My mistake comparing Hartech and Porsche warrranty costs.
Discussion
You can disadvantage yourself when trying to post fair and balanced points (as I always try to) - although I am often advised that I should instead paddle my own canoe and allow readers to balance favouritism from each business post - but it is not my style - unfortunately - because in trying to be fair - I stupidly shot us well and truly in the foot when recently comparing our warranty prices with Porsche and suggesting that they might work out cheaper in the rare event of a serious engine failure early on in the first year or so.
This is how I made that mistake. I created a spreadsheet to compare typical std replacement costs for running cars under different schemes - set at 12K/year, starting at a 3 year old car covering each year up to 10 years old and allowing the costs to be compared for any period of ownership within those years and showing average costs.
I compared cars bought from Porsche and us (therefore not needing an initial service/check) and also cars bought elsewhere (that did) and put in the different costs for with or without a warranty.
I assumed the cars had no other faults in the period except those things we know will need replacing like - pads (every 20K), discs (40K), Battery (@ 8 years old), brake fluid/gearbox oil change/air bag check (as specified) clutch (60K) and all the services at the standard intervals.
I thought this was fair because in most cases any other typical fault (which is usually wear and tear related and covered by us) would work out cheaper on our scheme and so I was trying to be as fair as possible.
I then worked out and compared the yearly average costs.
Whichever way I looked at it - the average yearly costs were always similar however long you owned the car and this is how it worked out (brought up to date with the latest Porsche warranty costs).
BOUGHT PRIVATELY AND NOT ON ANY WARRANTY SCHEME
Average annual service and repair costs with Porsche £2,200
Average annual service and repair costs with Hartech equivelant std service system £1,300
Average annual service and repair costs Hartech more comprehensive "GOLD" service system £1,450
Conclusion - not unexpected - same sort of work done - cheaper with an independent.
BOUGHT PRIVATELY BUT THEN ON EITHER PORSCHE OR HARTECH WARRANTY SCHEME
Average annual service and repair costs with Porsche £3,300
Average annual service and repair costs with Hartech (only gold std available) £2,200
BOUGHT FROM PORSCHE OR HARTECH THEN ON EACH WARRANTY SCHEME
Average annual service and repair cost with Porsche £3,200
Average annual service and repair cost with Hartech £1,700
Conclusion
I know you can do anything with statistics but these are worked out fairly and probably more in favour of Porsche than us (in the things I have included and bearing in mind that our scheme covers all problems - wear or tear related or not - water pumps, window winders etc so will always be cheaper whenever something is not covered elsewhere) and do average out well and will be reasonably reliable.
They tell an obvious story - that it costs less with an independent and that it costs about the same to have the more comprehensive Hartech Gold standard services and a warranty, as having no warranty with Porsche and just paying for the service and repair work to be done.
Everyone also knows it costs more for the Porsche warranty but then it covers parts as well whereas ours only covers labour costs and so although ours costs significantly less, if a lot of warranty claims were made it would increase by the cost of the parts with us - so comparing the two schemes is difficult without knowing exactly what is going to go wrong and be compared.
This is where I previously made such a stupid error of logic. I looked at the average annual cost and realised that in the first year the Porsche scheme cost about £1000 more (bought privately) or £1500 more (bought from each of us) - but covers parts as well. I thought about the worst case scenario of an engine blow up (that would benefit the Porsche scheme the most as the engine is FOC) and realised that if the parts they would have to pay for on our scheme came to more than £1000 (or £1500) then they would have been as well off (or perhaps slightly better off) under the Porsche scheme - and to be fair to them I published that.
Part costs for the least expensive engine failure (an intemediate shaft bearing) are just under £1000 and for a more serious liner crack about £1300 but if a crank went as well - nearer £2200 - so to be fair to them I stated that you could be better off under the Porsche scheme in the first 18 months if your engine failed - other than which in any other scenario I can imagine - our scheme is much less expensive (because in the second year the savings double and so on and then exceed the cost of parts anyway).
So what was the error - simple - the average cost is over the first year but you pay up front with the Porsche scheme but monthly with ours - so if the failure occured in the first month - you would only have paid one months premium with us (about £44 to £55 + vat) whereas you would have paid the full anuual amount with the Porsche scheme (£1400 is it?) - so you would still be quids in with us. Indeed you would only be marginally worse off if your engine failed seriously in the last month of the year - a 12 to 1 outside chance in that year. This repeats each year by paying the Porsche premium in advance but paying ours in monthly amounts and being able to stop whenever you choose.
I now realise this will also be a significant disadvantage with any other new scheme that is paid in advance annually - as well.
Although all insured loss is a risk that only benefits if a loss occurs - because our premiums are monthly and include the cost of the services in full (and an annual MOT) - I cannot now in all fairness find any scenario in which you would be better off under the Porsche scheme (or any other annualy paid alternative).
Our monthly paid scheme really does therefore include a significant benefit for owners unfortunate enough to experience a warranty failure that could only ever be better off in the very worst engine failure in the last month of the first year of cover and the odds against that must be so enormous it could never be a serious reason to go elswhere.
Baz
This is how I made that mistake. I created a spreadsheet to compare typical std replacement costs for running cars under different schemes - set at 12K/year, starting at a 3 year old car covering each year up to 10 years old and allowing the costs to be compared for any period of ownership within those years and showing average costs.
I compared cars bought from Porsche and us (therefore not needing an initial service/check) and also cars bought elsewhere (that did) and put in the different costs for with or without a warranty.
I assumed the cars had no other faults in the period except those things we know will need replacing like - pads (every 20K), discs (40K), Battery (@ 8 years old), brake fluid/gearbox oil change/air bag check (as specified) clutch (60K) and all the services at the standard intervals.
I thought this was fair because in most cases any other typical fault (which is usually wear and tear related and covered by us) would work out cheaper on our scheme and so I was trying to be as fair as possible.
I then worked out and compared the yearly average costs.
Whichever way I looked at it - the average yearly costs were always similar however long you owned the car and this is how it worked out (brought up to date with the latest Porsche warranty costs).
BOUGHT PRIVATELY AND NOT ON ANY WARRANTY SCHEME
Average annual service and repair costs with Porsche £2,200
Average annual service and repair costs with Hartech equivelant std service system £1,300
Average annual service and repair costs Hartech more comprehensive "GOLD" service system £1,450
Conclusion - not unexpected - same sort of work done - cheaper with an independent.
BOUGHT PRIVATELY BUT THEN ON EITHER PORSCHE OR HARTECH WARRANTY SCHEME
Average annual service and repair costs with Porsche £3,300
Average annual service and repair costs with Hartech (only gold std available) £2,200
BOUGHT FROM PORSCHE OR HARTECH THEN ON EACH WARRANTY SCHEME
Average annual service and repair cost with Porsche £3,200
Average annual service and repair cost with Hartech £1,700
Conclusion
I know you can do anything with statistics but these are worked out fairly and probably more in favour of Porsche than us (in the things I have included and bearing in mind that our scheme covers all problems - wear or tear related or not - water pumps, window winders etc so will always be cheaper whenever something is not covered elsewhere) and do average out well and will be reasonably reliable.
They tell an obvious story - that it costs less with an independent and that it costs about the same to have the more comprehensive Hartech Gold standard services and a warranty, as having no warranty with Porsche and just paying for the service and repair work to be done.
Everyone also knows it costs more for the Porsche warranty but then it covers parts as well whereas ours only covers labour costs and so although ours costs significantly less, if a lot of warranty claims were made it would increase by the cost of the parts with us - so comparing the two schemes is difficult without knowing exactly what is going to go wrong and be compared.
This is where I previously made such a stupid error of logic. I looked at the average annual cost and realised that in the first year the Porsche scheme cost about £1000 more (bought privately) or £1500 more (bought from each of us) - but covers parts as well. I thought about the worst case scenario of an engine blow up (that would benefit the Porsche scheme the most as the engine is FOC) and realised that if the parts they would have to pay for on our scheme came to more than £1000 (or £1500) then they would have been as well off (or perhaps slightly better off) under the Porsche scheme - and to be fair to them I published that.
Part costs for the least expensive engine failure (an intemediate shaft bearing) are just under £1000 and for a more serious liner crack about £1300 but if a crank went as well - nearer £2200 - so to be fair to them I stated that you could be better off under the Porsche scheme in the first 18 months if your engine failed - other than which in any other scenario I can imagine - our scheme is much less expensive (because in the second year the savings double and so on and then exceed the cost of parts anyway).
So what was the error - simple - the average cost is over the first year but you pay up front with the Porsche scheme but monthly with ours - so if the failure occured in the first month - you would only have paid one months premium with us (about £44 to £55 + vat) whereas you would have paid the full anuual amount with the Porsche scheme (£1400 is it?) - so you would still be quids in with us. Indeed you would only be marginally worse off if your engine failed seriously in the last month of the year - a 12 to 1 outside chance in that year. This repeats each year by paying the Porsche premium in advance but paying ours in monthly amounts and being able to stop whenever you choose.
I now realise this will also be a significant disadvantage with any other new scheme that is paid in advance annually - as well.
Although all insured loss is a risk that only benefits if a loss occurs - because our premiums are monthly and include the cost of the services in full (and an annual MOT) - I cannot now in all fairness find any scenario in which you would be better off under the Porsche scheme (or any other annualy paid alternative).
Our monthly paid scheme really does therefore include a significant benefit for owners unfortunate enough to experience a warranty failure that could only ever be better off in the very worst engine failure in the last month of the first year of cover and the odds against that must be so enormous it could never be a serious reason to go elswhere.
Baz
We would take each request on its own merits.
We would not for example agree to use unsuitable oil that we think would harm the engine and we would not use oil that we had no experienc of or were unable to judge.
If we did agree to use customer supplied oil we could only reduce the cost by the price we presently pay for our oil - so unless the customer gets it FOC (as in one case) it is unlikely to benefit him.
Generally we do not fit customer supplied parts - or the next thing is they will be wanting to pay to use the tools and floor space! We need to be sure about the quality of parts ourselves - and there has to be a point at which we would need to use the price we pay for our parts and materials in any calculations and that is likely to be a lower price than an owner can obtain due to our economies of scale and volume.
Baz
We would not for example agree to use unsuitable oil that we think would harm the engine and we would not use oil that we had no experienc of or were unable to judge.
If we did agree to use customer supplied oil we could only reduce the cost by the price we presently pay for our oil - so unless the customer gets it FOC (as in one case) it is unlikely to benefit him.
Generally we do not fit customer supplied parts - or the next thing is they will be wanting to pay to use the tools and floor space! We need to be sure about the quality of parts ourselves - and there has to be a point at which we would need to use the price we pay for our parts and materials in any calculations and that is likely to be a lower price than an owner can obtain due to our economies of scale and volume.
Baz
OK first of all the oil. We have no objection to using Silkolene as long as it is the right viscosity for the age and mileage of the car. We normally use Castrol GTX magnatec 10-40. I am not going to enter into a debate as to why - I have for many years involved in motor racing been involved in lengthy discussions with all the leading specialists, I have track and dyno tested oils and had years of experience after stripping them down etc. The accumulated knowledge gained has resulted in this choice for this engine and takes into account the increased bore clearances caused in time by the cylinders going oval etc.
Regarding "how we make the scheme pay" - it is based entirely upon customer retention and regular cash flow.
Once someone is on our scheme they are unlikely to go to any of our competitors (having already accumulated their payments each month) and that enables us to plan ahead and predict turnover, spares requirements and workload - while receiving a steady influx of money to pay what are mainly regular monthly business costs.
The usual discount we get from Porsche is 10 to 15% and if anyone thinks that is enough to base a business on - they need to go back to business school (especially as we have to stock a lot in advance to cope with throughput). Financing parts that are in stock for over 6 months recovers nothing at these discount rates.
Where we offer less expensive alternatives (like our reconditioned wishbones, engine repair technology like re-linering blocks, modifying intermediate shaft bearings etc - we actually cost less. Where we may use an alternative supply source (having already satisfied ourselves that the product is the same or better) we usually pass on a saving - so I think it is enirely wrong to imply that profit on spares funds the scheme.
Most of all the scheme works because we are so good at what we do - our customer cars have a better reliability record - on average- than many other places and of course we have a vested interest in making sure they don't go wrong between services (unlike anywhere that can re-claim the cost from the prime manufacturer or a warranty company).
Our work is unbelievably thorough and follows the most comprehensive service records I have seen anywhere. It is based on the aerospace industry traceability system (where I have previously worked) and is more sophisticated than I found in the automotive industry.
It would also not be possible if we did not have a large place (that we own) with 10 ramps and good staff capacity to manage unexpected problems and high demand when needed.
Finally it would not be possible if we had not perfected some very simple management systems for stock control and accounts that minimise the indirect costs of running such a business. Why it takes so many people in suits elsewhere I do not know!
The main reasom we charge for spares is to enable us to keep the cost low and the customer to take advantage of adding some parts that have not failed but that the car would benefit from fitting during any rebuild claim - like perhaps new shells, chains, slippers etc after say a cracked cylinder job - which we are always happy to offer - saving the customer a return trip and resulting in a much better and more thorough repair for them for little extra cost.
Whichever way you weigh it up our scheme is in its 9th year - and has worked brilliantly for us and our customers. The customer retention has enabled us to re-invest with some confidence and when we hit those periods of recession when customers delay work and generally dissapear - we still get a regular influx of money - which may individually be a small amount monthly but overall adds up to some considerable regular turnover.
We are still a very small privately owned business and we have a limited capacity and have no desire to expand any further being quite happy looking after a great bunch of regular customers and enjoying the work we do and the relationship with those customers that the scheme enables us to build.
Baz
Regarding "how we make the scheme pay" - it is based entirely upon customer retention and regular cash flow.
Once someone is on our scheme they are unlikely to go to any of our competitors (having already accumulated their payments each month) and that enables us to plan ahead and predict turnover, spares requirements and workload - while receiving a steady influx of money to pay what are mainly regular monthly business costs.
The usual discount we get from Porsche is 10 to 15% and if anyone thinks that is enough to base a business on - they need to go back to business school (especially as we have to stock a lot in advance to cope with throughput). Financing parts that are in stock for over 6 months recovers nothing at these discount rates.
Where we offer less expensive alternatives (like our reconditioned wishbones, engine repair technology like re-linering blocks, modifying intermediate shaft bearings etc - we actually cost less. Where we may use an alternative supply source (having already satisfied ourselves that the product is the same or better) we usually pass on a saving - so I think it is enirely wrong to imply that profit on spares funds the scheme.
Most of all the scheme works because we are so good at what we do - our customer cars have a better reliability record - on average- than many other places and of course we have a vested interest in making sure they don't go wrong between services (unlike anywhere that can re-claim the cost from the prime manufacturer or a warranty company).
Our work is unbelievably thorough and follows the most comprehensive service records I have seen anywhere. It is based on the aerospace industry traceability system (where I have previously worked) and is more sophisticated than I found in the automotive industry.
It would also not be possible if we did not have a large place (that we own) with 10 ramps and good staff capacity to manage unexpected problems and high demand when needed.
Finally it would not be possible if we had not perfected some very simple management systems for stock control and accounts that minimise the indirect costs of running such a business. Why it takes so many people in suits elsewhere I do not know!
The main reasom we charge for spares is to enable us to keep the cost low and the customer to take advantage of adding some parts that have not failed but that the car would benefit from fitting during any rebuild claim - like perhaps new shells, chains, slippers etc after say a cracked cylinder job - which we are always happy to offer - saving the customer a return trip and resulting in a much better and more thorough repair for them for little extra cost.
Whichever way you weigh it up our scheme is in its 9th year - and has worked brilliantly for us and our customers. The customer retention has enabled us to re-invest with some confidence and when we hit those periods of recession when customers delay work and generally dissapear - we still get a regular influx of money - which may individually be a small amount monthly but overall adds up to some considerable regular turnover.
We are still a very small privately owned business and we have a limited capacity and have no desire to expand any further being quite happy looking after a great bunch of regular customers and enjoying the work we do and the relationship with those customers that the scheme enables us to build.
Baz
Hi Baptistan, I will answer but I don't want to develop arguments with others about oils - it's a bit like how to bring up your children - people seem to have loyalties that make them blind to alternatives - however the most important thing for any oil is (1) to change it often and (2) for it to remain on the moving parts during periods of innactivity so it is there from cold when re-starting again - sometimes weeks later. In this latter respect Magnatec is excellent while many expensive fully synthetics are very poor indeed. No more on this now.
Baz
Baz
Diesel130 said:
hartech said:
... the most important thing for any oil is (1) to change it often ...
Baz
How often do _you_ recommend ? (elapsed time and/or mileage)Baz
Cheers - Phil
Frankly I think it is a bit crazy to leave oil a long time in a new engine.... I would change at least every 6K or 12 months but we do not insist on this under our Maintenance Plan - it is available FOC @ 6K but customers can leave it to 12K if they prefer (or live a long way away) so you can see that somewhere between 6 and 12 K we approve of - any more I don't personally like at all.
Apart from anything else there is often a lot of crankcase sealant flashing that squeezes out on the inside of the engine and this gradually falls off and clogs the filter. We have already replaced a crankshaft on a Boxster because the accumulated bits almost completely blocked the wire mesh gauze on the oil pick up mushroom. Oil pressure was still OK but flow was so restricted the extra heat generated had allowed the shells to get so hot that the white metal had melted in some places.
I am not entering into a debate about this though - don't have the time - sorry.
Baz
Apart from anything else there is often a lot of crankcase sealant flashing that squeezes out on the inside of the engine and this gradually falls off and clogs the filter. We have already replaced a crankshaft on a Boxster because the accumulated bits almost completely blocked the wire mesh gauze on the oil pick up mushroom. Oil pressure was still OK but flow was so restricted the extra heat generated had allowed the shells to get so hot that the white metal had melted in some places.
I am not entering into a debate about this though - don't have the time - sorry.
Baz
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