Several days back I caught wind of this story but did not get around to reading about it.  On 8/19/2009 Chrysler, the ailing U.S. auto manufacturer, said that it was dropping their lifetime powertrain warranty, replacing it with a 5 year / 100,000 mile guarantee.

Now this is going to seem odd – guess why they are cutting the lifetime warranty? Consumers do not want a lifetime warranty!

Chrysler spokesman Rick Deneau said the decision was driven by market research that showed consumers prefer warranties with a fixed time period. Powertrain warranties typically cover repair or replacement of transmission and engine parts.

What?

Chrysler is trying to tell us that consumers only want a warranty that is for a set limited time.  Does this make sense to anyone? You don’t happen to think this is a cost savings measure on the part of Chrysler, especially when you factor in how poor Chrysler’s quality is over a long period of time, do you?

Once I get past the performance requirements I have in a vehicle, the very next thing I am looking at is the warranty. A 5 year / 100,000 mile powertrain warranty is an automatic “no purchase” in my book simply because I hear “this car will pall apart on year 5, day 1”.

Just another step in Chrysler’s move towards automotive obscurity.

Wait a second…. was the world asleep when this happened – Canada has offered $3.29 billion in loans to the Canadian subsidiaries of U.S. Automakers.

How much will the automakers obtain from governments around the world in the name of a “bailout”? For those keeping score at home, thus far we have…

$17 Billion from the United States
$3 Billion from Canada 

That’s a nice $20 Billion thrown at a problem that is larger than simply running short of money, it’s bad corporate management.  

Just so that I don’t offend any of my Canadian friends, I have no problem with your Government doing what it sees fit for it’s own interest. My issues are a) the automakers having loans in general and b) what will the the worldwide total “loaned” to Detroit?  

This will end up costing tax payers world wide more money than anyone had ever expected.

Anyone who knows me can easily say I have never been a supporter of U.S. automakers.  For years I have felt their products to be inferior to the majority of their competitors, plus poor business management has created the situation the American Auto Industry is currently in. 

That said, recently my respect for the Ford Motor Company has been building.  

One of the most impressive accomplishments recently was having 16 cars listed with the IIHS as “top safety picks“. While not available in the US, the Ford Fiesta ECOnetic  shows how serious the company is about creating a feet of vehicles that falls into the “fuel efficient” category (65.3 mpg – and for the record, it’s too expensive to import to the US at this point) and now Ford is making it clear the do no need the loan money for survival at this point – it’s a last resort.

Like a decently run company, began to restructure and secured almost 28 B in cash over the last two years. Ford has also cut capacity to match demand and let go of the unnecessary workforce.  The were rightsizing the ship, quick to recognize the F-150 wasn’t going to always be either bread and butter, and started developing smaller cars and hybrid vehicles.  

When did Noah build the ark?  Before the rain.  

It looks as if Ford really put the majority of their heavy lifting in before the market turned south – they had, apparently, started to run like a real company. So, to hear…

I think if they see Ford as a company trying to pull itself up by its own bootstraps, and making it on its own and pulling the right levers, I think that could be a positive for us,” Ford (Bill) 

I have to say fully agree, with the effort and steps taken thus far – it could be a huge positive for Ford.