Walk through any car dealership showroom in the United States, and you’ll undoubtedly hear a few common words: price, payment, lease, cash, finance, test drive, and warranty. You’ll also hear the inevitable "I have to think about it," and, if you’re bold enough to follow the employees afterward, perhaps a few select curse words. However, one phrase you are almost guaranteed to hear — and should never hear — is, “The car comes with an ‘X’ year, ‘X’ thousand miles, bumper-to-bumper warranty.”

Do you feel the same chill running down your spine that I do? It's as though the room suddenly dropped to 0 degrees Fahrenheit. Nothing makes me cringe more than hearing "bumper-to-bumper" at a dealership. Why? It could be that the business manager in me doesn’t want the customer to come into the office with an objection already in hand to the vehicle service contract I'm preparing to offer. It could also be because the bumpers themselves aren’t covered by the so-called "bumper-to-bumper" warranty. Or it could be because it’s a complete and utter lie.

The Misleading Nature of "Bumper-to-Bumper"

A lie, you say. How could something so commonly said to customers every day across the country be a lie? Simple: somewhere, somehow, someone decided to describe the coverage in that manner, and it stuck. Anyone who takes the time to look at the Monroney label of a vehicle will understand. For example, KIA refers to their warranty as the following:

• Limited Powertrain Warranty Coverage: 10 years or 100,000 miles, whichever comes first
• Limited Basic Warranty: 5 years or 60,000 miles, whichever comes first
• Limited Anti-Perforation Warranty: 5 years or 100,000 miles, whichever comes first
• Paint Warranty: 3 years or 36,000 miles, whichever comes first
• Original Equipment Battery Warranty: 3 years or 36,000 miles, whichever comes first
• Audio / Entertainment Warranty: 3 years or 36,000 miles, whichever comes first

This is on top of many exclusions, such as:

"Liability under this warranty is limited solely to the repair or replacement of factory-installed parts if they fail to function properly during normal use. Such repair or replacement shall be carried out by an Authorized Kia Dealer at its place of business. This warranty does not include any other expenses, including but not limited to those for any replacement transportation or for the loss of use of your Kia vehicle."

When a consumer hears "bumper-to-bumper," they tend to presume the vehicle is covered no matter what. However, within their owner's manual is proof that the salesperson who said that to them misrepresented the facts.

Misuse and Misunderstanding

I am not accusing any salesperson of lying intentionally to deceive a customer. Far from it. The term is simply commonly misused and misunderstood. It is imperative that customers understand their warranty is limited. This is crucial not only to properly set up the sale of service contracts for the dealership but to protect customers from thinking they have coverage they don’t and to protect the dealership. Under certain circumstances, a customer could attempt to take legal action against a dealership if the car they purchased had a “bumper-to-bumper” warranty and a part failure was deemed not to be covered by the factory. Congress has created protections for consumers in these types of situations under the Magnuson-Moss Warranty Act (MMWA).

When enacting the MMWA, Congress described a warranty as:

“An express or implied statement or representation made by a seller of goods with reference to the character or quality of the goods being sold. A warranty can also be described as an assurance that the goods sold are as represented or promised.”

Creating an Express Warranty

An express warranty results from some type of overt action on the person giving the warranty. These can be created in three ways:

1. Through a promise or affirmation of fact that relates to the goods.
2. A description of the goods.
3. Based on a sample or model of the goods.

For example, "Hondas are incredibly reliable; these engines never break down" provides an express warranty that the vehicle engine will last indefinitely. If a customer bases their buying decision on this statement, it can be considered an express warranty and leaves the dealership susceptible to civil lawsuits if the engine does indeed fail. For an express warranty to be created, the buyer must also be using that expression as a basis for buying a product.

Implied Warranties Under the MMWA

Under the MMWA regarding implied warranties, there are three basic requirements:

1. If a seller or manufacturer gives a written warranty, it needs to be clearly and conspicuously labeled as either full or limited. This applies to all consumer products over $10.
2. The warranty coverage information must be contained in a single, clear, and easy-to-read document. This requirement applies to all consumer products over $5.
3. Warrantors and sellers must ensure that written warranties are available where the consumer goods are sold, so consumers have an opportunity to read the warranties before making the purchase. This requirement applies to all consumer products valued over $15.

A "consumer good" is tangible, personal property normally used for personal, family, or household purposes. All vehicles sold by a dealership are considered consumer goods and therefore subject to the MMWA. The first bullet point is the focus of this article: the word "limited." The law states a warranty provider must label a warranty as either full or limited, which is why KIA (and most warranty providers) use the word "limited" to describe their basic and powertrain coverages on vehicles. There are exceptions and exclusions, and therefore it is not full coverage.

The Impact of Words

Now, if we look at ourselves in the mirror and ask honestly, as a consumer, if you were told a warranty had “bumper-to-bumper” coverage, would you presume it was full or limited? To look at the scope outside of the car business, let's say you are buying a brand-new computer, and the employee tells you that its warranty is "cover-to-cover." Do you automatically presume exceptions apply? Perhaps, but many consumers would not, and therein lies the gray area.

Training: The Simple Solution

Sound the alarm! We could get sued! Seriously though, unlikely as it may be, there is potential there, while a simple solution can be enacted to prevent this: training. It takes a consistent effort to train your sales, service, finance, and management staff to all use the same proper language and terminology. However, the results will surprise you. The safest language you can use when teaching the staff how to refer to the warranty coverage is simply to mimic what the manufacturer uses in their owner’s manual. You will also need to prepare them for the inevitable question customers will ask: "Limited to what?" To which I would simply answer, "time, miles, defects, and the list of exclusions included in the owner’s manual." This is not likely to scare a customer away from buying a vehicle. If anything, it will make them more likely to purchase from you instead of a competitor. Customers don’t appreciate being misled, and they are skeptical of our industry as it is, so why not show them we want to be honest and transparent with them by using the right language?

Again, Words Matter

This is why, at dealerships every day (and in life), words matter. Using precise and truthful language not only builds trust with customers but also protects the dealership from potential legal issues. Let’s ensure we are all on the same page, speaking the same language, and providing our customers with the transparency they deserve.

To learn more, reach out to Tim Allen at tallen@ezvds.com or via LinkedIn.