This can be posted under: Another failing American automobile manufacturer makes yet another mistake moving them even closer to their eventual demise.
I have seen some advertisements where GM is offering a 100,000 mile warranty! Now most people will probably think “Why is that a bad idea?”, and that is a very good question, which I will try to answer. You see, GM has a cash flow problem, they have ridiculous union and pension liabilities and not enough revenue to cover them. The profit margins on all automobiles have narrowed to a point where they simply can’t afford the concessions they made to the UAW over the last few decades. The problem is so bad, that GM actually loses less money if they pay their employees not to make cars! Ha! So what does this have to do with them offering a 100,000 mile warranty? Well, this is a quick fix to bolster their short term cash flow problems. Sure, there will be an infusion of cash as a result of this offering, but without correcting the “real” problems facing GM, this will only make their end happen sooner and more drastically.
A few other car companies have offered a long term warranty to increase sales and turn the company around, but the success of this approach depends on a couple of factors: first, you have to be able to reasonably expect your cars to last for 100,000 miles without having to do major repairs to a significant percentage of them, and secondly you have to be able to rework your organization so that this infusion of cash makes you profitable. GM has not increased the quality of their products, so any extension to the existing warranty is only going to result in an increase of related warranty costs, and they certainly haven’t convinced the UAW that all of the members will be out of work sortly if they can’t turn this company around. Volkswagen offered a 100,000 mile warranty or a while, but it was after a serious reworking of every vehicle they offered and genuine attempt to gain back the public’s trust by building a considerably better car, this plan worked very well for VW, I doubt that it will do the same for GM.