New-car Warranties: Demystifying Statutory, Expressed & Extended Warranties
Car warranties can be confusing
New cars all come with a statutory warranty - the average in Australia is three years and 100,000km, although some manufacturers offer a greater warranty (Hyundai, Kia and Mitsubishi offer five years, and Lexus offers four). These are a very good deal, but the car industry tries very hard to leverage the statutory warranty into the consumer perception that you need to get the car serviced at a 'factory authorised dealer' (ie franchised new car dealership) if the warranty is to be preserved. Many consumers understandably form the view that 'authorised dealer' service is a condition of the statutory warranty. This is absolutely not true, but the belief that it is true costs many people thousands of dollars over the term of their warranty - because 'authorised dealer' service is unquestionably the most expensive way to go.
If your car develops a problem while the statutory warranty is still active, you can take it to any authorised dealer for repairs, which should be totally free of charge. Just remember that statutory warranties don't cover items that wear out (like tyres and brake pads). Nor do they cover abuse or accidental damage - such as driving into a pothole and damaging a wheel. If, however, the speedo just stops working or your alternator dies, the cost of having it fixed - parts and labour - should be zero.
Expressed or Extended Warranties
Expressed or Extended warranties are additional to statutory warranties, and generally the're thinly veiled service contracts. Often they come with used cars. Basically, they lock you, the consumer, into servicing with that particular dealer (often at extortionate prices). If you fail to get the car serviced at that dealer, the warranty is voided. They're generally a very bad deal for consumers (and a very good deal for the dealer...)
You should steer well clear of those extended warranties - and if you're tempted by one, read the fine print and consult an advisor. Often the warranty itself seems fairly cheap - but the real profit is made during the (extortionate) servicing for the term of the warranty.