GM Extends New Model Warranties to 100,000 Miles In Latest Effort To Win Back Market Share

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General Motors Corp., the world’s largest automaker, will extend warranties to 100,000 miles on 2007 cars and trucks as part of a plan to tout quality and win back buyers lost to Toyota Motor Corp. and other rivals.

The new warranty on engines and other powertrain parts is an increase from the current 36,000 miles, Chief Executive Officer Rick Wagoner said today in Detroit. It also will apply to 2007 models already sold, he said.

“You can see gleanings of a cohesive strategy,” said Jeremy Anwyl, president of Santa Monica, California-based Edmunds.com, which runs an auto-pricing Web site. “They went through this repricing back in January, and they’ve kind of toughed it out this year without having any major incentives.”

Mr. Wagoner is trying to emphasize value and rely less on incentives after Toyota and Hyundai Motor Co. grabbed American market share last year, contributing to GM’s $10.6 billion loss. Sales of redesigned models such as the Chevrolet Tahoe sport-utility vehicle helped GM post record revenue in the first half.

The warranty, which starts tomorrow, will run 100,000 miles or five years. It has no deductible, is transferable to new owners and applies to all new cars and light trucks sold in the U.S. and Canada. Detroit-based GM also will extend roadside assistance to 100,000 miles.

Warranty coverage for parts outside the powertrain, such as cupholders, remains at 36,000 miles.

GM shares rose $1.01, or 3.3%, to $31.45 at 1:52 p.m. in New York Stock Exchange composite trading. The stock has gained 62% so far this year, the most of any company in the Dow Jones Industrial Average.

Mr. Wagoner said GM would pay for the extra warranty expense with part of the $9 billion in savings it’s achieved so far this year through job cuts and other changes. He didn’t specify the cost other than to say that it was manageable.

The warranty program is part of an eight-month-old initiative to shift money from incentives and instead attract buyers with lower prices or added features at no extra cost, according to Mark LaNeve, GM’s North American marketing chief. Mr. Wagoner has been under pressure to boost North American sales and profits after billionaire Kirk Kerkorian, GM’s fourth-largest investor, urged the automaker on June 30 to consider an alliance with Renault SA and Nissan Motor Co.

Mr. Wagoner agreed with Renault and Nissan CEO Carlos Ghosn on July 14 to study the proposal for 90 days. Mr. Wagoner said GM’s primary focus is his own restructuring plan and GM doesn’t need an alliance to return to profit. Mr. Ghosn said today that Renault is hiring banks to review the proposed alliance and Nissan should follow soon.

The number of GM warranty repairs at dealerships has dropped 40% in the past 5 years, Mr. Wagoner said.GM took a $300 million second-quarter gain from lower warranty costs, which led in part to operating profits more than three times analysts’ estimates.

“This is another big step for us in the turnaround,” Mr. LaNeve said. “We’re going to validate the dramatic improvements we’ve had. We know we’ve closed the quality gap.”


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