[dZired]

Mercedes-Benz India has launched extended warranty packages spanning up to 6 years. The German automaker has collaborated with Daimler Financial Services India and Reliance General Insurance for this new warranty product, called Advanced Assurance Program. Prior to this launch, Mercedes-Benz owners were being offered warranties of up to 4 years.

Mercedes cars currently come with a standard 3-year warranty (2-year standard warranty + 1-year STAR CARE). The Advanced Assurance Program will offer warranty benefits after the completion of this 3-year standard warranty. It will be available in three packages - 4th year, 4th and 5th year, and 4th, 5th and 6th year. The extended warranty can be bought any time before the completion of the standard 3-year warranty. Additionally, a customer can also exit the package after enrolling, provided that the standard warranty period hasn't lapsed.

The said extended warranty packages are not limited by the number of kilometres a car has been driven and thus offer unlimited mileage. Moreover, these programmes can be transferred to subsequent owners in case the vehicle is sold. It must be noted that Mercedes will be offering the extended warranty packages only to non-commercial customers.

Interested customers can visit the company's official website to get a quote of the Advanced Assurance Program for their cars by using an online calculator.

Link to Team-BHP News

[dailydriver]

Originally Posted by dZired

Mercedes-Benz India has launched extended warranty packages spanning up to 6 years.

The said extended warranty packages are not limited by the number of kilometres a car has been driven and thus offer unlimited mileage. It must be noted that Mercedes will be offering the extended warranty packages only to non-commercial customers.

Good:

Customers can breathe easy knowing fully well that their car will be under warranty for six years, thereby reducing their own exposure to risk - albeit at a price. With increasing instances of premature problems surfacing on the cars sold by the Big 3, this is a very comforting option for the buyers. Related thread (PICS : How flatbed tow trucks would run out of business without German cars!)

Bad:

This is a very clever strategy because the manufacturer knows that very few of their cars are likely to fail. But these very few instances/ possibilities compel the purchaser to opt for additional warranty. A failure here and a problem there have created a fear in the minds of the car buyers and the manufacturer is cashing in on this fear.

Most privately owned cars will be regularly serviced, well maintained and most importantly moderately run. One can safely assume that only a very minor percentage of cars will have crossed 1,00,000km in six years. Hence, the unlimited mileage clause is just that. Only in case of severe manufacturing/operating defects will Mercedes lose some money.

Ugly:

A point worth noting is that commercial vehicles, which invariably see a high mileage, aren't covered under this scheme.

[redeff]

I welcome this step. I'm getting this for my C Class !! BMW has yearly limits on Kilometers and the extended warranty is quite expensive. This package seems very competitively priced.

[agambhandari]

Look like mercedes knows what people are afraid of!! they already had the service packages(albeit very expensive as compared to BSI) but this is definitely going to add peace of mind. Also it will add resale value to any merc being sold in under 3 years.

[androdev]

Don't get too excited guys, I checked their calculator and the prices are crazy even by Mercedes standards. What is more disappointing (and reflects very poorly on their intentions) is the fact the the prices go up steeply if you delay the purchase of the warranty.

Until this move, they were offering 4th year warranty at a very reasonable price and you could buy it anytime before the expiry of 3yr standard warranty. I remember I paid Rs 75K for my 4th year warranty (2012 s class). The same 4th year warranty now costs 1.98L if bought within first 3 months of buying the car, Rs 3.75L if bought during 3rd year of ownership (before expiry of std warranty). These prices make no sense really except give an indication of their poor reliability.

EDIT: C and E class prices are okay, but GLC, GLE, S, etc. are a bit too much.

[SmartCat]

Originally Posted by androdev

Don't get too excited guys, I checked their calculator and the prices are crazy even by Mercedes standards. What is more disappointing (and reflects very poorly on their intentions) is the fact the the prices go up steeply if you delay the purchase of the warranty.

Any idea why warranty underwriters increase prices when it is bought after 2 or 3 years? I wonder if there is any statistical model based on past warranty claims. Or is it just a marketing strategy?

When somebody is presented with the price table that you have uploaded, the first thing that comes to mind is -

woah, if I pay Rs. 6 Lacs now, I can save Rs. 6 Lacs on the extended warranty. And hey, I'm already paying Rs. 90 Lakhs for the new car. Extra Rs. 6 Lakhs is not much for peace of mind.

[tp_dominator]

Originally Posted by smartcat

Any idea why warranty underwriters increase prices when it is bought after 2 or 3 years? I wonder if there is any statistical model based on past warranty claims. Or is it just a marketing strategy?

When somebody is presented with the price table that you have uploaded, the first thing that comes to mind is -

woah, if I pay Rs. 6 Lacs now, I can save Rs. 6 Lacs on the extended warranty. And hey, I'm already paying Rs. 90 Lakhs for the new car. Extra Rs. 6 Lakhs is not much for peace of mind.

Mods:- Please delete this post if it is in any way violation of the rules of posting at Team-BHP since I work for the associated company and was present during this launch. Also, my below post is to enlighten our readers and not endorse the product in any way.

@smartcat:- Its a simple formula, the risk increases when the life of a product increases. The prices have been arrived at after a rigorous big data analysis and past experiences. If a customer faces a problem with the car during the standard warranty period, he/she is more likely to get the extended warranty package and thereby decreasing the quantum of risk he/she has to endure but at the same time increasing the risk for the insurer/company.

So, the differential pricing. Moreover, these packages are transferrable to the next owner and also have an exit clause if you want to surrender the warranty in case of a Total loss of the vehicle due to accident/theft or if one decides to sell it off. In my view, it offers more peace of mind for the owner of a MB vehicle.

[vishal9999]

Originally Posted by androdev

Don't get too excited guys, I checked their calculator and the prices are crazy even by Mercedes standards. What is more disappointing (and reflects very poorly on their intentions) is the fact the the prices go up steeply if you delay the purchase of the warranty.

Until this move, they were offering 4th year warranty at a very reasonable price and you could buy it anytime before the expiry of 3yr standard warranty. I remember I paid Rs 75K for my 4th year warranty (2012 s class). The same 4th year warranty now costs 1.98L if bought within first 3 months of buying the car, Rs 3.75L if bought during 3rd year of ownership (before expiry of std warranty). These prices make no sense really except give an indication of their poor reliability.

EDIT: C and E class prices are okay, but GLC, GLE, S, etc. are a bit too much.

Attachment 1639446

I guess they are just adding the interest which they would other wise use for 3 years in the pricing .Vice versa--using DCF method the price is 12 lacs for three years warranty (2 lakhs per year post standard warranty) but daimler is able to use our funds for six years
Compound interest does the magic here.

[Arjun Reddy]

Originally Posted by tp_dominator

@smartcat:- Its a simple formula, the risk increases when the life of a product increases. The prices have been arrived at after a rigorous big data analysis and past experiences. If a customer faces a problem with the car during the standard warranty period, he/she is more likely to get the extended warranty package and thereby decreasing the quantum of risk he/she has to endure but at the same time increasing the risk for the insurer/company.

Thanks for the response from the inside. All the number crunching and data analysis is fine. Then why differentiate between 0-3 months and 3-12 months ? Why couldn't it have been a straight forward 0-12 months ?

[Jeroen]

Originally Posted by tp_dominator

@smartcat:- Its a simple formula, the risk increases when the life of a product increases. The prices have been arrived at after a rigorous big data analysis and past experiences. If a customer faces a problem with the car during the standard warranty period, he/she is more likely to get the extended warranty package and thereby decreasing the quantum of risk he/she has to endure but at the same time increasing the risk for the insurer/company.
.

I’d say it’s still a marketing ploy. Sure enough the risk increases when the life of a product increases. But why charge more when you purchase the insurance later? The risk as such hasn’t changed. The car and it’s component don’t start behaving differently because you have or have not bought insurance.

When you buy the car new, the statistical chance of anything going wrong in year 4 is for instance X. At the end of the third year of ownership, it would still be X. Why should it cost more?

Or are we saying that, statistically speaking, cars that suffer from problems during their initial warranty, will suffer from more problems the next period than car that did not have any problems during initial warranty period?

Sort of once your car starts giving problems, no matter what, it will only get worse?

The way I read your explanation is that owners think along those lines so are likely to cough up the premium. But that is human behaviour and thus marketing. What I would like to understand is the (statistical) chance of technical faults. Does it increase if your car had faults early on?

Thanks
Jeroen

[androdev]

Originally Posted by Arjun Reddy

Thanks for the response from the inside. All the number crunching and data analysis is fine. Then why differentiate between 0-3 months and 3-12 months ? Why couldn't it have been a straight forward 0-12 months ?

You nailed it. This is just their greed to cash in on the customer's vulnerability. I generally say good things about Mercedes but this scheme really sucks. But I suppose 1.5L (C class) and 2L (E class) for 6 year coverage is reasonable and I guess having an option helps.

[n.devdath]

Originally Posted by Jeroen

When you buy the car new, the statistical chance of anything going wrong in year 4 is for instance X. At the end of the third year of ownership, it would still be X. Why should it cost more?

Exactly. Doesn't make any sense, however

Originally Posted by Jeroen

The way I read your explanation is that owners think along those lines so are likely to cough up the premium. But that is human behaviour and thus marketing.

Which is what this is. Play on the customer's fear of the probability of "something else failing" because "something else already did" and make money.

I tell ya, nothing beats having a good FNG for all these elephants for their post warranty love and care.

[redeff]

Let me tell you, the packages for the C and the E are fantastic. A lot of things can go wrong in 6 years, specially considering the electronics and advanced systems in cars these days.

I agree that the price list for the S is steep, but then so is the cost of components. Six years is not a short period of time at all.

BTW have you seen the BSI rates as on date? They are pretty steep and limited by KMs. Also I believe that BSI is non transferable. Cost of spares and parts are quite high on these cars. If for 1.5 L i'm covered for 6 years on a car costing 50L, I'm satisfied.

BTW - 6L is a marginal sum on a car costing 1.3 - 1.5 CR on Road Bombay. Specially when just 1 - 2 visits to the workshop with a faulty anything will rake up a bill upto that cost.

[GTO]

Happy with the news and am sure glad that Mercedes finally matches BMW's 6 year plans. As one would guess, the chances of part failure increase with the car's age and 6 years is the minimum coverage I'd want on a European car. Hope Mercedes & BMW bring out 7 year plans soon.

I checked on the C-Class and it costs 50k for the 4th year, 98k for 5 years and 1.5 lakhs for warranty up to the 6th year. This is very fair pricing, especially when you consider the unlimited km!!!


2 lakhs for the E-Class is reasonable too. I paid about the same money for my 530d's 6 year warranty:

Originally Posted by androdev

I checked their calculator and the prices are crazy even by Mercedes standards.

The S-Class' warranty is steep for sure, but then what part of S-Class ownership isn't obscenely priced . 6 lakhs for 6 year coverage is a lot, although the car is also scarily complex.

Originally Posted by smartcat

I wonder if there is any statistical model based on past warranty claims. Or is it just a marketing strategy?

Originally Posted by Arjun Reddy

Then why differentiate between 0-3 months and 3-12 months ? Why couldn't it have been a straight forward 0-12 months ?

Sales strategy man, just to entice people to buy it ASAP. Indians are known to keep their options open till the deadline. Ever seen the lines at government offices on the due date?

Most people will just add the warranty to their new car invoice and thus, the loan.

[Simple_car]

Originally Posted by GTO

2 lakhs for the E-Class is reasonable too. I paid about the same money for my 530d's 6 year warranty:
Attachment 1639638

The prices seem to make sense only if you buy new. For an existing owner, these prices make little sense. As an example, if you were an existing E class owner (the W212), you would be in your 2nd or 3rd year of ownership, with 4 year warranty already existing on your car. To get additional 2 years of coverage, you will be spending about 3-4 lakhs, which is high, especially after you factor in that the average service costs of these vehicles hovers around 50 - 60k in Mumbai.

I have to agree with @androdev. This scheme really sucks, for current owners though

Thanks,
Simple_car