BMW Warranty Changes

The warranty changes that came into effect on February 1 have raised a lot of concerns 

Your fellow enthusiasts on BM3W have now made representations to BMW UK

http://www.bm3w.co.uk/ubbthreads/showthreaded.php?Number=397 962

ultegra wrote: Any chance of copying the text over here so we can read it?

Text follows, updates on:

http://www.bm3w.co.uk/ubbthreads/showthreaded.php?Number=397 962

Our members are passionate about M cars and amongst your most loyal customers. They have requested me to raise this issue with you directly as it is feared that the wide-ranging impact of extended warranty changes, on owners and on the Company itself, may not have been thought through fully. We hope you will consider the contents of this letter and give the issue a serious review. I apologise for the length, but believe the issue, however complex, is of major importance for BMW and our members alike.

As you are aware, this year the M car premium has gone up by 46% to £1050 (more than double the 2004 price, despite reduced cover) but only until mileage reaches 60,000. For higher mileage cars the increase is an astronomical 159%, to £1868, with loss of cover for steering and suspension. Furthermore, all M cars are now saddled with an excess of £250 per claim (for emergency callouts too, we gather), so the effective increase is actually much greater.

We cannot believe that BMW would wish to alienate loyal premium-product customers in this way. We realise that regulations changed last year but do not see that this can justify such increases now. Are insurer and dealer fees and mark-up having a major impact? Are they perhaps using the regulatory change as an excuse to inflate prices?

Some of these changes do not apply to the AUC warranty, but this only covers the first year of ownership. In any event, members resent the loss of competitive choice inherent in being ‘forced’ towards a BMW dealer by the contrast in AUC vs. Extended cover.

We fear the new policy will put BMW at a major disadvantage, particularly for those wishing to keep a car long term. Porsche charge a mere £725 for any car below 9 years old and 125,000 miles. Although Porsche’s new car warranty only covers 2 years, by the second year of the M car extended warranty (even assuming just one claim) cumulative cost already exceeds that of Porsche, despite the head start. From then on the difference increases 'exponentially' – a Porsche costs £5,075 over nine years of life, the M car £9186, assuming only one claim per year and a paltry 10k miles annually. (If the M car does even 15k miles p.a., the cost reaches £11,622, over double the Porsche!)

No competitor we know of has a policy excess, or a premium hike at 60K miles. Whilst the excess may be intended to keep premiums lower, it makes the effective premium much higher. The higher excess versus other BMW models causes much bad feeling (M premiums are higher already, and many parts are common to non-M cars). The excess ‘per claim’ rather than ‘annual’, and for emergencies, are further causes for annoyance.

Do increased premiums reflect past expensive claims (eg. bottom end/double vanos)? BMW told us these design issues had been rectified so they should not affect premiums. Or have too few owners signed up for cover? It hardly seems sound economics to boost demand by raising price! Perhaps BMW really wish to kill off extended warranties? If so, we again fear that BMW will place itself at a grave disadvantage to competitors.

What sort of message does it send? That BMW has so little faith in its premium M cars, the very products that give it a significant sporty edge over Audi, Mercedes and others, that it must either set premiums sky high or kill off the extended warranty altogether?

Is BMW really saying its M cars are much more fragile than competitors or other BMW models? Is that why there are higher premiums and excesses for M cars, and why the premium shoots up, with steering and suspension excluded, above 60,000 miles? Surely M cars are built to last and are fit for purpose?

What of BMW’s own dealers? Members have had numerous expressions of concern from their contacts that the new terms will kill off dealer loyalty, as owners move to 3rd party warranties or chance having no cover, using non-franchised garages for repairs. Many members are actively considering such options, or already preparing to sell, while others may drop their extended warranty and rely on goodwill – extra hassle for BMW.

There is bound to be a knock-on effect upon residual values. When word gets around, new car sales will surely suffer too: those wanting to keep a car long term will factor in the big increase in running costs, whilst those buying for 1-2 years will worry re reduced trade-in values. Both aspects are already of concern to members, some of whom have decided against purchasing another M car as a result – they are not switching to a 3 Series but to Porsche or Audi. In the current market, it surely behoves manufacturers to support their brand by improving warranties rather than reducing the cover.

We realise that BMW previously subsidised its excellent warranties, aiding sales by limiting running costs and demonstrating faith in the product. This was presumably reflected in higher new/used car prices and profitability. We appreciate that third party insurers do not subsidise but does this necessarily, at a time of difficult market conditions, preclude BMW from subsidising flagship M-cars as in the past?

On a related issue, our members were also angered by the way the new terms have been implemented. Many have not been told of (a) their warranty expiry, despite promises made on purchase, and (b) the new warranty rules. We have specific cases where owners only became aware of the changes through our forum, then contacted their dealer to be told the warranty had expired that month and could not be extended.

We realise BMW UK is not a charity, and it is in our interest for you to be financially healthy, so a reasonable increase is acceptable. However, the triple hit of a major price increase (enormous for higher mileage cars), reduced cover (for all, but significantly worse for those same higher mileage cars), and the £250 excess per claim (would not a no-claim discount deter the frivolous?) is too painful for many owners to bear.

We respect BMW UK as a purveyor of fine cars, but fear you may suffer long-term damage through loss of many loyal buyers and service customers in a key M car market. As members of a Forum which engenders a spirit of loyalty for the brand, and which will itself suffer from these changes (fewer M cars means fewer members), we are genuinely concerned at the impact on the ‘M’ brand.

We respectfully request that you review with some urgency the changes that came into effect last month, with a view to reconsidering as a minimum the “excess” side to these changes, and the extra increase for cars over 60,000 miles. We would also ask that you introduce a window of 28 days where a customer’s warranty has expired and they were not warned of its expiry, so that they can obtain an extension.

I agree fully. There is no doubt that the warranty provider will be trying to maximise profit potential and has identified higher mileage, particularaly M cars, as being the biggest drain on profitability. However, brands often need loss leaders to assist in other areas of the business and accept reduced, or even neagative, profits in some areas if an overall benefit can be demonstrated. I would imagine that quite a high loss has been shown on M cars over 100k miles. However, I don't believe that there are enough of them or even "ordinary" BMW's) left in the warranty scheme to risk devaluing it in the way the new conditions do. Like others, I accept that there may well be a good case for increasing the price, but to a reasonable level, this is quite plainly intended to remove vehicles over 60k completely. The message is very simple, BMW do not value overall long term ownership of its' products sufficiently. It used to.

www.bm3w.co.uk/ubbthreads/showflat.php?Cat=0&Number=3979 62&an=&page=&vc=1

BMW are now saying they will review the warranty situation in 6 months, and are inviting feedback.  Please let them know your views by writing to Jim O'Donnell (MD) at his e-mail address:

fay.wells@bmw.co.uk

All of us are affected by this issue - let's work together to influence BMW into re-considering these extreme changes.

ultegra wrote: No good. Warranty would have lapsed by then.

Ultegra

We can still influence them - have you written and made your views known?

ultegra wrote: I agree with it all. The new warranty is hardly worth the paper it is written on - the dealers are going to claim that any and all failures are 'wear and tear' [ I have this on good authority from a source in the dealer network]. Better off banking the money and paying a reputable independant to fix things when they go wrong. Oh, and if I need to labour the point, get EVERYTHING fixed before the old warranty expires. I have.

What should I get done to my car which is still under warranty. To my knowledge everything seems to be ok, but will they charge me for 'getting them to check it over'?

I would like a few things replaced as preventative, but how should I approach it.......I mean, I would like the smg checked and the diff replaced with a new one, the tappets adjusted etc etc

Also, what are these third party warranties *actually* like?

Hell, why not? 

Potential gain of £330 a year, or £1150 a year if you are over 60,000 miles (and that's not counting the excess), for the price of a 30p stamp or the electricity for an email. 

AND it will improve residual values substantially when we come to sell.

The more of us who contact BMW the better the chance of victory.

No Brainer !!!

M3Nally wrote: With the latest M car engines now so technically complicated with the electronics et al, they are completely out of the realms of home or even "independent" repairers IMO.

Oh thats not the case (with us anyway). We have all the diagnostic equipment to service even the most modern BMW's and possess all the specialist BMW tooling for doing things like cam swaps in E46 M3's and E39 M5's. The investment is huge (over £10k just for tooling) so most tuners don't have them I grant you but if you're working on these cars you need to replicate a full dealer level IMO.

However, I agree with the comments on the warranty, whilst as an indpendant tuner/servicer this is potentially good news for us I fundamentally disagree with what they've done (we have our own CSl so are directly effected anyway).