Kia mulls 10-year warranty

KIA Motors Australia (KMAu) chief operating officer Damien Meredith says the company would consider extending its industry-leading seven-year warranty to 10 years if an increasing number of its competitors extend their own offerings to seven years.

The South Korean car-maker introduced the seven-year/unlimited kilometre new-vehicle warranty in October 2014, and the company has credited it as being one of the key reasons for a 95 per cent sales increase between 2014 and 2017.

When asked if Kia had a plan to maintain its warranty edge, Mr Meredith said the company would look at extending the warranty to 10 years.

“Well, it would be fair to say that is our unique selling proposition,” he told journalists in Melbourne this week. “It has been for four years. I think if you did it, and I am not saying we would do it, but we would look at 10 very, very seriously.”

A number of car-makers, including Holden and Honda, have announced temporary seven-year warranties on certain vehicles over a specified period, whereas Kia’s offering is permanent and covers all models in its line-up.

It also includes seven years of capped-price servicing and roadside assist and it is fully transferable.

Citroen was the next-best permanent offering in the Australian market with six years under previous distributor Sime Darby, but new importer Inchcape briefly halved that to three years/100,000km late last year before increasing its permanent offer on Citroen and Peugeot early this year to five years/unlimited kilometres.

Mr Meredith said if the 10-year term eventuated, Kia would try to keep the offering at unlimited kilometres.

He added that the company had to consider three things carefully before extending the warranty offer.

“Obviously it is the customer, Australian consumer law and the ACCC (Australian Competition and Consumer Commission),” he said. “We are of the view that the seven-year warranty covers those three pillars pretty well.

“But with what the demands of the consumer are, the demands of the ACCC and the challenging aspects of the Australian consumer law, maybe, I’m not saying it is the answer, but maybe a 10-year warranty/unlimited covers those three pillars quite well. We are thinking seriously about that.”

Mid-last year, the ACCC released a draft report of its market study into Australia’s new-car industry, which highlighted issues with warranties and manufacturer’s focus on warranty obligations to the exclusion of their consumer guarantee obligations.