Kia calls time on warranty wars

KIA Australia has signalled there will be no changes to its new-car warranty despite rival brands lifting coverage to as much as 10 years.

Kia’s CEO Damien Meredith has previously said that his company would watch the warranty of rival brands and could increase its own cover to 10 years if it thought it was beneficial to sales and to the customer expectations.

Kia introduced a seven-year/unlimited-kilometre warranty in 2014, up from five years. Its stablemate Hyundai has a five-year/unlimited-kilometre offer.

This week Mr Meredith dismissed any warranty upgrades, saying Kia had noted buyer research that showed prospective new-car buyers had put other factors ahead of warranty when selecting their next car.

“I think they’ve moved on,” he said of customer interest.

“A long warranty was seen as beneficial to buyers a decade ago but is less so now.”

Like Kia in 2014, new Chinese entrants have used warranty as an inducement to Australian buyers, some offering extensions to the coverage as a promotion and others advertising up to 10 years cover.

Zeekr and XPeng have a five-year/unlimited-kilometre warranty and others such as Jaecoo, Deepal, Chery and Leapmotor have seven years of cover.

Mr Meredith said it was “interesting” that some Chinese brands had adopted a 10-year warranty program.

“The long warranty worked for us (Kia went to seven years from five years in 2014) and I’m sure that may work for them as well,” he said.

“The thing about warranty is that you’ve got to back it up with good service and be very true to your word.”

Mr Meredith said he has no problems with the expansion of Chinese models in Australia but sees changes ahead for the industry as these new brands start taking sales from legacy brands.

“I think what will happen is that there'll be an erosion of their (Chinese) brands first, then those that are stronger, that have survived, that will eat away slowly at the legacy brands,” he said.

“We’ve just got to be a bit smarter in how we approach our branding and pricing; and we think we can do that.

“In building market share, the Japanese took 20 years. It then took the Koreans 10 years and it’s now taken China five years.

“That’s competition, and you’ve got to embrace that.”

MG Motor currently has the longest warranty in the Australian new-car industry with 10 years and 250,000km, up last year from seven years’ cover. MG will allow owners to service the car outside its dealer network but only if the repairer uses MG genuine parts.

Mitsubishi has a 10-year/200,000km warranty on its products when serviced within its dealer network. Kia and GWM share a seven-year/unlimited-kilometre warranty program.

New vehicles sold in Australia with the smallest warranty include Lamborghini and Lotus (two-year/unlimited-kilometre); Ram and Fiat (three years each with Ram having a 100,000km distance); and Porsche and GMSV with a three-year//unlimited-kilometre cover.