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

[Strider]

At least M customers have a standard three year warranty. I spent last night on the A34 with two very kind taxi drivers trying to get my 30 month old Alpina B3S back on the road, cursing Alpina and BMW because it only has a two year warranty. If I'd had a 320 instead of a £50,000 BWM-Alpina the van would have arrived and I'd have been home by midnight, but because I bought the premium product I was still at the side of the road. Unfortunately I didnt discover this failing until I'd bought the car. OK, I could have extended the warranty, but after spending large amounts of cash on a ranging-topping product that should come with decent customer care I was just too livid to pass any more money in their direction. And they wonder why residual values are so low !

[off_again]

I must admit that this warranty thing scares me (sad I know but it does). I want to get an M5 and was going to go for an E39. But with all of these stories, I might get a mint E34 and keep money back for the maintenance / fettling and maybe a weekend toy with the rest. Given that BMW are getting strict on warranties, why buy sooner? Prices of E39's will drop as a result (are any shifting?) but I cant get a warranty over 100k miles and if an owner has let theirs slip then you cant renew it.... and even if an owner has kept it up, I am looking at a near £2k a year bill (with caps!). Hardly seems worth it.....

[Broccers]

Oooh looks very similar to the letter I had

Basically the price stays the same for at least 6 months.