Warranty deals increase competition

Added value packages such as warranties and servicing cover could represent the latest competitive arena for car firms in Ireland. BMW is the latest marque to announce a new maintenance package that will cover any servicing costs on new cars for five years or 100,000 km.

Available as an option on new Minis, BMW 5-, 7-, and future 6-series models, costs will range from €165 plus VAT for the Mini to €1,405 for the 6- and 7-series. BMW has also announced that warranties on new cars will now run to three years.

It follows an earlier decision by Fiat and Alfa Romeo to introduce an incentive package that effectively provides a full five-year guarantee on all its new vehicles. Already Ford offers similar servicing schemes as an option on its Ford Protect programme.

If the new packages by BMW and Fiat are judged a success in the New Year, it's likely that warranty and servicing packages may prove to be attractive competitive incentives in the industry, much like cash rebates are in the US at present. There are also obvious benefits for the car firms, who are left with better-maintained products when the cars are traded in, usually within the first five years. At the launch of the scheme BMW Ireland"s recently appointed managing director Conradt Schmidt described as shocking the poor level of service history in Ireland.

While there is no published statistics on the depreciation rates for various models, unlike in Britain, it's generally judged in the market that BMW has a higher depreciation rate than its main competitor Mercedes, in the region of two-three per cent difference.

The BMW scheme is already in operation in Britain and is the latest in a series of moves likely to harmonise operations and incentives between the two markets. It follows the introduction of additional model options to the BMW range packaged together at a discount price and previously only available in the British market.