i s s i s s i p p i s t a t u t e p r o v i d e s :
The [ N i s s i s s i p p i motor v e h i c l e ] c o m i s s i o n may deny
an a p p l i c a t i o n f o r a l i c e n s e , o r revoke o r suspend a
l i c e n s e a f t e r i t has been g r a n t e d , f o r any o f t h e follow-
i n g reasons:
(9) Being a m a n u f a c t u r e r who f o r t h e p r o t e c t i o n
of t h e buying p u b l i c f a i l s t o s p e c i f y t h e d e l i v e r y
and p r e p a r a t i o n o b l i g a t i o n s o f i t s motor v e h i c l e
d e a l e r s p r i o r t o d e l i v e r y of new motor v e h i c l e s t o
r e t a i l b u y e r s . A copy o f t h e d e l i v e r y and p r e p a r a -
t i o n o b l i g a t i o n s o f i t s motor v e h i c l e d e a l e r s and a
s c h e d u l e of t h e compensation t o b e p a i d t o i t s motor
v e h i c l e d e a l e r s f o r t h e work and s e r v i c e s t h e y s h a l l
b e r e q u i r e d t o perform i n c o n n e c t i o n w i t h such d e l i v e r y
and p r e p a r a t i o n o b l i g a t i o n s s h a l l b e f i l e d w i t h t h e
commission by e v e r y l i c e n s e d motor v e h i c l e m a n u f a c t u r e r
and s h a l l c o n s t i t u t e any such d e a l e r ' s o n l y r e s p o n s i -
b i l i t y f o r p r o d u c t l i a b i l i t y as between s u c h d e a l e r
and such m a n u f a c t u r e r . The compensation a s s e t f o r t h
on s a i d s c h e d u l e s h a l l be r e a s o n a b l e and t h e r e a s o n a b l e -
n e s s t h e r e o f s h a l l be s u b j e c t t o t h e a p p r o v a l of t h e
c o m i s s i o n . Any mechanical, body o r p a r t s d e f e c t s
a r i s i n g from any e x p r e s s o r i m p l i e d w a r r a n t i e s o f any
such m a n u f a c t u r e r s h a l l c o n s t i t u t e such m a n u f a c t u r e r s '
product o r warranty l i a b i l i t y . 1
NEW CAR WARRAKTIES
Hawaii may a l s o want t o c o n s i d e r a s t a t u t e s i m i l a r t o t h a t
o f M a s s a c h u s e t t s which r e q u i r e s a d e q u a t e and f a i r compensation
f o r l a b o r and p a r t s b u t s e t s no l e v e l o f compensation.
Every m a n u f a c t u r e r , d i s t r i b u t o r , w h o l e s a l e r ,
d i s t r i b u t o r branch o r d i v i s i o n , f a c t o r y branch o r
d i v i s i o n , o r wholesale branch o r d i v i s i o n s h a l l properly
f u l f i l l any w a r r a n t y agreement and a d e q u a t e l y and f a i r l y
compensate e a c h o f i t s motor v e h i c l e d e a l e r s f o r l a b o r
and p a r t s . A l l c l a i m s made by motor v e h i c l e d e a l e r s h e r e -
under and under s e c t i o n 5 f o r such l a b o r an2 p a r t s s h a l l
be p a i d w i t h i n 30 days f o l l o w i n g t h e i r a p p r o v a l . A l l such
c l a i m s s h a l l be e i t h e r approved o r d i s a p p r o v e d w i t h i n
30 d a y s a f t e r t h e i r r e c e i p t , and when any such c l a i m
i s d i s a p p r o v e d t h e motor v e h i c l e d e a l e r who s u b m i t s it
s h a l l b e n o t i f i e d i n w r i t i n g of i t s d i s a p p r o v a l w i t h i n
s a i d p e r i o d , and each such n o t i c e s h a l l s t a t e t h e s p e c i f i c
grounds upon which t h e d i s a p p r o v a l i s based.2
There i s no i n f o r m a t i o n c o n c e r n i n g t h e e x p e r i e n c e o f d e a l e r s
i n Massachusetts with t h i s s t a t u t e . The a p p a r e n t drawback o f s u c h
a s t a t u t e seems t o be t h a t t h e r e i s no d e f i n i t i o n of what a d e q u a t e
and f a i r compensation means o r who i s t o d e t e r m i n e when t h e compen-
s a t i o n i s f a i r and a d e q u a t e . The M a s s a c h u s e t t s s t a t u t e d o e s p r o v i d e
t h a t t h e a t t o r n e y g e n e r a l i s t o e n f o r c e t h e s t a t u t e , b u t such e n f o r c e -
ment would a p e a r t o b e a f t e r t h e d e a l e r h a s complained o f i n a d e q u a t e
compensation.3 A p o s s i b l e a l t e r n a t i v e t o t h i s method o f enforcement
i s t o a l l o w t h e Hawaii Motor V e h i c l e I n d u s t r y L i c e n s i n g Board t o make
a d e t e r m i n a t i o n a s t o t h e adequacy o f t h e compensation when r e q u e s t e d
by t h e d e a l e r and t h e n r e q u i r e enforcement by t h e a t t o r n e y g e n e r a l
i f t h e m a n u f a c t u r e r s f a i l t o comply w i t h t h e b o a r d ' s d e c i s i o n .
The M a s s a c h u s e t t s s t a t u t e f u r t h e r r e q u i r e s a p p r o v a l o f c l a i m s
f o r reimbursement w i t h i n 30 d a y s a f t e r r e c e i p t by t h e m a n u f a c t u r e r
and payment w i t h i n 30 d a y s a f t e r a p p r o v a l . T h i s r e q u i r e m e n t does
n o t seem t o speed payment s i n c e 6 0 d a y s c o u l d e l a p s e between r e c e i p t
and payment. The d e a l e r s i n Hawaii r e c e i v e reirrJ3ursexent a s e a r l y
a s 4 5 days, with t h e average being 72 days, A b e t t e r a l t e r n a t i v e
may be t o r e q u i r e advance payment o r c r e d i t a l l o w a n c e s , such a s
t h a t used by Ford which i s based on a mont"ily a v e r a g e o f t h e d e a l e r ' s
warranvy c o s t s computed by d i v i d i n g t h e p r e v i o u s y e a r ' s w a r r a n t y
c o s t s by t w e l v e , T h i s t y p e o f r e i r b u r s e m e n t would n o t add a g r e a t
burden on t h e m a n u f a c t u r e r s and i s a p p a r e n t l y s n c c e s s f u l i n F o r d ' s
operation.
Consumer D i s s a t i s f a c t i o n
Once t h e d e a l e r i s ai3equatel.y reimbursed f o r h i s work, he w i l l
more l i k e l y improve h i s w a r r a n t y work, Since b u s i n e s s e s a r e p r o f i t
motivated however, i t would s t i l l be t o a d e a l e r " advantage i n
CONCLUSIONS AND RECOMMENDATIONS
some i n s t a n c e s t o c l a i m t h a t t h e w a r r a n t y d i d n o t a l l o w s u c h work
o r t o c h a r g e f o r w a r r a n t y work when the work s h o u l d b e done f o r
f r e e . A d d i t i o n a l l y , p r e s s u r e i s o c c a s i o n a l l y e x e r t e d by t h e manu-
f a c t u r e r s upon t h e d e a l e r s n o t t o b e t o o l e n i e n t w i t h w a r r a n t y
complaints.4 Thus, t h e consumer s h o u l d a l s o b e c o n s i d e r e d i n
enacting warranty l e g i s l a t i o n .
A s t a t u t e s i m i l a r t o the C a l i f o r n i a s t a t u t e o r the C o n g r e s s i o n a l
b i l l s e s t a b l i s h i n g c e r t a i n minimum r e q u i r e m e n t s t h a t a w a r r a n t y
must c o n t a i n may be c o n s i d e r e d t o p r o t e c t t h e i n t e r e s t s o f t h e
consumer. The l e g i s l a t i o n s h o u l d r e q u i r e t h e m a n u f a c t u r e r t o pay
f o r t h e r e p a i r o r r e p l a c e m e n t o f any p a r t it s u p p l i e s t h a t i s d e f e c t i v e
i n m a t e r i a l o r workmanship w i t h i n t h e w a r r a n t y p e r i o d , w i t h no excep-
t i o n s p e r m i t t e d f o r s u c h items a s b r a k e s o r wheel a l i g n m e n t i f
t h e v e h i c l e i s used f o r o t h e r t h a n b u s i n e s s p u r p o s e s . T h i s would
a l l o w t h e m a n u f a c t u r e r t o d e t e r m i n e whether o r n o t t o o f f e r a
w a r r a n t y and the l e n g t h o f the w a r r a n t y , w h i l e t h e s t a t e would
d e t e r m i n e t h e minimum coverage.
Enforcement o f w a r r a n t y r e q u i r e m e n t s s h o u l d be s o l e l y the respon-
s i b i l i t y o f t h e Consumer P r o t e c t o r . Placement o f t h e b u r d e n o f
e n f o r c e m e n t on t h e Consumer P r o t e c t o r i n s t e a d o f t h e Motor V e h i c l e
I n d u s t r y L i c e n s i n g Board w i l l p r e v e n t a c o n f l i c t o f i n t e r e s t f o r
t h e board, s i n c e t h e b o a r d would b e c h a r g e d w i t h p r o t e c t i n g t h e d e a l e r s ,
i n t h e i r warranty r e l a t i o n s with t h e manufacturer.
FOOTNOTES
Chapter I of Liability: i970 A s s m g e r Cars (Except
ifaverifks and Cortinasj and Light T r u c k s " ;
General :%tors Corporacion, "19iC Xaiei Ger.rral
Xodel car year is c5e period from the intro- Motors Passeager Car Xev Vehicle !iarracty".
duction of a new car in September to August
of the following year. Ford Motor Co-npaay, "l97l Xodel Passenger Car
(Except Capri, C m e t , Xaverick and Sinto: and
U. S. Federal Trade Commission, Staff Report Light Truck-Warranty and Limitation of Liabi-
on Autorr.obi:e tiarranties (Kashingiun: C. 5 . lity"; General %tors Corporation, "1971 M O D C
Govermenr Printing Office, 1568). p. 24. Passenger Car Kew Vehicie 'Sarranty - Zxcept
(Hereinafter cited as FTC Report, 1468.) Kova and IJega 23OC". Free adjustment i r e m
include - cheel balancing, alig~.nmt,engine
;
FTC Report, 1968, p. 2. atjust-nents, addition of fluids, except
gasoline, and tightening of ncts, bolts and
The exclusions specifically include engine iiitings.
tune-up, adjustments of wheels, brakes, or
clutch, lubrication and oil change, and See advertisement in Business Week,
.
replacement of items such as brake and ciutch
~ . i n g s ,spark plugs, ignition points, filters,
m
September 25, 1971, ? p . i i - 4 6 .
clutch plates, and light bulbs. Also excluded PTC Report, 1968, p. 29.
is deterioration l i i e to normal wear or exposure
of soft trim, decorative bright metal trim, American ?lotors Corporation, "1966 New Car
pointed parts, rubber parts and the like. .,
warranty"; Chrysler Corporation, "1966 ~ e v
Car 'h'arranty"; Ford X t t r Company, "1966
?TC Report, 1968, pp. 27-28. S e w Car Warranty"; General ?lotors Corporation,
"1566 New Car Warranty".
M.,Appendix B.
Ibid. .Ford Motor Compny, "1969 Model Car and T~do
idneel Drive Light Truck Warranty" and "Ford
and Dealer Basic Warranty and Limitation o f
U. S. Federal Trade Coamission, Report on Liability: 1970 Passenger Cars (Except
Automobile Uarranties Washington: 1970j, ?lavericks and Cortinasj and Light Trucks".
p. 16. (Hereinafter cited as FTC Report,
1970.j American Motors Corporarion, "American Xators
1970 S e w Ambassador, Rebel, Javelin, A l l
Ibid. Warranty"; Ghrysler Corporation, "Chrysler
Corporation's Warranty and Limitation of
- p?.
Ibid., 11-18; FTC Report, 1968, p. 25; Liability for 1970 Mode1 Passenger Cars";
See generally, A*erican Motors Corporation, Genera: Motors Corporation, "1970 Model General
Warrznty Administration; Warranty and Policy Motors Passenger Car Sew Vehicle :iarrantyW.
Procedures (Detroit: 1970); Chrysler Corpora-
tion, Warrant? Policy and "rocedure ?fanual F o r d Xotor Company, "Ford and Dealer Basic
Passenger Cars and Trucks (Detrcic: 1570); Xarranty and Limitation of Liability: i570
Ford Xotor Company, Warranty and Policy Manual Passenger Cars (Except Mavericks and Cortinasj
(Dearborn: 1970) : General Xotors Cwerseas
, . and Light Trucks".
Disrributors Corporation, GMODC Service Policies
and Procedures Manual *ll70H (New York: 1970). \.
.*lssan:+ator Company, "Nissan New Vehicle
Warranty"; l c y o t a Xotcr Sales Colipany,
Components deleted were suspension, steering "Warranty"; Valkswagenwerk Aktiengesellschait,
g e a r , steering pump, steering linkage, wheels, I,.,
%arrant? for New Voikswagen Vehicles".
and wheel bearings.
FTC Report, 7
. . 19; See generally, k e r i c i n
M a r c r z Corporatian; Chrysler Corparatia;; Ford
:%tar Company; Cener~l\ l o t o r s O ~ e r a e a sDistii- FTC R e p o r t , i ? M , p p . 30-31
butcrs Corporation.
in
See ad-~ertisrmest ,
- J a z u a r y , !465,
FTC Report, 1970, 2. 20; herican Xotors pp. 152-153,
Corporation, "American Motors 19783 Krw
L
Ambassador, Rebel, .;a~ieliz,i % Warranty"; PIC Y e p o r r , 1568, pp. 3C-33.
Chryslrr Corporation, "Chrysler Corporarion's
nn,rraaty
~ - and Linitaiion c: Liability for 1970
..
"odei Ztsstlger Cars"; Ford ? o o Cocpar.;,,
!tr
- p.
Ibid., 35
"Fcrd and Dca;cr &sic '#larran:i am5 LimiLnricn
28. Business Week, September 25, 1971, p. 46 :
I. Chrysler further states the dealer's cost of
fringe benefits other than those listed
29. FTC Report, 1970, pp. 23-25. (including those required by law snch as
social security and worlcmea's cmpensationj
are not included in the warrancy labor rate
unless such costs are part of a union nego-
Chapter 11 tiated contract. U. S. federal Trade
Commission, Report an Autmobiie Warranties
1. The GCC Warranties disclaimed are found in
- . .
(Washineton: 1970).. o. 109. (Hereinafter
cited as FTC Report, 1970.); Chrysler
Hawaii Revised Statutes, s e e s . 490: 2-313 Corporation, Warranty Policy and Procedure
to 490: 2-315. Manual Passenger Cars and Trucks (3etroit:
2. Ford Motor Company, "1971 Mode: Passenger Car 19701, section 11, subject 11-5, p. 1.
General Motors has a similar formcia
(Except Capri, Comet, Maverick and Pinto) and
to Chrysler, General Motors Overseas
Light Truck-Warranty and Limitation of
Distributors Corporation, W O D C Service
Liability". Policies and Procedures Manual 11170H (Sew
3. General Motors Overseas Distributors York: 1970), part 2, secrion 2, part 5,
Corporation, GMODC Service Policies and p. 1.
Procedures Manual #1170H (Cew Y o r b : 1970), American Motors does not adopt a
part 2, section 2, part 4, pp. 7-8. formula approach, but instead studies the
wage rate in the dealer's market area and
then sets his warranty reimbursement rate
at a level that will allow him t o compete.
5. E.,
part 2s. section 2, part 5, p. 4. FTC Report, 1970, p. 109.
Ford Motor Company computes its warranty
6. U., 2, section 2, part 4, p. 8
part labor rate at the average wage rate for
similar mechanics skills as computed by the
7. See for example, American Motors Corporation, Department of Labor's Bureau of Labor Stan-
Warranty Administration; Warranty and Policx dards for each labor a r e a . Ford then rnulti-
Procedures (Detroit: 1970); Chrysler Corpora- plies that wage by 200 fo 215 per cent
tion, Warranty Policy and Procedure Manual depending on the particular dealer's
Passenger Cars and Trucks (Detroit: 1970); performance in certain prescribed areas.
Ford Motor Company, Warranty and Policy Manual FTC Report, 1970, pp. 108-109.
(Dearborn: 1970):. General Motors Overseas
. Nissan Motor Company (Datsun) bases its
Distributors Corporation, GMODC Service labor rate on net labor cost which includes
Policies and Procedures Manual #1170H (New York: base pay and fringe benefits. This is
1970). compared with an 80 per cent valuation
These manuals contain information and of retail labor rate and a comparison with
instructions with regard to such matters as: other manufacturer reimbursement rates in
(1) the terms of warranties for the current as the area. Interview with Datsun Dealer,
well as previous model years, (2) a list af November, 1970.
items or repairs not covered by warranties, Toyote Motor Company uses the General
(3) procedures relating to receipt, inspection, Motors formula which the dealers compute
and delivery of new cars fo buyers, ( 4 ) dis- and then send to Japan for approval. Inter-
cussion of rates at which the dealer will be view with Toyota Dealer, October, 1970.
reimbursed for work performed and hou; he will Volkswagen of America takes an average
be credited or paid, (5) discussion and of the retail labor rate in all fifty states
explanation of the forms to be used by dealers and pays all Volkswagen dealers that average.
in claiming reimbursement, ( 6 j instructions Inferview with Volkswagen Dealer,
concerning disposition, storage, or return October, 1970.
of parts replaced by dealers in performing
work, and (7) maintenance of records of warranty 12. FTC Report, 1968, p. 98
work the dealer has performed and a reference
to periodic examination of the records by the 13. Chrysler's standards also include the value
manufacturer's representative. of parts inventory and number of personnel
to be provided by the dealer. Chrysler
8. C . S. Federal Trade Cmission, Staff Report requires its dealers selling 1,000 cars a
on Automobile Warranties (Washington: U. S. year to have 18,050 square feet devoted to
-
Government Printinn Office. 19681. . . 91.
. o
(Hereinafter cited as FTC Report, 1968.) See
servicing. American Motors dealers who sell
fifty cars or less per year must have 3,800
also chapter I\, pert 11. square feet of building space of which
66 per cent is devoted to service, while a
9. Interview with General Motors Dealer, dealer selling 1,000 c a r s annually is urged
August, 1970. to provile 28,600 square feet of space with
;he service lepartmmt occupying73
10. FTC Report, 1968, p. 94 per c e n t of the area. &. , pp. ill-114.
16. E.,b - 1 1 7 .
pp. l i - (Xew
1971 'iork: The N e w iori Times Book a n d
E d u c a t i o n a l D i v i s i o n , 19703, p. 660.
IS. s.,
pp. 117-119
16. s.,n t e r v i e x s
p. 1 2 5 ; I w i t h new car -
d e a l e r s , J u i y t o September 1971. rer c i t e d as FTC Re
17. FTC R e p o r t , 1 9 6 8 , pp. :27-128.
-,
Ibid. p. 45, f o o t n o t e I
Chapter 111
FTC R e p o r t , 1 9 6 8 , 9 . 9 0 ; I n t e r v i e w s w i t h new
e a r d e a l e r s , .July t o September, 1971.
1. T h e s e s u r v e y s are used p r i m a r i l y t o i n d i c a t e
a n e x i s t i n g problem a n d t h e r e f o r e , do n o t I n d e t e r m i n i n g how many c a r s a n a v e r a g e d e a l e r
r e p r e s e n t r h e e x p e r i e n c e of t h e e n t i r e s e l l s , a few of t h e l a r g e r d e a l e r s have n o t
buying pubiic. been included w i t h i n t h e average as they s e l l
between 1 , 0 0 0 a n d 3 , 0 0 0 c a r s a y e a r .
2. Sea Appendix B , T a b l e 1 .
"-C
rl R e p o r i , 1970, pp. 73-15
3. A u t o m o b i l e X a n u f a c t u r e r s A s s o c i a t i o n , 1970
Automobile F a c t s a n d Z i g u r e s ( D e t r o i t : l970), -
Ibid.
p. 9 .
I b i d . , pp. 102-103.
4. 'Warranties ...
a n d w h a t s h o u l d be done a b o u t
them,'' Consumer R e p o r t s , A p r i l , 1 9 6 9 , pp. 177- I b i d . , pp. 1 0 3 - 1 0 4 .
181.
-,
Ibid. p. 105.
5. "Some v a r i a b i e c o s t s of o w n e r s h i p ; r e p a i r s ,
i n s u r a n c e , w a r r a n t i e s , " Consumer R e p o r t s , -,
Ibid. p . 119-120.
A p r i l , 1 9 i 0 , pp. 201-20L.
I n t e r v i e w s w i t h new c a r d e a l e r s , J c l y t o
6. S e e Appendix B , T a b l e 2 . S e p t e z b e r , 1971.
7. See A p p e n d i x 8 , T a b l e 3 . FTC R e p o r t , 1968, pp. 95-96, 102
8. U. S . F e d e r a l T r a d e Commission, S t a f f R e p o r t -,
Ibid. p . 96.
o n Automobile W a r r a n t i e s (Washington: U. S.
- . ..
Government P r i n t i n e O f f i c e , 1 9 6 8 ) . UP. 63-66. FTC R e p o r t , 1970, p . 110-111.
( H e r e i n a f t e r c i t e d as FTC R e p o r t , 1 9 6 8 . )
-
:bid., pp. 110-114. M a n u f a c t u r e r ' s s t u d i e s ,
9. B. H. Lovejoy and u t l k r s , A Stud? of Garage
Repair and Dealer Warranty !Vactices (Spring-
however, g i v e d i f f e r e n t r e s u l t s .
" 2 . 112-113.
x.,
i l r l d : Clearinghouse f o r F e d e r a l S c i e n t i f i c
and Y e c h n i c a l I n i o n n a t i o n , 1 9 6 9 ) , p. 8 8 . Of 29. FTC R e p o r t , 1 9 6 6 , p . 1 0 1 . I n t e r v i e w s w i t h
i n t e r e s t i n t h i s study is t h a t the q u a l i t y new car d e a l e r s , J u l y t o September 1971.
o f r e p a i r was found i n a d e q t a t s . I n a 1 1 of
t h e jobs which involved a s a f e t y - c r i t i c a i
s u b s y s t e m o f t h e v e h i c l e , more t h a n 11 p e r
c e n t o f a i l n o n - w a r r a n t y a n d more t h a n 22 Chapter IV
p e r c e n t o f a 1 1 w a r r a n t y j c b s were r e t u r n e d
b e c a u s e o f i n a d e q u a t e r e p a i r . Moreover,
more t h a n 6 p e r c e n t o f t h e c u s t o m e r s i r v o l v e d i. See c h a p t e r 11.
c i t e d a s a f e t y hazard p r e s e n t i n n o n - w a r r a n t y
r e p a i r j a b s , a n d more t h a n 11 p e r c e n t 2. U. S . F e d e r a l Trade C o m . i s s i o n , R e p o r t on
r e p o r t e d such h a z a r d is r e p a i r s u n d e r w a r r a n t y A u t m o b i i e ! < a r r a n t i r s
(p. 88). u . 9:.
i0. STC R e p o r t , 1 9 5 8 , pp. 6 6 - 6 7 , 3 c r i c g the
f o u r t e e n - m o n t h p e r i o d between J a n u a r y 1, 1967
a n d F e b r u a r y 2 9 , 1968 t i e Commission r e c e i v e d Chapter V
380 l e t t e r s of c o m p i a i n t c o n c e r n i n g w a r r a n t y
problems o r 1 3 per c e c t of t h e t o t a l c m p l a l n t
file. u. 1. Kass. Sen. Laws Ann., ch. 93B, s e c . I; Is .
Code Ann., s e c . 5 0 1 7 . 7 - 0 6 ( 9 ) ; Tenc. Code Ann.,
\i .
:I. i5 U. S . C . A. s e c . 3 3 : e t . s r q . (19633. s e c . 5 9 - 1 7 1 4 ( h ) ( 7 ) : W i s . S r e c . Ann., s e c .
Z 1 8 , O l ( I ) ( t j (22).
iZ. The :
2. Kiss. Code Ann., sec. 8017.7-06(9) H. R. 5519, 92nd Cong., 1st Sess. (1971);
I?. R. 5942, 92nd Cong., 1st Sess. (1971);
3. Brown, "A Bill of Rights for Auto Dealers," H. R . 10673, 92nd Cong., 1st S e s r . (1411)
12 B . C. Ind. & Cm.. L. Rev. 757, 807 (1971).
2G. S. 1221, 92nd Cong., 1st Sess. (1971);
4. fbid., p. 809. H. R. 6314, 92nd Cong., 1st Sess. (1971)
5. Fla. Scat. Ann., sec. 320.696; Mass. Gen. Laws 25. S. 425, 92nd Cong., 1st Sess. (1971).
Ann., c h . 33B, s e c . 6; Miss. Code Ann., s e c .
8017.7-06(10j; Tenn. Code Ann., s e c . 59-1714 26. U. S., Congress, Senate, C m i t t e e on
2i8.0ii3i(a)
(h)(ij; Wis. Stat. A n n . , $ 3 ~ . Comerce, Hearings on S. 986. Consumer
(22j. Product Warranties and Federal Trade
Commission Improvement Act of 1971, 92nd
6. Nass. Gen. Laws Ann., c'n. 43B, s e c . 6 ; -Y Cong., 1st S e s s . , 1571, PP. 3 0 - 3 : .
Code Ann., s e c . 8017.7-06(10).
27. s.,p p . 29-32.
7. Miss. Code Ann., s e c . 8017.7-06(10j; Term.
Code Ann., sec. 59-1714( h j (7). 28. m.,pp. 33-34.
8. S. B. 277, Arizona, 1970 Legislative Session. 29. m.
9. Brown, p . 807. 30. E.,
pp. 35-36.
10. Whitford, "Law and the Consmer Transaction:
A Case Study of the Automobile Warranty,"
1968 W i s . L. Rev. 1006, 1015, note 175
Chapter VI
(1968).
11. Brown, p. 807, note 256.
1. Miss. Code A m . , sec. 8071.7-06(Yj.
12. 7 A. L. R. 3d Validicy and Constructi-
Statutes Regulating Dealinas between Autwo- 2. Mass. Gen. Laws Ann., ch. 038, sec. 7
bile Manufacturers, Distributors and Dealers,
3. Mass. Gen. Laws Ann., ch. 93B, s e c . 12.
1173, L192.
Calif. Civil Code, s e c s . 1190 to 1795.
4. U. S. Federal Trade Cmiasion, Staff Report
on Automobile Warranties (Washington: U. S.
Calif. Civil Code, s e c . 1793.2 (a). Government Printing Office, 1968), p. 145;
U. S., Congress, Senate, Consumer Subcoonnittee
of the ComiStee on Commerce, Hearings on
Calif. Civil Code, secs. lj93.3, 1793.5
S. 3074. Consumer Products Guaranty Act, 91st
L11. Ann. Stat., ch. 121k, sec. 262L. Cong., 2nd Sess., 1970, pp. 26-33.
H. B. 3458, Florida, 1970 Legislative Session.
H. F. 1628, Xinnesota, 1969 Legislative
Session.
S. 2726, 90th Cong., 1st Sess. (1967);
H. R. 16109, 90th Cong., 1st Sess. (1967).
S. 2721, 90th Cong., 1st Sess. (1967);
W. a. 14746, 90th Cong., lsr Sess. (1967)
21. 8 . R. 10690, 91st Cong., 1st Sess. (1969);
W. 8. 12656, 51st Cong., 1st Sess. (1955);
. n . 15782, 9lst Cong., 2nd Sess. (1570);
H. R. 18056, gist Cong., 2nd Sess. (1970).
22. I?. a. 13395, 9Lst Cong., 1st Sess. (1569);
S. 30iL, 51sr Ccng., 2nd Sess. (1970);
Y. R . 18758, 9:sL Cang., 2nd Sess. (1570);
H, R. 19293, 91st Cung., 2nd S e s s . (1570).
23. s. 986, 92nd Cong., 1st Sess. (1971);
R . R. 261, 92nd Cong., 1st Sess. (1971);
F. R. 985, 92nd Cong., 1st Sess. (1971);
H. R . 4809, 92nd Cong., 1st S e s s . (1971);
P. R . 5027, 92nd Cong., 1st Sess. (1971;;
APPENDIX A
V
PONTIAC MOTOR OiVlSlON
~ ~ * corporataor~
~ ~ r Hu~aomw
~ A W T E N ~ N C C
1971 PONTIAC
VEHICLE lDENTlFICATlON N O .
PRE-DELIVERY SERVICE
AND ADJUSTMENT
CHECK SHEET
2. BOCbY.CHASS6 INSPECTION A N D ADJUSTMENTS
WNCTIGNAILY CHECK AND COlllECl AS N K E S S A R I :
.
CHECX AND CORRECT A5 NECESSARY:
. %rering d u r n " ,gniliOn lack
Neutral %wit',,
. .
rianrrn,rrion pe:io,manc+ ,inri"d;"g down ,hiit
.*itch:
C d i s i a n t i a l , if 10 equippad
Steeiing. r l e l i i n g wheel c e n t t i poa+ien ond
. iandling
Squeak% aod iolllpi
H ~ a l r "nd/oi a;, iardeio*ri
i
. "omi
5. (71 APPEARANCE
.
INSPECT CONDiiiON AND CGRIECI AS NECESSARY:
. Wosb car
E l t r r i a r ,rim and m.:ding.
Erieiioi i,":sh~brrri. ~e"ih."@.
%pa: pa,".
rrpatr. cub ""3, and d d 0 , l &m."p iaq"i,~d
6 d REMOVE KEY NUMBER SLUGS FROM DOOR A N D TRUNK
KEYS A N D P U C E SPARE KEYS A N D SLUGS I N ENVELOPE
PROVIDED
OWNER - DEALER - VEHICLE DATA
i
C Fi:I in owner and vehicle datn an foce of "Owner Identification NOTE. Xefsi :o Ssrriie Monvci !ai Correct ipeciiicafioor
end New vehiicie Worianty" folder provided wi!h vehicle.
ExnInin v4o,.rn,v Prarisian.:
- Review Owner', Manual with owner.
.- neiraos,;o,e
~ ~~
..: rper0,:an of oil ocieisories.
APPENDIX B
Table 1
Question: "Was t h e new c a r i n s a t i s f a c t o r y
c o n d i t i o n when d e l i v e r e d ? "
General
Motors Chrysler -
Ford American Motors Average
1970 C a r s Approximately 36% o f t h e c a r s were i n an u n s a t i s f a c t o r y
c o n d i t i o n when d e l i v e r e d .
1969 .Cars
% Yes
% NO
1968 C a r s Approximately 33% o f t h e c a r s w e r e i n a n u n s a t i s f a c t o r y
c o n d i t i o n when d e l i v e r e d .
1967 C a r s Approximately 35% o f the c a r s w e r e i n a n u n s a t i s f a c t o r y
c o n d i t i o n when d e l i v e r e d .
1966 C a r s
% Yes
% NO
1965 C a r s
% Yes
% NO
1964 Cars
% Yes
s, No
1963 C a r s
% Yes
% NO
Source: U. S . F e d e r a l Trade Commission, S t a f f R e p o r t on Automobile
W a r r a n t i e s (Washington: U. S. Government P r i n t i n g O f f i c e , 19681, p . 58;
" W a r r a n t i e s : T h i s y e a r ' s r e t r e a t , " Consumer R e p o r t s , A p r i l , 1 9 6 8 ,
pp. 176-179; " W a r r a n t i e s . . . a n d what s h o u l d b e done a b o u t them,"
Consumer R e p o r t s , A p r i l , 1969, pp. 177-181; "Some v a r i a b l e c o s t s o f
ownership: R e p a i r s , i n s u r a n c e , w a r r a n t i e s , " Consumer R e p o r t s , A p r i l ,
1970, pp. 201-204; "From showroom t o s e r v i c e shop," Consumer R e p o r t s ,
A p r i l , 1971, pp. 203-206.
Table 2
Question: "Was w a r r a n t y work
performed s a t i s f a c t o r i l y ? "
General
Motors Chrysler Ford American Motors Total
1970 Cars Approximately 26% s t a t e d t h e y were u n a b l e t o g e t t h e i r
c a r s s a t i s f a c t o r i l y r e p a i r e d under t h e w a r r a n t y .
1969 Cars Approximately 25% s t a t e d t h e y were u n a b l e t o g e t t h e i r
c a r s s a t i s f a c t o r i l y r e p a i r e d under t h e w a r r a n t y .
1968 Cars Approximately 25% s t a t e d t h e y were u n a b l e t o g e t t h e i r
c a r s s a t i s f a c t o r i l y r e p a i r e d under t h e w a r r a n t y .
1967 Cars Approximately 25% s t a t e d t h e y were u n a b l e t o g e t t h e i r
c a r s s a t i s f a c t o r i l y r e p a i r e d under t h e w a r r a n t y .
1966 Cars
% Yes
% NO
Total
1965 Cars
% Yes
% NO
Total
1964 Cars
% Yes
% NO
Total
1963 Cars
% Yes
% NO
Total
Source: U . S. F e d e r a l Trade Commission, S t a f f Report on Automobile
W a r r a n t i e s (Washinqton: U . S. Government P r i n t i n q O f f i c e , 1 9 6 8 ) ,
p . 60; " w a r r a n t i e s ; T h i s y e a r ' s r e t r e a t , " consumer R e p o r t s , A p r i l ,
.-
1968. w w . 176-179: " W a r r a n t i e s . . . a n d what s
.
them," Consumer R e p o r t s , A p r i l , 1969, pp. 177-181; "Some v a r i a b l e
ut
c o s t s of ownership: R e p a i r s , i n s u r a n c e , w a r r a n t i e s , " Consumer
R e p o r t s , A p r i l , 1970, pp. 201-204; "From showroom t o s e r v i c e s h o p , "
Consumer R e p o r t s , A p r i l , 1971, pp. 203-206.
Table 3
Question: " I f w a r r a n t y work was n o t performed s a t i s f a c t o r i l y ,
w h a t was t h e t r o u b l e ? "
General
Motors Chrysler -
Ford American Motors Total
1966 Cars
Dealer d i d n o t cooperate 11.1 11.7 12.1 11.5
Not c o v e r e d 9.3 5.8 6.7 7.9
Dealer could n o t f i x 71.6 69.2 70.0 70.6
Other 8.0 13.3 11.1 10.0
Total 795 377 404 1,616
1965 C a r s
Dealer did n o t cooperare 14.9 18.0 14.2 15.2
Not c o v e r e d 12.6 11.7 8.2 11.2
Dealer could n o t f i x 66.3 61.2 67.3 65.6
Other 6.2 9.1 10.3 8.0
Total 1,597 649 681 3,092
1964 C a r s
Dealer d i d n o t cooperate 15.8 18.1 15.2 16.0
Not c o v e r e d 11.4 18.4 11.2 12.2
Dealer could not f i x 64.8 54.8 66.4 63.8
Other 8.0 8.7 7.2 8.0
Total 1,293 343 429 2,232
1963 C a r s
Dealer d i d not cooperate 19.0 18.6 12.8 17.1
Not c o v e r e d 14.7 18.6 11.4 13.7
Dealer could n o t f i x 59.0 52.5 67.6 61.5
Other 7.3 10.3 8.2 7.7
Total 1,029 280 376 1.878
S o u r c e : C. S. F e d e r a l T r a d e Commission, S t a f f Report o n Automobile W a r r a n t i e s
(Washington: L'. S . Government P r i n t i n g O r r i c e , 1 9 6 8 ) , p . 6 1 . The r e s p o n s e s f o r
y e a r s f o l l o w i n g 1966 a r e u n a v a i l a b l e , a l t h o u g h r e p e a t e d i n q u i r i e s w e r e made t o
Consumers Cnion.
APPENDIX C
Questionnaire
I n answering t h e following q a e s t i o n s , i f t h e spaces provided a r e n o t
s u f f i c i e n t , p l e a s e u s e t h e back of t h e page. Xost o f t h e q u e s t i o n s may be
answered by s i m p l y p l a c i n g a n X i n t h e a p p r o p r i a t e box; a few q u e s t i o n s a s k
f o r w r i t t e n - i n a n s w e r s . You may w r i t e a d d i t i o n a l comments whenever you
w i s h t o do s o . P l e a s e i g n o r e t h e numbers b e s i d e s t h e q u e s t i o n s and a n s w e r s ;
t h e y a r e f o r machine t a b u l a t i o n o n l y .
The L e g i s l a t i v e R e f e r e n c e Bureau would l i k e t o t h a n k you i n advance f o r
your cooperation i n completing t h i s q u e s t i o n n a i r e .
1. Do you p r e s e n t l y own a 1969 a u t o m o b i l e ?
1 [ 1 Yes 2 [ ]No
i f y o u r answer i s yes, p l e a s e i f y o u r answer i s no, d i s r e g a r d
complete t h e rest of t h e t h e rest o f t h e q u e s t i o n s and
questions. return the questionnaire t o the
L e g i s l a t i v e R e f e r e n c e Bureau.
I f you own more t h a n one 1969
a u t o m o b i l e , p l e a s e answer che
q u e s t i o n s f o r t h e c a r you f i r s t
bought i n 1969.
2. Did you p u r c h a s e your a u t o m o b i l e from:
1 [ j A local dealer
2 [ j A d e a l e r on t h e mainland
3 [ ] D i r e c t from t h e m a n u f a c t u r e r
4 ] Csed c a r agency
5 [ 1 O r i g i n a l owner
6 [ ] Other
3. Did t h e p a r t y from whom you purchased your a u t o m o b i l e e x p l a i n t h e terms
of t h e new c a r w a r r a n t y o r g u a r a ~ n t e et o you'!
1 [ 1 Yes
2 [ j?Jo
4. P l e a s e i n d i c a t e t h e m a n u f a c t u r e r , model, and t h e month t h a t y o u r 1969
a u t o m o b i l e was p u r c h a s e d .
Manufacturer: L [ ] General Notors 5 [ j Datsun
2 [ ] Chrysler 6 I I Toyota
3 1 ] America2 %tor.:
-
, c
, ! Volkswagen
i[ j Ford
Nodel
Month s o i d t o you
5. Are you the original owner of the automobile?
1 [ 1 Yes
2 1 ]NO
If your answer is n o , please indicate the year and month in which you
acquired the automobile.
1 [ 1 1969 01 [ 1 January 07 [ I July
2 [ 1 1970 02 [ 1 February 08 [ 1 August
3 1 1 1971 03 [ 1 riarch 09 [ 1 September
04 [ 1 April 10 [ 1 October
05 [ I May 11 [ ] November
06 [ I June 12 [ I December
6. How many miles has the automobile traveled?
1 [ 1 Less than 12,000
2 [ J 12,000
3 [ ] 18,000
4 [ ] 24,000
5 [ 1 30,000
6 i 1 36,000
7 [ 142,000
8 [ 1 More than 42,000
7. When the automobile was delivered to you, was it in satisfactory condition?
1 [ ] Yes
2[1NO
If your answer is no, please answer the following:
a. Was the unsatisfactory condition of your automobile:
[ ] Mechanical problem
[ I Body exterior problem
[ ] Body interior problem
(1) If your answer is body exterior or body interior, please explain:
b. Did you have the condition corrected?
1 I Yes
2ilN0
If your answer is E
:
(lj Was the condition corrected by:
1 [ I Dealer 3 1 1 Original owner
2 [ I Used car agency 4 /: 1 Other
(2) Was the condition corrected to your satisfaction?
1 [ I Yes
2 ; j ? k
I f your answer i s no, c h e c k one o r more and p l e a s e e x p l a i n :
[ ] Dealer d i d not cooperate
[ j Not c o v e r e d by t h e w a r r a n t y o r p r e d e l i v e r y s e r v i c e
[ j Dealer could not f i x
[ I Other
Explanation:
8. A f t e r d e l i v e r y and u s e of t h e a u t o m o b i l e by you, d i d you have any work o r
r e p a i r done under y o u r new c a r w a r r a n t y o r g u a r a n t e e ?
1 [ I Yes
2 / I N O
I f y o u r answer i s yes, p l e a s e i n d i c a t e :
a. The a p p r o x i m a t e d a t e s on which t h e work was done
b. The n a t u r e o f t h e r e p a i r work t h a t was done:
[ ] Mechanical
[ 1 Body e x t e r i o r
[ 1 Body i n t e r i o r
Explanation:
c. Did you have t o r e t u r n t h e c a r more t h a n once f o r t h e same w a r r a n t y o r
g u a r a n t y problem?
I f y o u r answer i s yes, how many t i m e s ? [ 1 1
1 1 2
How l o n g d i d t h e r e p a i r t a k e ? 1 [ j 1 day
2 ! I 2 t o 3 days
3 [ ] 4 t o 5 days
L [ j 1 t o 2 weeks
5 i ; 1 month
6 [ 1 More t h a n 1 month
What was t h e problem?
d. Was t h e r e p a i r work done i n a s a t i s f a c t o r y manner?
1 [ 1 Yes
2 [ I N 0
I f y o u r answer i s no, checii one o r more and p l e a s e e x p l a i n :
] Dealer d i d not cooperate
1 Not c o v e r e d by t h e w a r r a n t y
] D e a l e r could n o t f i x
j Other
Explanation:
Many p e o p l e f i n d new a u t o m o b i l e w a r r a n t i e s c o n f u s i n g . The L e g i s l a t i v e R e f e r e n c e
Bureau would l i k e t o d e t e r m i n e how much c o n f u s i o n e x i s t s . The f o l l o w i n g q u e s t i o n s
w i l l b e used t o d e t e r m i n e how w e l ? you a n d e r s t a n d your w a r r a n t y . You may, i f you
w i s h , l o o k a t your w a r r a n t y t o answer t h e s e q u e s t i o n s .
9. How l o n g i s t h e l e n g t h of t h e w a r r a n t y o n your a u t o m o b i l e ? Check one o r
more.
1 [ I 12,000 miles112 nonths
2 [ 1 24,000 m i l e s / 2 4 months
3 [ 1 36,000 m i l e s / 3 6 months
4 [ 1 50,000 m i l e s / 5 y e a r s
5 [ j 60,000 m i l e s 1 6 y e a r s
6 [ ] D o n ' t know
10. O t h e r t h a n t i r e s and b a t t e r y , i s t h e l e n g t h o f t h e w a r r a n t y on y o u r a u t o -
m o b i l e t h e same f o r a l l p a r t s ?
1 [ I Yes
2 [ I N 0
3 [ ] Don't k n o ~
11. I f t h e l e n g t h o f t h e w a r r a n t y i s n o t t h e same f o r a l l p a r t s o f t h e a u t o -
m o b i l e , o t h e r t h a n t i r e s and b a t t e r y , what p a r t s a r e c o v e r e d by d i f f e r e n t
warranty periods?
Body
D r i v e t r a i n and r e l a t e d p a r t s
Paint
Interior
Don ' t know
None
12. Are you r e q u i r e d t o f o l l o w m a i n t e n a n c e s e r v i c e s and s c h e d u l e s t o keep
the warranty o r guarantee?
1 [ I Yes
2 1 I N 0
3 [ 1 D o n ' t know
13. Where a r e t h e s e m a i n t e n a n c e s e r v i c e s t o be performed?
1 [ 1 New c a r d e a l e r
2 [ 1 Service s t a t i o n
3 [ 1 Other
4 [ 1 D o n ' t know
14. I f t h e b r a k e l i n i n g s o f y o u r a u t o m o b i l e were worn o u t a t 17,000 m i l e s ,
would you b e a b l e t o have them r e p a i r e d a t no c o s t t o you under t h e
warranty o r guarantee?
1 [ I Yes
2 [ 1 N O
3 [ 1 D o n ' t know
15. I f t h e p a i n t on y o u r a u t o m o b i l e had d e t e r i o r a t e d and you had t h e a u t o m o b i l e
f o r e l e v e n months, c o u l d you have t h e a u t o m o b i l e r e p a i n t e d a t no c o s t t o
you under t h e w a r r a n t y o r g u a r a n t e e ?
1 i 1 Yes
2 i j ~ ~
3 [ ] D o n ' t know
APPENDIX D
The t a b l e s i n t h i s r e p o r t were o b t a i n e d from a c o m p i l a t i o n
o f t h e answers t o a q u e s t i o n n a i r e s e n t t o r e g i s t e r e d owners of
1969 c a r s o b t a i n e d through a s i m p l e random sample. The s i m p l e
random sampling t e c h n i q u e i s a s t a t i s t i c a l method i n s u r i n g each
i n d i v i d u a l car owner an e q u a l chance t o b e s e l e c t e d i n a sample.
The t a b l e s i n this r e p o r t r e p r e s e n t a n e x p a n s i o n o f the a c t u a l
responses f o r each question. The e x p a n s i o n o f t h e r e s p o n s e s was
made by a t t a c h i n g w e i g h t s t o e a c h m a n u f a c t u r e r . A weight is the
m u l t i p l i c a t i o n o f subgroup d a t a ( r e s p o n s e s ) by a f a c t o r or f a c t o r s
so a s t o b r i n g t h e i r v a l u e s i n t o p r o p e r p r o p o r t i o n s r e l a t i v e t o
t h e p o p u l a t i o n ( t o t a l m a n u f a c t u r e r ' s c a r s ) o r t o o t h e r subgroups
s u r v e y e d . The e x p a n s i o n was c a l c u l a t e d by d i v i d i n g t h e t o t a l
number o f cars f o r a p a r t i c u l a r m a n u f a c t u r e r ( e . g . G e n e r a l Motors
9,875) by t h e t o t a l number o f r e s p o n s e s (93) t o f i n d t h e weight
f o r e a c h r e s p o n s e ( 1 0 6 ) . T h i s w e i g h t was i n t u r n used t o expand
t h e r e s p o n s e s by m u l t i p l y i n g t h e w e i g h t a s s i g n e d t o t h a t
m a n u f a c t u r e r ( e . 9 . General Motors 106) by t h e number o f r e s p o n s e s
f o r a p a r t i c u l a r q u e s t i o n ( e . g . 4 6 ) f o r a n answer ( 4 , 8 7 6 ) . T h i s
answer was i n t u r n d i v i d e d by t h e t o t a l number o f cars a s weighed
f o r e a c h m a n u f a c t u r e r (e.g. G e n e r a l Motors 9,858) t o o b t a i n an
a c t u a l p e r c e n t a g e o f t h e t o t a l number o f c a r s f o r t h a t m a n u f a c t u r e r
(49.4%) . T h a t p e r c e n t a g e i s used i n t h i s r e p o r t i n c o n j u n c t i o n
w i t h t h e a c t u a l number o f r e s p o n s e s found i n p a r e n t h e s i s i n t h e
tables.
T a b l e o f P o p u l a t i o n , Responses, Weights,
and S t a n d a r d Error
Manufacturer Population Respondents Weights Standard Error
American Motors 1,244
Chrysler 8,409
Ford 5 , 502
General Motors 9,875
Datsun 3,626
Toyota 4 , 107
Volkswagen 4,508
The s t a n d a r d e r r o r was d e t e r m i n e d by u s i n g t h i s f o r m u l a :
SE
Where SE s t a n d s f o r s t a n d a r d e r r o r
2 i s a c o r r e c t i o n i n t h e formula f o r a f i n i t e
population
N represents the t o t a l population
n r e p r e s e n t s t h e number o f r e s p o n d e n t s .
Although t h e r e s p o n d e n t s may appear t o b e s m a l l i n number, under
t h e s t a t i s t i c a l method u s e d , t h e p r o b a b i l i t y of e r r o r on a c c o u n t o f
t h e l a c k o f a g r e a t e r number o f r e s p o n s e s i s i n t h e magnitude of
a p p r o x i m a t e l y p l u s o r minus 1 0 p e r c e n t .
The t a b l e s i n t h i s r e p o r t c o n c e r n i n g p r e d e l i v e r y s e r v i c i n g and
w a r r a n t y s e r v i c i n g c o n t a i n t h r e e v e r t i c a l columns. Column one i s
a c o m p i l a t i o n of a l l 696 r e s p o n s e s t o t h e q u e s t i o n n a i r e which was
answered by p e r s o n s who p u r c h a s e d t h e i r c a r s from any o f t h e
following:
(1) A l o c a l d e a l e r (489)
(2) A d e a l e r on t h e mainland (70)
(3) D i r e c t from t h e m a n u f a c t u r e r (2)
(4) Used c a r agency (56)
(5) O r i g i n a l owner (57)
(6) Any o t h e r s e l l e r (20)
(7) No answer (2)
Column two i s composed of r e s p o n s e s o n l y from t h o s e p e r s o n s who
a r e o r i g i n a l owners and who purchased t h e i r c a r s from l o c a l d e a l e r s
(489). I n o r d e r t o a s c e r t a i n i f p e r s o n s who a r e o r i g i n a l owners b u t
who buy from a n o n - l o c a l s o u r c e a r e t r e a t e d d i f f e r e n t l y by l o c a l
d e a l e r s , a t h i r d column is e s t a b l i s h e d t o r e f l e c t t h e s e r e s p o n s e s .
I n u s i n g t h e tables it s h o u l d be k e p t i n mind t h a t some q u e s t i o n s
r e q u i r e d more t h a n one answer and i n some i n s t a n c e s p e r s o n s d i d n o t
answer a l l t h e q u e s t i o n s .
Table 1
Question: "What w a s t h e u n s a t i s f a c t o r y c o n d i t i o n o f your automobile?"
Responses by O r i g i n a l Owners
p u r c h a s i n g Car from:
Dealer on
Mainland or
T o t a l Responses Local Dealer Manufacturer
American Motors
Mechnical
Body e x t e r i o r
Body i n t e r i o r
Chrysler
Mechnical
Body e x t e r i o r
Body i n t e r i o r
Ford
Mechanical
Body e x t e r i o r
Body i n t e r i o r
General Motors
Mechanical
Body e x t e r i o r
Body i n t e r i o r
Datsm
Mechanical
Body e x t e r i o r
Body i n t e r i o r
Toyota
Mechanical
Body e x t e r i o r
Body i n t e r i o r
Volkswagen
Mechanical
Body e x t e r i o r
Body i n t e r i o r
Table 2
Q u e s t i o n on reasons f o r d i s s a t i s f a c t i o n with r e p a i r .
Responses by O r i g i n a l Owners
Purchasing Car from:
Dealer on
Mainland o r
T o t a l Responses Local D e a l e r Manufacturer
American Motors
Dealer d i d not cooperate
Not covered by warranty o r
predelivery service
Dealer could n o t f i x
Other
Chrysler
Dealer d i d not cooperate
Not covered by warranty o r
predelivery service
D e a l e r could not f i x
Other
Ford
Dealer d i d n o t c o o p e r a t e
Not covered by warranty o r
predelivery service
D e a l e r could not f i x
Other
General Motors
Dealer d i d n o t cooperate
Not covered by warranty o r
predelivery service
Dealer could n o t f i x
Other
Datsun
Dealer d i d not cooperate
Not covered by warranty o r
predelivery service
Dealer could n o t f i x
Other
Toyota
Dealer did n o t cooperate
Not covered by warranty o r
predelivery service
Dealer could n o t f i x
Other
Volkswagen
Dealer d i d not cooperate
Not covered by warranty o r
predelivery service
Dealer could n o t f i x
Other
Table 3
Question: "What was t h e u n s a t i s f a c t o r y c o n d i t i o n o f y o u r a u t o m o b i l e ? "
Responses by O r i g i n a l Owners
P u r c h a s i n g Car from:
D e a l e r on
Mainland o r
T o t a l Responses Local Dealer Manufacturer
American Motors
Mechanical
Body e x t e r i o r
Body i n t e r i o r
Chrysler
Mechanical
Body e x t e r i o r
Body i n t e r i o r
Ford
Mechanical
Body e x t e r i o r
Body i n t e r i o r
General Motors
Mechanical
Body e x t e r i o r
Body i n t e r i o r
Datsun
Mechanical
Body e x t e r i o r
Body i n t e r i o r
Toyo t a
Mechanical
Body e x t e r i o r
Body i n t e r i o r
Volkswagen
Mechanical
Body e x t e r i o r
Body i n t e r i o r
Table 4
Question: Did you have t o r e t u r n t h e c a r more t h a n once
f o r t h e same w a r r a n t y problem?
Responses by O r i q i n a l Owners
- ~ u r c h a s i n gC& from:
D e a l e r on
Mainland o r
T o t a l Responses Local Dealer Manufacturer
American Motors
Returned
Not Returned
Chrysler
Returned
Not Returned
Ford
Returned
N o t Returned
G e n e r a l Motors
Returned
Not Returned
Datsun
Returned
Not Returned
Toyota
Re t u r n e d
Not Returned
Volkswagen
Re t u r n e d
N o t Returned
Table 5
Q u e s t i o n on number o f t i m e s c a r r e t u r n e d f o r same problem.
Responses by O r i g i n a l Owners
P u r c h a s i n g Car from:
Dealer on
Mainland o r
T o t a l Responses Local Dealer Manufacturer
American Motors
1
2
3
4
5 o r more
Chrysler
1
2
3
4
5 o r more
Ford
1
2
3
4
5 o r more
G e n e r a l Motors
L
3
4
5 o r more
Datsun
1
2
3
4
5 o r more
Toycta
1
2
3
4
5 o r more
L
3
4
5 o r more
Table 6
Question: How l o n g d i d r e p a i r t a k e on same problem?
~es p o n s e s by o r i q i n a l Owners
z u r c h a s i n g Car from:
b a l e r on
Mainland o r
T o t a l Responses Local Dealer Manafacturer
A n e r i c a n Motors
1 day
2 t o 3 days
4 t o 5 days
1 t o 2 weeks
1 month
More t h a n one month
Chrysler
1 day (20) None
2 t o 3 days
4 t o 5 davs
1 t o 2 weeks
1 month
More t h a n one month
Ford
1 day
2 t o 3 days
4 t o 5 days
1 t o 2 weeks
1 month
More t h a n one month
G e n e r a l Motors
1 day
2 t o 3 days
4 t o 5 days
1 t o 2 weeks
1 month
More t h a n one r.onth
Datsun
1 day
2 t o 3 days
4 t o 5 days
1 t o 2 weeks
1 month
More t h a n one month
'i'oyota
1 day
2 t o 3 days
4 t o 5 days
1 t o 2 weeks
1 month
More t h a n one month
'io lkswagen
1 day
2 t o 3 days
4 t o 5 6ays
it o 2 w e e k s
L Imnti;
?lore t h a n o n e m n t h
Table 7
Q u e s t i o n on r e a s o n s f o r d i s s a t i s f a c t i o n w i t h r e p a i r .
Responses by O r i g i n a l Owners
P u r c h a s i n g Car from:
D e a l e r on
Mainland o r
T o t a l Responses Local D e a l e r Manufacturer
American Motors
Dealer did not cooperate
Kot c o v e r e d by w a r r a n t y o r
predelivery service
Dealer could n o t f i x
Other
Chrysler
Dealer did n o t cooperate
Not c o v e r e d by w a r r a n t y o r
predelivery service
Dealer could n o t f t x
Other
Ford
Dealer did not cooperate
Kot c o v e r e d by w a r r a n t y o r
predelivery service
Dealer could not f i x
Other
General Motors
Dealer d i d not cooperate
Not c o v e r e d by w a r r a n t y o r
predelivery service
Dealer could n o t f i x
Other
Da t s u n
Dealer did not cooperate
Not covered by w a r r a n t y o r
predelivery service
Dealer could not f i x
Other
Toyo t a
Dealer d i d n o t cooperate
Not c o v e r e d by w a r r a n t y o r
predelivery service
Dealer could n o t f i x
Other
Volkswagen
Dealer d i d n o t cooperate
E o t covered by w a r r a n t y o r
predelivery service
Dealer could not f i x
Other
T o t a l r e s p o n s e s by a l l p e r s o n s answering t h e q u e s t i o n n a i r e a r e
n o t g i v e n i n T a b l e s 8 t o 1 4 . Only r e s p o n s e s from o r i g i n a l owners
a r e p r e s e n t e d s i n c e t h e used c a r owners e i t h e r d i d n o t r e c e i v e a
w a r r a n t y due t o e x p i r a t i o n of t h e w a r r a n t y p e r i o d p r i o r t o p u r c h a s e
o r i n d i c a t e d by t h e i r answers v e r y l i t t l e u n d e r s t a n d i n g of t h e
warranty, thus tending t o cloud t h e r e s u l t s .
Table 8
Question: How long i s t h e l e n g t h of t h e w a r r a n t y
on your automobile?
Responses by O r i g i n a l Owners
P u r c h a s i n g Car from:
D e a l e r on
Mainland o r
Local Dealer Manufacturer
American Motors
Correct
Partially correct
Incorrect
Don ' t know
Chrysler
Correct
Partially correct
Incorrect
Don ' t know
Ford
Correct
P a r t i a l l y Correct
Incorrect
Don ' t know
G e n e r a l Motors
Correct
Partially correct
Incorrect
Don ' t know
Datsun
Correct
Incorrect
Don ' t know
Toyota
Correct
Incorrect
Don ' t know
Volkswagen
Correct
Incorrect
D o n ' t know
Table 9
Question: Is the l e n g t h o f t h e w a r r a n t y on y o u r a u t o m o b i l e
the same f o r a l l p a r t s ?
Responses by O r i g i n a l Owners
P u r c h a s i n g C a r from:
D e a l e r on
Mainland o r
Local D e a l e r Manufacturer
American Motors
Correct
Incorrect
D o n ' t Know
Chrysler
Correct
Incorrect
Don ' t Know
Ford
Correct
Incorrect
Don' t Know
General Motors
Correct
Incorrect
Don' t Know
Datsun
Correct
Incorrect
Don ' t Know
Toyota
Correct
Incorrect
Don ' t Know
Volkswagen
Correct
Incorrect
Don't Know
T a b l e 10
Question: What p a r t s a r e covered by d i f f e r e n t w a r r a n t y p e r i o d s ?
Resuonses bv O r i a i n a l Owners
- p u r c h a s i n g C a r from:
Dealer on
Mainland o r
Local Dealer Manufacturer
American Motors
Correct
Incorrect
Don ' t know
Chrysler
Correct
Incorrect
Don ' t know
Ford
Correct
Incorrect
Don ' t know
G e n e r a l Motors
Correct
Incorrect
Don ' t know
Datsun
Correct
Incorrect
Don ' t know
Toyota
Correct
Incorrect
Don ' t know
Volkswagen
Correct
Incorrect
Don ' t know
Table 11
Question: "Are you r e q u i r e d t o f o l l o w maintenance s e r v i c e s and
s c h e d u l e s t o keep t h e w a r r a n t y or g u a r a n t e e i n f o r c e ? "
Responses by O r i g i n a l Owners
p u r c h a s i n g car from:
Dealer on
Mainland o r
Local W a l e r Manufacturer
American Motors
Correct
Incorrect
Don ' t know
Chrysler
Correct
Incorrect
Don ' t know
Ford
Correct
Incorrect
Don ' t know
General Motors
Correct
Incorrect
Don ' t know
Datsun
Correct
Incorrect
Don ' t know
Toyota
Correct
Incorrect
Don ' t know
Volkswagen
Correct
Incorrect
Don ' t know
T a b l e 12
Q u e s t i o n on where w a r r a n t y maintenance s e r v i c e s
a r e t o be obtained.
Responses by O r i q i n a l Owners
- p u r c h a s i n g C a r from:
D e a l e r on
Mainlana o r
Local D e a l e r Manufacturer
American Motors
New Car D e a l e r
Service Station
Other
Don't Know
Chrysler
New Car D e a l e r
Service Station
Other
Don' t Know
Ford
N e w Car D e a l e r
Service Station
Other
Don ' t Know
G e n e r a l Motors
New Car D e a l e r
Service Station
Other
Don ' t Know
Datsun
N e w Car D e a l e r
Service Station
Other
D o n ' t Know
Toyota
X e w Car D e a l e r
Service Station
Other
Don ' t Know
Volkswagen
New Car D e a l e r
Service Station
Other
Don ' t Know
Table 1 3
Question: I f your b r a k e l i n i n g s wear o u t a t 17,000 m i l e s ,
can f r e e w a r r a n t y r e p a i r be o b t a i n e d ?
Responses by O r i g i n a l Gwners
P u r c h a s i n g Car from:
D e a l e r on
Mainland o r
Local D e a l e r Manufacturer
American Motors
Correct
Incorrect
D o n ' t Know
Chrysler
Correct
Incorrect
Don ' t Know
Ford
Correct
Incorrect
Don ' t Know
General Motors
Correct
Incorrect
Don ' t Know
Datsun
Correct
Incorrect
Don ' t Know
Toyota
Correct
Incorrect
Don ' t Know
Volkswagen
Correct
Incorrect
Don ' t Know
Table 1 4
Question: I f p a i n t d e t e r i o r a t e s i n e l e v e n months,
can f r e e w a r r a n t y r e p a i r be o b t a i n e d ?
Responses bv O r i s i n a l Owners
' p u r c h a s i n g car from:
D e a l e r on
Mainland o r
Local D e a l e r Manufacturer
American Motors
Correct
Incorrect
Don ' t Know
Chrysler
Correct
Incorrect
Don' t Know
Ford
Correct
Incorrect
Don ' t Know
G e n e r a l Motors
correct
Incorrect
Don' t Know
Datsun
Correct
Incorrect
Don't Know
Toyota
Correct
Incorrect
Don ' t Know
Volkswagen
Correct
Incorrect
Don't Know
Table 15
Question: Did d e a l e r i n f o r m you of t h e terms
of t h e warranty?
A m e r i c a n Motors
Yes
NO
Chryslel:
Yes
NO
Ford
Yes
NO
General Motors
Yes
NO
Datsun
Yes
NO
Toyota
Y es
NO
Volkswagen
Yes
NO