There seems to be a long-standing misconception between the $37 billion aftermarket industry, consumers, and automakers/dealers concerning the possible repercussions of specialty-parts installation on a vehicle's factory warranty. Despite warranty concerns, the aftermarket continues to grow at an astounding rate. According to the Specialty Equipment Market Association (SEMA), approximately 75 percent of vehicle owners today personalize their vehicle by purchasing products to improve performance and appearance, including suspension and lift kits, custom wheels, superchargers/turbochargers, etc.
Some aftermarket folks are wary that automakers and dealers use specialty-parts installation as an excuse to weasel their way out of performing warranty work and paying for a customer's claim. But, part of the problem rests with ensuring aftermarket products and installation are free of defects in the first place.
On the other side of the argument, automakers and dealers insist that contrary to popular belief, merely installing specialty parts on a vehicle under factory warranty does not automatically void the warranty, but if you're going to personalize your vehicle, the only "safe" bet is to install factory tuner parts. However, if damage occurs to an original vehicle part still under warranty as a direct result of an aftermarket installation, and can be proven as such, the general consensus among OEMs is they don't pay for the repair or replacement of the damaged part(s).
While a rare gesture, specialty-parts manufacturers, including Roush, Stillen, and Magna Charger, have ventured into uncharted territory by offering an optional 3-year/36,000-mile powertrain warranty on supercharger kits installed by an approved shop.
SEMA has also weighed in on this matter by creating the ProPledge warranty-assurance initiative, which seeks to establish a uniform warranty covering product and installation defects. The program is designed to promote the sales and service of quality aftermarket parts from reputable manufacturers.
So, how do new-vehicle warranties affect the specialty-parts industry, and are automakers and dealers warranted in voiding factory warranties for aftermarket product installation damages?
TAKING IT TO THE LIMIT As a uniform policy throughout the automotive world, Mopar warrants its vehicle parts, while outside aftermarket parts carry their own manufacturer's warranty. Potential warranty denial only ensues when an aftermarket part installed on a Chrysler vehicle causes damage to an original part warranted by the automaker, in which case, Chrysler would not pay the tangential damage caused by somebody else's part, according to Christine Cortez, senior vice president, global service and parts, Mopar."For example, if an electronic device is installed that overloads our vehicle's electrical capacity, from shorting out the lights to a big vehicle malfunction to a 'thermal event,' we would not take care of the damage that it caused because we know the vehicle's capacity," said Cortez. "When we install our accessories, we know they fit within the vehicle's electrical capacity. Same thing happens with the powertrain because if indeed an outside aftermarket accessory overtaxes the vehicle's capability and causes engine or transmission failure, we would not warrant the engine or transmission because the failure was caused by an external part. It's not that we don't warrant the parts, it's that we don't take care of any damage caused by those parts."
For the most part, aftermarket consumers are enthusiasts who make educated purchasing decisions and know their vehicle's limitations. They want to personalize their vehicle as soon as possible and are not going to wait until the factory warranty expires to do so. Cortez believes many young aftermarket enthusiasts can't afford to purchase a new vehicle, so they buy a used vehicle already out of warranty and hop it up.
"We find that people who are out there fooling with their vehicles and having fun know what they're doing, are very confident, and know how to check the technical competency of what their vehicle can do and what they're installing," said Cortez. "They also tend to be the 'cowboys;' they're out there doing fun stuff and they're usually pretty good at it. If they're not, and they take a risk, they pay for the risk. But people are either in that market and they're going to make modifications regardless of the vehicle's age, or they're not in that market, and they don't fool around much with their vehicles. People who play with their cars and trick them out are not going to wait three years to do it."
Cortez acknowledges that, for the most part, aftermarket companies are reputable and produce quality products. It's a select few that tend to hang a black cloud over the industry.
"There are very good aftermarket suppliers out there who do a great job and they stay within the vehicle's capability, and there are other situations where we'll see a grille that actually restricts the airflow and overheats the engine," she said. "I don't think the aftermarket world suffers as a result of new-vehicle warranties. The customer base knows what they're going after. They know who's reputable and who's cheap."
BRIDGING THE GAP To help bridge the gap between the aftermarket and automakers and dealers, the Specialty Equipment Warranty Alliance (SEWA), a SEMA subsidiary, devised a pilot program called the ProPledge warranty-assurance initiative, designed to increase specialty-auto product sales through new-car dealers. Launched May 15, 2007, ProPledge is a cooperative venture comprised of SEMA-member accessory manufacturers and professional installers.According to SEMA, ProPledge is being test-marketed for 18 months in key U.S. regions and includes a diverse array of product categories, ranging from sunroofs, leather interiors, mobile electronics, custom wheels, suspension components, ground effects, cat-back exhaust systems, and assorted truck gear. Through participation in ProPledge, SEMA-member companies proactively work to further enhance the stature of the specialty auto products industry and ensure total consumer confidence in the industry's products and services. SEMA plans to use the pilot stage to expand the program down the road when all the components that go into building a warranty program are in place.
ProPledge establishes a uniform warranty that covers product and installation defects for a minimum of 3 years/36,000 miles, which corresponds to most new-vehicle warranty terms. The program includes protection to the consumer in the event a product or installation defect results in the denial of a vehicle warranty claim and provides parts and labor repair or replacement at no cost to the car dealer or vehicle owner.
"The program provides dealers the assurance that manufacturers have pledged to stand behind the products they provide and guarantee they are free of defects," said Ellen McKoy, sr. director, dealer relations for SEMA and executive director of ProPledge. "Participating installers have pledged to warrant their workmanship is free of defects, and in the event that either or both of them fail to perform in accordance to their expectations, they will warrant their products and services and make the necessary repairs at no extra cost to the dealer or the customers. That's a very important message to send out to the industry."
THE BOTTOM LINE According to Wayne Geoffrey, a Ford Racing Performance Parts salesperson, some aftermarket manufacturers are sidestepping the factory warranty issue by offering their own warranties. For example, if a Roush supercharger is installed in a vehicle and it causes a malfunction, Roush pays for the part and the damage it caused.Ford Racing Performance Parts offers a select number of 3-year/36,000-mile warranted Mustang performance parts that can be installed at the dealership, including the brand-new Ford Racing packs and a Power Upgrade Pack, which features a cold-air kit, Ford Racing Performance calibration, muffler kit, and a performance oil filter. Each has an executive order so they're emissions-legal.
On the other hand, cosmetic parts generally don't void the warranty unless the wheel diameter is changed, according to Geoffrey. "And unless you put something over the paint, and something happens to the paint, then it wouldn't be covered, but for the most part, 'bling' accessories don't affect the warranty."
The bottom line is that auto manufacturers must prove the installed part caused the damage to the vehicle in order to void the warranty, according to Geoffrey. The warranty cannot be voided if an aftermarket part is installed and the vehicle experiences a problem unrelated to the part's installation.
Geoffrey also believes that some people don't care to wait until the vehicle's warranty expires to modify it, especially those with money. "They want to bolt everything on it right now and if they blow their engine up, they'll say 'big deal, just put another engine in and tell me how much I owe.' But then I'm sure there's a large contingent of people who may wait until their warranty expires before they start hopping up their vehicle."
GOING OUT ON A LIMB Among the few, Stillen offers an optional engine warranty on some of its supercharger kits. For example, stainless exhaust systems are warranted for life against defects in materials and workmanship and urethane body parts are warranted for life against cracking or breaking in normal use. The warranty only applies to defects in material and workmanship and does not apply to any external engine parts, ignition parts, fuel system parts, or engine management parts."This is a very unusual offering for the aftermarket. Obtaining this warranty required submission of our design parameters and AutoCAD drawings, as well as testing by an independent laboratory," said Jeff Ricciardi, sales manager, Stillen. "I think it is reasonable for a manufacturer to void any part of a vehicle warranty where aftermarket-parts installation may compromise the vehicle. Unfortunately, very few aftermarket manufacturers perform the thorough design, testing, and production quality checks that Stillen does."
Ricciardi acknowledges that many aftermarket parts are made that can either damage the vehicle or make the vehicle illegal to drive on the street; therefore, it's unreasonable to ask manufacturers to police aftermarket-parts quality. He also says the OEM has a vested interest in selling its own parts.
"The difficulty is that dealers are inconsistent in their approach to aftermarket parts," said Ricciardi. "Many dealers will not install aftermarket parts or, in extreme cases, will not perform service work on vehicles with aftermarket parts. I recently spoke with a customer whose dealer would not perform an engine oil change based on his having an aftermarket supercharger installed, so this definitely hurts the aftermarket industry."
MEETING QUALITY STANDARDS Bill Kwong, product communications administrator for Toyota/Scion, says a vehicle modified with non-genuine Toyota or Scion parts could adversely affect the vehicle's performance and safety. "It's the customer's car and they can do whatever they want, but any damage resulting from a modification is not covered under warranty unless it's a Toyota/Scion part."However, if a customer installs an aftermarket suspension component and a problem arises with a seat, window, or any other part unrelated to the suspension, then the 3-year/36,000-mile warranty is still intact.
"We have more than 1,200 dealers in the U.S. and customers can bring their vehicles in for any product issues to be reviewed on a case-by-case basis to determine whether or not the damage is covered under the warranty," said Kwong. "If your turbocharger puts out 15 lbs. of boost and it blows up the head gasket, that's not a Toyota turbo, so we can't cover the powertrain warranty."
Factory tuner parts covered under the warranty are flying off the shelves, particularly with the Scion brand, according to Kwong. These parts include superchargers, cold-air kits, cat-back exhaust, TRD suspension kits, wheels, lighting kits, sport pedals, and quick shifters. Kwong says the company has more confidence in its own products because stringent guidelines are in place to ensure its vendors meet Toyota/Scion quality standards in durability, reliability, fit, and finish.
"That's why we're able to cover these parts under the factory warranty. I'm sure there are non-genuine Toyota products out there that are built well, but we have not tested them for durability and compatibility, and so forth; therefore, we cannot guarantee the part's performance and safety and whether or not it will violate our warranty," said Kwong. "Again, the modification may or may not be covered under the factory warranty. That's at the discretion of the dealership to see the vehicle up close and determine, 'ok, the cat-back exhaust is really not going to do much to the powertrain, but a turbocharger or supercharger or nitrous kit can affect the powertrain.'"
ADDRESSING THE "MYTH" Tom Henderson, spokesperson for General Motors service and parts operations, calls it a "mythological notion" that merely installing aftermarket parts on a vehicle automatically voids the factory warranty, which isn't the case. It's the same deal as with Ford, Mopar, and Toyota/Scion—the warranty is only voided when a non-GM-approved part installed on a vehicle causes the failure of another related component."The rest of the warranty stays intact because we don't want to leave our customers stranded if they then have a problem with a different part of the vehicle that's unrelated to the aftermarket or non-GM-approved part," said Henderson.
For example, if someone installs 24-inch wheels on a full-size SUV, which is more weight than the vehicle is designed to handle, and a portion of the transaxle cracks, the problem is caused by the additional loading resulting from oversize wheels, so the repair would not be covered under the warranty. However, if an aftermarket radio is installed and there happens to be a failure in the vehicle's driveline, which is clearly not related to the aftermarket radio, the warranty would be honored.
"Any customer who owns a GM vehicle, whether it's a Chevrolet, Cadillac, or anything in between, they're still our customer; we still want them to buy another vehicle, whether they have purchased our accessories or aftermarket accessories. So, there's no way we would just void the whole vehicle warranty just because of one incident," said Henderson.
Henderson believes SEMA's ProPledge program is a good step forward for the aftermarket customer because, until now, there hasn't been a consistency of promise behind the parts sold in the aftermarket. He predicts SEMA is driving toward wider-spread coverage with the program.
MOVING FORWARD Peter MacGillivray, SEMA's vice president, events and communications, recognizes the misunderstanding between consumers, the aftermarket, and automakers and dealers concerning the impact aftermarket accessories may have on factory warranties."ProPledge was developed in response to the highest level of mainstream consumer interest in personalization, making their cars, trucks, and SUVs fit them like a glove, whether they're enhancing their vehicle's styling or functionality through aftermarket products," said MacGillivray. "The warranty-assurance program helps dealers do a better job and heightens their confidence in our industry's products. When you boil it down, this program is meant to clear up the misunderstandings about the impact of installing accessories on brand-new vehicles and it helps auto dealers to make those sales to interested consumers."
While others believe consumers won't wait for their vehicle's warranty to expire before modifying it, MacGillivray says that traditionally, they do wait until their vehicle is either out of warranty or second or third hand. He also thinks people are not having their warranty honored when they're perfectly entitled to it.
Essentially, ProPledge covers not only the accessory installed, but also the entire vehicle. "There have always been warranties that cover the component, but never the component's impact on the vehicle. That's a pretty significant step. Hopefully the program will help clear up confusion when consumers ask, 'Hey, is this going to void my warranty?' This takes that misunderstanding right out of the thought process," said MacGillivray.
SEMA acts as the program's coordinators, but it's supported by participating installers and manufacturers. "We've received great support from the industry, which is coming together to see how this program has the potential to raise consumer confidence," said MacGillivray. "Consumer interest is as high as it's ever been—we did $37 billion in sales in 2006. This industry's been growing at about 7-percent per year for the past 10 years, and as we look down the road, it's programs like this that are going to contribute to that growth."
MacGillivray believes part of the problem is that salespeople and consumers don't understand their warranties and it's that type of "unknown" that creates anxiety, which can impact the growth of the aftermarket industry. "It's not clear to me if it's just that some people are looking for excuses for not doing warranty work who say, "You've got this aftermarket part on here, you voided your warranty." That's an easy excuse," he says. "Our program takes this misunderstanding and adds a lot more clarity to it by demonstrating to other businesses related to the specialty-equipment industry that we've got fantastic products that are as good as anything you can find.
"Our biggest hurdle right now is time and collecting the actuarial data because with any new program, you need to cycle through data and know the business before you can do a full launch. We want to make sure that the program is completely in place and we get it right before moving forward with the launch," said MacGillivray. "One of our chairmen has said, 'The best time to plant an oak tree is today,' so it's one of those things where I don't know if it's going to be one year or five years before we go full steam ahead, but when you're working on big programs like this that hopefully will have a huge impact on the industry, there's no better time to get started than right now."
To conclude, it seems automakers and dealers are justified in voiding factory warranties to consumers who hop up their vehicle beyond its capacity. However, they cannot deny a warranty claim in the event a problem unrelated to an aftermarket installation arises.
We'll see how many aftermarket manufacturers follow the leads of Stillen, Roush, and Magna Charger. One thing is sure—the politics of fear rule, yet the aftermarket industry is still ablaze, despite consumer anxiety of losing their factory warranty. But it might never be known how many more enthusiasts would gravitate toward the aftermarket if it weren't for that fear.
In the meantime, through ProPledge, SEMA continues its work to bring the aftermarket together with automakers and dealers. Stay tuned.
