Fleet News

Longer vehicle operating cycles: Extended warranties avert costly repair bills

Fleets are facing higher repair bills than ever before, as the current economic depression forces an increasing number to hold on to their vehicles for longer than the usual three-year period.

This means many vehicles are slipping out of their manufacturer warranties, which are typically three years.

The complex nature of modern vehicles, with multiple sensors and electronic control units for exhaust emissions, stability and braking, engine management and sophisticated safety systems, means repair costs can be huge when components fail.

Another factor fleet managers should be thinking about is the developing green technologies, such as batteries, driveline components and start/stop technology in electric and hybrid vehicles.

These technologies place greater emphasis on starter motors and charging systems, and fleets should consider how these may impact on repair costs after the warranty has run out.

Parts prices have risen by 20-30% for franchised garages over the past 10 years. Labour rates are as high as £180 per hour for some franchised dealers (according to the AA), creating a very real concern for fleets.

And last year’s tsunami in Japan only served to further push parts prices up, especially for Japanese vehicles.

Many leasing and rental companies are keeping vehicles into their fourth and fifth years and, with no extended warranty in place, these older higher-mileage vehicles are likely to be racking up sizeable repair bills.

Many user-chooser fleets consist of prestige cars like Audis, BMWs and Mercedes, and servicing and maintenance costs are considerably more in years four and five.

Extending the warranty cycle helps take the guesswork out of running costs, giving additional peace of mind.

One of the most common problems premium cars, such as BMWs and Audis, suffer in the fourth year is ABS pump and control unit failure and something like that could cost anything from £700 to £2,000 to repair.

Mercedes often have problems with the automatic gearbox in their fourth and fifth years, which could produce a bill of £3,000 or more.

Considering extending warranties is new for many asset owners, but any additional safeguard they can make against incurring extraordinary costs should be worth the consideration.

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  • Martin - 06/09/2012 08:19

    The car manufacturers offer a warranty period for a particular duration, and the car dealers have to provide an extended car warranty for the used car on their behalf for assuring the buyers that they are not going to loose their money if something goes wrong with the machinery.

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