Friday 17th March 2006

BMW softens warranty stance

Potential price drop in the offing?

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BMW M5: too expensive to run?

BMW's attitude to its new warranty charges, which caused outrage among some customers for its most expensive products, has softened slightly. It could mean a reduction in the cost of a warranty on an M car, which rose 46 per cent this year (see link below for full story).

The changed stance is revealed in a letter from BMW to one customer who complained. Hedged with apologies, a representative of the Munich-based company responded saying that, in essence, its warranty charges were based on the cost of supplying the guarantee but that they could be reduced if that cost fell.

Here's the letter in full:

Dear Mr xxx

Thank you for your recent email sent to Mrs Fay Wells, regarding changes to BMW Insured Warranty products effective from 1 February 2006. Your email has been sent to me for response. I was sorry to learn of your dissatisfaction and, on behalf of BMW UK, regret the frustration this matter has caused. Moreover, I must stress that the loyalty you have shown to BMW is indeed appreciated and I apologise that changes to this warranty product have caused you to lose faith in our brand.

I acknowledge your request that I should respond to your email personally.

However, I have noted your comments and the points you raise are answered by our company response below: 

The actions taken, as with any insured product are based on historic costs and the impact these have on the fund held by the Insurance Underwriter. Whilst BMW have in the past priced M product the same as its equivalent BMW model derivative, we believed that this was unfair to these owners who represent a lower warranty cost base.

None of our insured warranty products are profit making and the changes reflect our cost prediction based on actual historic trends.

With regard to the insurance excess we have introduced, this was done to keep the premium as low as possible.

Whilst we are very sorry that you have had cause to complain, we regret that it will not be possible to reduce the cost of these warranties in the future unless actual costs reduce. However, a further review will be undertaken in six months time to see if the situation has changed, giving due consideration to customer correspondence.

In closing, I thank you for taking the time to contact us with your feedback.  I regret that you have had cause to contact us under these circumstances and hope that future experience will reaffirm your faith in our brand.

Yours sincerely

...

Customer Service Executive

Taking this at face value and given the high purchase and running costs of M cars even before the new warranty price hike, maybe BMW should redouble its efforts on making cars that tolerate being driven as they were designed to be driven. If it did, maybe the warranties wouldn't cost as much to fulfil.

• Related story: BMW hikes warranty charges

[B 7 VP]

Since ALL dealer labour costs increase weekly together with the monthly increased costs of parts, dont hold your breath for any reductions.If the product was of better quality for the purpose that BMW markets it for, we wouldnt need to keep insuring it cos it may break--once again.Independent service specialists dont seem to have anything like the rampent inflation found at the megadealers.