Warranty claims have fallen over 40% for Detroit’s Big 3

From L to R: Alan Mulally, Sergio Marchionne, Ed Whitacre

The Detroit Big 3 are enjoying the big drop in warranty claims, which has decreased by more than 40 percent in recent years. The drop shows that American automakers have improved the quality of their vehicles and overall consumer perceptions that their product is inferior to foreign automakers. Not to mention, the decrease in warranty claims saves the automaker several hundred dollars per vehicles sold.

“That’s pure operating profit,” auto analyst Joe Phillippi of AutoTrends Consulting told The Detroit News. “If you can put an extra $200 or $300 a car toward the bottom line, and multiply that out, it adds up in a hurry.”

Warranty claims for General Motors have dropped 45 percent from 2007, while FoMoCo reduced its warranty claims by 40 percent from 2007 through last year.

Chrysler, the smallest of the Big 3, has always been known as the one with the most quality problems. Surprisingly, warranty claims at the Auburn Hills automaker have dropped 48 percent in the past two years. Claims dropped to their lowest level in 2008 at 30 percent, and continue to fall at a record pace in 2009.

– By: Omar Rana

Source: Detroit News