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After-market warranties - are they worth it?

A technical analysis of  after-market motor vehicle warranties Table of contents: 1. Expert's Qualifications and Experience 2. The Field of expertise of the author of the report 3. The issue reported on 4. Glossary

1. The Experts Qualifications and Experience: The Report’s author is a qualified motor mechanic (Germany) and is licensed to practice in Australia MVTC153432. He has been intimately involved in the Australian Automotive Industry since 1976. Since then he held various senior executive positions in large franchised motor dealerships, including that of Dealer Principal (1987-1996). In 1996 he founded Car Solutions Motor Vehicle Consultants, a company specialising in assisting individual consumers and organisations with their varying motoring needs. This includes the buying and selling of motor vehicles, pre-purchase inspections and dispute resolution. During this period Car Solutions Motor Vehicle Consultants has provided numerous Expert Opinions to its clients and the Author of this report has appeared on several occasions as Expert Witness at NCAT (and its predecessors) proceedings.

2. The Field of expertise of the author of the report: The author of this report, Erich Kannen worked for more than a decade as Fleet & Leasing Manager, later as General Sales Manager and finally as Dealer Principal in some of the largest Motor Dealerships in the Country. He established a dealership on a Greenfield site that under his control grew into the largest dealership for its franchise in Australia. He was also the Dealer Council Chairman of a large Dealer Group representing the National Dealer Body to the Manufacturer. During this time he was involved in the selling of not only motor vehicles but also after-market products such as extended warranties.

3. The issue reported on: 3.1. Servicing requirements 3.2. Reasons a motor vehicle might break down 3.3. Extent of coverage of after-market warranties 3.4. Other matters

3.1. Servicing requirements a. Manufacturers requirements for servicing varies between manufacturers, models, year of built and conditions of use. b. The most basic and regular servicing requirement is an engine oil change. c. Later models due to better quality oils require “servicing” (oil changes) less often than older models. d. Most manufacturers use a combination of time and usage (distance travelled) formula. e. More advanced vehicles use On-Board Diagnostic systems to indicate when an oil change is due. These systems take into account the number of cold starts, starts between distances driven etc. • The shortest servicing requirements is stipulated by one of the Japanese manufacturers that requires a vehicle to be serviced every 6 months or 5,000 Km. • Others have intervals of 6 months or 7,500 Km and • Some European manufacturers 12 months or 15,000 Km. • The longest service intervals I am aware of is a German manufacturer, needing servicing only every 25,000 Km, no time limit is specified. • Other manufacturers and vehicles are within that general range shown above. Conclusion: Given that the warranties are generic, the requirement to service a vehicle once a year or once every 10,000 Km is reasonable. Servicing more often i.e. every 3 months is not beneficial, no matter how old or how many kilometres the vehicle has been used for. The reason for the conclusion: Servicing any more often than what is required by the manufacturer would be beneficial only to the service provider. Oil does not lose its lubricating qualities purely through the lapse of time. A vehicle usually does not produce enough residue to affect its lubricating quality in under 10,000 Km (only one major manufacturer has such short interval between oil changes). The 12 months/10,000 Km servicing requirement appears to be a sound compromise. f. The frequency to service a motor vehicle does not increase with age or usage, but remains constant throughout its life. (Appendix ‘A’). I have not seen any manufacturer’s service book (schedule) that requires more frequent servicing based on age or higher kilometres. • Producers of engine oil warn that oil loses some of its lubricating qualities over time due to the number of cold starts that are likely to occur during a given period.  Oil has two primary purposes in the engine, one is to reduce friction (especially between pistons and cylinders as well as other parts), the other is to trap and remove residue which, if not removed turns into sludge affecting the engines performance. • No matter whether the vehicle has travelled a total distance of 50,000 Km, 150,000 or 200,000 Km the oil, provided all other things are equal, has to be changed regularly. Manufacturers use a combination of distance travelled ranging from 5,000 to 25,000 Km, and timing, ranging from 6 months to two years in their recommendations. Factors influencing these recommendations are expected operating conditions, oil quality and number of anticipated cold starts. More frequent servicing than what is recommended by the manufacturer will not be beneficial or lessen the likelihood of a breakdown. • Whilst vehicles do not require more frequent servicing with age, vehicles certainly require more repairs or replacement of parts/components as they get older. There is a distinct difference between servicing and repairing or replacing worn parts or components. • Servicing is a broad term, scheduled or log book servicing is generally understood to be the routine work undertaken no matter how new or old the vehicle is. It is this routine or scheduled servicing that will prevent “Breakdowns”. Scheduled servicing includes an inspection (Appendix ‘B’) of parts and components that wear. These parts or components are than flagged for repair or replacement. If the need for more frequent servicing existed, manufacturers would reflect the increased frequency in their servicing schedules. All manufacturers recommend that original parts are used when one of their vehicles is serviced. Manufacturers would want the vehicle to be returned for servicing as often as possible to increase sales of original parts. It is their best chance to sell after sales service products such as filters, spark plugs, brake pads etc. Mark ups on parts used by service departments are substantial. On the other hand there are competitive pressures from motoring organisations and other manufacturers that prevent over servicing as a vehicles running costs are affected. Motorists are very much aware of dealers trying to over service their vehicles and thus tend to switch to non-franchised dealer servicing once the original new vehicle warranty has expired. Service intervals as shown in the service manuals of vehicles are the optimum. g. Servicing costs vary depending on make and model type of service required and the servicing organisation. • Typically, in 2015 service providers charge between $90 per hour (a local mechanic) to $250 per hour (prestige car dealer) – for the purpose of our calculations, $120 per hour has been used; cost of parts are in addition (genuine parts cost considerably more than generic parts). So, even servicing the same make and model and completing the same service, costs can vary greatly. Recommended servicing times are printed in the original service book that is provided with all new vehicles by the manufacturer.   Service “Advisors” employed by the larger servicing organisations are usually trained service sales people, who are expected, among other things, to sell non-essential extras like oil additives, engine and coolant system flushes etc. which often boost the basic service costs to much higher amounts. • For all scheduled services (except some fixed price services), the cost of repairs or replacement of parts or components is extra.  A minor scheduled service always includes an engine oil change. It may extend to brake fluid, air filter changes and cleaning of the air-conditioning filter. Various specified items as listed in the service book are checked for wear. (Time allowed for a 2009 Toyota Corolla is 1.7 hours - Appendix ‘C’).  A major scheduled service would include minor service items plus the replacement of filters for oils and fuel and more. (Time allowed for a 2009 Toyota Corolla is 2.1 hours - Appendix ‘C’).  If an inspection reveals that brake pads need replacing, drive shaft boots are split, tyres need rotating, or the engine coolant needs replacing extra cost will be incurred. • A simple “Oil service” can cost as little as $150-$200 for a small imported car like a Toyota Corolla, $175 to $225 for a medium car like a Toyota Camry or similar and $250-$300 for a large locally made car like a Holden Commodore if carried out by a local mechanic. A franchised dealer will charge more. • A small imported car, like a Toyota Corolla costs approx. $735 to service at 80,000 Km, a major service. A minor service due at 120,000 Km costs around $492 if the service was carried out by a franchise dealer, less if the work was done by a local mechanic. • A mid-size locally made car like a Toyota Camry costs approximately $700 to service at 90,000 Km which is a major service. A minor service at 120,000 Km costs $460 if the service was carried out by a franchise dealer, less if the work was done by a local mechanic. • A large locally made car like a Holden Commodore would cost $395 to service at 75,000 Km, a minor service. A major service at 120,000 Km costs around $609 if the service was carried out by a franchise dealer, less if the work was done by a local mechanic. • A small imported car (not a luxury/prestige) like a VW Golf cost aroud$480 to service at 75,000 Km, a minor service and $1,350 is the cost for a major 120,000 Km service if the service was carried out by a franchised dealer, less if the work was done by a local mechanic. Conclusion: A basic oil change can cost as little as $150 and a major service can cost as much as $1,350 depending on make, model and service provider, plus any additional items that may need repair or replacement. The need for replacement of parts is not quite as clear cut as it might seem. The owner of a near new vehicle would have much higher expectations than the buyer of a vehicle that was 10 to 20 years old. The latter would most likely only want the vehicle to be safe and roadworthy  without breaking down, whereas the former would want the vehicle to be in the best possible condition. Costs are a serious consideration when authorising repairs to an old vehicle. Replacing parts that are “worn” as opposed to “worn out” may be acceptable to the owner of a near new vehicle, but not to the owner of a vehicle that was 20 years old. The reason for the conclusion: • There is no such thing as a “Standard” service. There are only major and minor services. Those services include inspections that will invariably lead to further work at additional cost. • Servicing costs will depend on service provider, level of service required or authorised, usage, make, model and extras as a result of wear. Wear depends on past usage, past servicing as well as present usage. • The level of work authorised will depend on the necessity having regard to the vehicle’s condition and the owner’s expectations and financial ability or willingness to pay for the required work. h. The price for a safety check, as defined by the relevant Motor Transport Authority, is set by the Authority, regardless of the size of vehicle, other than Heavy Trucks, at just under $40. This is the annual check required for vehicles that are more than 3 years old. The check is to ensure the inspected vehicle is roadworthy. • The items checked include Lights, Wiper, Horn, Tyres, Brakes and Mirrors etc. • Dealers may only sell roadworthy vehicles.

3.2. Reasons a motor vehicle might break down a. Breakdowns are generally preventable by proper (as recommended by the manufacturer) servicing, i.e. following the manufacturer’s instructions as to what to check, when to check it and replacing fault items with quality if not genuine parts. Whilst oil has to be changed regularly, as time progresses other components like filters for oil, fuel and air also need to be replaced. • If the coolant is not maintained at the right level or a faulty thermostat is not replaced in time, the vehicle will overheat and breakdown. If the fuel filter is not replaced it will eventually clog up with residue, starve the engine of fuel and the engine will eventually lose power and “Breakdown”. • Manufacturers include as part of the service schedule items that a service provider should check. Such items include among others, drive and tooth belts, suspension ball joints, auto transmission fluid, brake pads and discs as well as the battery. • Manufacturers also require dealers to check the VIN (vehicle identification number) against any “recalls” or as they prefer to call them “Field Campaigns”. Details of field campaigns are not available to non-franchised service providers. Conclusion: To avoid breakdowns servicing should always be in accordance with the manufacturer’s recommendation, if not by a franchised dealer certainly by a licenced mechanic. The reason for the conclusion: Today’s quality controls largely prevent breakdowns as a result of faulty material or workmanship. Most breakdowns are as a result of under or no servicing –most manufacturers go through great length to ensure maximum quality in their production processes. Failure to do so can involve very costly recalls as was recently demonstrated when a prominent European manufacturer had to recall a huge number of vehicles (worldwide) that had faulty transmission parts. That manufacturer features at the bottom of most Customer Satisfaction Indexes (CSI). Having a low CSI does not help resale values, future or repeat sales and undermines marketing campaigns, or requires costly marketing to focus on preventing or minimising consumer back-lash. b. By excluding certain items from a warranty cover the risk of a claim is further reduced. There are obvious reasons why a warranty provider excludes certain items. • Pre-existing faults are excluded from the warranty to prevent dealers to get the warranty provider to pay for reconditioning a vehicle. A dealer for example could deliver a Vehicle with a pre-existing alternator fault to a customer and bring it back claiming the alternator had failed after the customer had taken possession. • Misuse, neglect or abuse has to be excluded as otherwise owners would simply not care how much damage a vehicle incurred. Misuse is excluded from all warranties, no matter who provides the warranty. • Damage caused by overheating can be severe and therefor costly. Overheating is caused by either loss of coolant (broken hose, pipe or radiator), in severe cases cracked cylinder head or faulty cylinder head gasket, or a faulty thermostat. The temperature gauge should warn a driver and raising steam from under the bonnet is another warning sign for the driver to stop the vehicle immediately. • Continued driving when knowing of a problem is under no warranty or circumstances an option. The operator of a vehicle is always required to mitigate any damage caused. Conclusion: • A vehicle serviced as recommended by the manufacturer is unlikely to breakdown. Potential problems are identified early and before they are so severe as to cause the component to fail (completely stop working as it is supposed to). Once exclusions are taken into account the chance of a breakdown is further mitigated. • Each additional exclusion like normal wear and tear, damage caused by lack of oil lubricant, water/coolant, contamination etc. further reduces the chance of a claim.  Rust and corrosion are not causes of breakdowns in motor vehicles. Rust and corrosion are usually only found in the body of a vehicles if exposed to air containing salt, (like near, or at beach side suburb) for a prolonged period of time, or through water/flood damage after being submersed. The reason for the conclusion: • Manufacturers recommended service procedures include a range of inspection points depending on the distance travelled and therefor likely wear of these components. If these inspections are carried out as they should be, worn, faulty, or damaged components or parts are identified early and can be replaced well before they breakdown. A service provider, in order to maximise income, is more likely to suggest early, rather than late replacement of components or parts. • Rust/corrosion progress is only very slow and will be detected during the annual safety inspection well before it becomes an issue that could potentially lead to a breakdown. c. Can the breakdown of a second hand motor vehicle be attributed to either a pre-existing problem or normal wear and tear? The answer is as follows: • Before a dealer is allowed to offer a motor vehicle for sale, the vehicle has to be roadworthy, (Motor Dealer Act). The vehicle must pass a safety inspection. • If the vehicle did not pass a roadworthy inspection it would be failing the “fit for purpose” test under the Australian Consumer Law, as well, the dealer would be in breach of the Motor Dealer Act. • If a vehicle was fit for purpose at the time of sale and had been inspected as recommended by the manufacturer and components had been replaced and repaired using “good trade practices” a vehicle would not and should not breakdown. Conclusion: • The usual definition of a breakdown is the failure for a part or component to function in its entirety. • Few components breakdown without warning. The exception are electronic devices such as an Engine Control Module/ECU or a Solenoid. Usually there will be signs indicating a problem well in advance. Only if those early signs are ignored is a breakdown likely to occur. • Breakdowns are caused when no action is taken to replace or repair wear and tear. The reason for our conclusion: • In perfect circumstances, usually only found in one owner vehicles, where parts and components are replaced as and when required breakdowns are unlikely even in very old vehicles.   Typically, each subsequent owner reduces the necessary upkeep of the vehicle until it reaches a point where the value of the vehicle has depreciated to a point where the cost of bringing the vehicle into a sound condition equals or exceeds the market value of the vehicle. A typical vehicle has a life span of 20 years and 300,000 Km. • Most dealers lack the qualification to determine what a minimum acceptable level of reconditioning is, in addition there are competitive forces at play demanding low selling prices. • Non-franchised dealers operating from suburban car yards, selling vehicles up to 160,000 Km, or wherever the Statutory Warranty cuts out, typically: • Detail the vehicle to give it a good appearance. Oil and fluid leaks are not detectable. Virtually all vehicles have fluid leaks once above 200,000 Km. • Replace tyres only when they are obviously beyond the legal limit. They are unlikely to make sure the tyre pattern of tyres on the same axle match. Few dealers would even know about a tyres speed rating. • Change the engine oil as it is common for a consumer to check the dipstick. • Accept that a used vehicle has wear and tear on parts and components consistent with the vehicle’s odometer reading. • Vehicles that are not covered by a statutory warranty are not even afforded minimal reconditioning. • Out of over 3,000 inspected vehicles around 30% qualify as being of “good quality”, 40% are of medium or fair quality and the final 30% is of “poor quality”. Meaning they have multiple issues ranging typically from, no service history at all, multiple panel repairs, to poor tyres, requiring servicing, oil leaks etc.  

3.3. Extent of coverage of after-market warranties A. Typical warranty • Engine: The Cover is Limited to Engine Block if damaged by internal components, Oil Pump, Pistons and Piston Rings, Crankshaft, Crankshaft Bearings, Camshaft, Camshaft Bearings, Camshaft Gears, Timing Gears, Bushes, Connecting Rods, Balance Shaft and Bearings and Cylinder Head Gasket if required as part of listed engine repairs. None of the Plans has adequate monetary cover. a. Engine Blocks and Cylinder Heads usually crack due to overheating, (appears to be covered, except if due to a water leak which it usually is), most of the other items wear out (wear is excluded). Head Gaskets do fail from time to time but they are covered only if replacement is needed as part of another repair! b. Estimated Labour: 8 hours @ $960 Parts $4,000 Total $4,960 • Transmission: The cover is limited to the internal lubricated parts of both auto and manual Transmissions. Only Plan 3 appears to offers adequate monetary cover. a. Transmissions usually wear out over 200,000 Km. (wear is excluded). b. Estimated Labour: 4 hours @ $480 Parts $1,650 Total $2,130 • Differential: The cover is limited to the internal lubricated parts. All Plans appear to offer adequate monetary cover. a. A Differential failure is rare and caused by wear (wear is excluded). b. Estimated Labour: 2 hours @ $240 Parts $670 Total $910 • Cooling System: The cover is limited to Cooling Fan and Water Pump. All Plans appear to offer adequate monetary cover. a. A Fan can get damaged from foreign objects hitting it, Water Pumps usually need replacing due to worn bearings or seals (wear is excluded). b. Estimated Labour: 1 hour @ $120 Parts $60 Total $180 • Electrical System: The cover is limited to Alternator, Starter Motor, Windscreen Wiper Motor and Voltage Regulator. All Plans appear to offer adequate monetary cover. a. Alternators do fail from time to time, as can Starter and Wiper Motors, they usually wear out (wear is excluded). Regulators can fail suddenly (covered). b. Estimated Labour: 1 hour @ $120 Parts $169 Total $289 • Braking System: The cover is limited to Booster, Callipers and Master Cylinder. All Plans appear to offer adequate monetary cover. Estimated Labour: 1 hour @ $120 Parts $140 Total $260 a. The most common items that need attention are of course brake pads or brake linings followed by the disc rotors which wear (wear is excluded). The other items may also wear (excluded). b. Estimated Labour: 1 hour @ $120 Parts $140 Total $260   Page 10. • Steering System: Cover is limited to Rack and Pinion, Steering Box and Pump. Plans 2 and 3 appear to offer adequate monetary cover. Plan 1 does not. a. A common problem is caused by faulty or worn seals (wear is excluded) in the power steering pump. b. Estimated Labour: 1 hour @ $120 Parts $260 Total $380 • Air-Conditioning: Cover is limited to Compressor, Condenser and Evaporator. Plans 2 and 3 appear to offer adequate monetary cover. Plan 1 does not. a. Most common is loss of gas usually as a result of faulty or worn seals (excluded) in the compressor. Condensers and Evaporators can also fail suddenly. Leaks, usually caused by faulty seals are another problem (excluded). b. Estimated Labour: 1 hour @ $120 Parts $570 Total $690 • Clutch: The Cover is limited to the Master and Slave Cylinders only. All Plans appear to offer adequate monetary cover. Plan 1 however is right on its limit. a. A common problem however is a worn out Clutch disc (wear is excluded) and affect only those vehicles that are manual. Master and Slave cylinder seals will wear (excluded). b. Estimated Labour: 3 hour @ $360 Parts $398 Total $758 Note: Many vehicles use an Automatic Transmission. • Fuel Pump and Fuel Injection System: The Cover is limited to the Fuel Pump, Pressure Regulator, Diesel Injector Pump, and Flow Meter. Plans 2 and 3 appear to offer adequate monetary cover. Plan 1 does not. a. Common problems are with the fuel injectors that clog up due to usage and lack of maintenance, failure caused by lack of maintenance, injectors and injection items are explicitly excluded. b. Estimated Labour: 1 hour @ $120 Parts $380 Total $500 • Drive Shafts, CV Joints and Universals: The Cover is limited to the Drive Shafts, CV and Universal Joints only. Plans 2 and 3 appear to offer adequate monetary cover. Plan 1 does not. a. The most common items that require attention are the CV Joint dust boots (dust boots are explicitly excluded). The Joints do wear but wear is not covered. b. Estimated Labour: 2 hour @ $240 Parts $192 Total $432 • Turbo: The Cover is limited to Factory fitted units only. Plans 2 and 3 appear to offer adequate monetary cover. Plan 1 does not. a. Few vehicles are fitted with Turbochargers, when they break down is usually caused by wear or negligence, wear and negligence are excluded. b. Estimated Labour: 1 hour @ $120 Parts $610 Total $730   Page 11. • Electronic Ignition System: The Cover is limited to the Ignition Module, Coil, Angle Cam position, knock and oxygen sensors, as well as the DFI Module. Plans 2 and 3 appear to offer adequate monetary cover. Plan 1 does not. a. Any of these may suddenly fail and cause a Breakdown (appear to be covered). b. Estimated Labour: 1 hour @ $120 Parts $220 Total $340 • Electronic Solenoids and Computers: The Cover is limited to the Electronic Solenoids and Computers: Plan 3 appears to offer adequate monetary cover. Plans 1 and 2 do not. a. These items certainly can and do suddenly fail and cause a sudden Breakdown (covered). b. Estimated Labour: 1 hour @ $120 Parts $900 Total $1020 • ABS Braking System: The Cover is limited to Actuators, Electronic Modules, and Wheel speed Sensors. Plans 2 and 3 appear to offer adequate monetary cover. Plan 1 does not. a. Any electronic item can suddenly fail, and they do from time to time, they do not cause a Breakdown, but compromise the safe operation of the vehicle. More common are worn out brake pads or brake linings (wear is excluded). b. Estimated Labour: 1 hour @ $120 Parts $350 Total $470 • Cylinder Heads: The Cover is limited to the Head, Valves and Adjustors but only if no evidence of overheating can be found. Plan 3 appears to offer adequate monetary cover. Plans 1 and 2 do not. a. Cylinder Heads usually crack from overheating, caused by loss of coolant (only covered if no evidence of overheating). Valve and adjustors wear-out, wear is however excluded. b. Estimated Labour: 2 hour @ $240 Parts $550 Total $790 • Radiator: The Cover is limited to leaks due to corrosion. Plan 3 appears to offer adequate monetary cover. Plan 1 offers no cover and Plan 2’s cover is inadequate. a. Leaks occur in Radiators for a variety of reasons. Corrosion, broken welds or broken soldered seams are among them, but only corrosion is covered. b. Estimated Labour: 1 hour @ $120 Parts $395 Total $515 • Power Window Motors and Switches: The Cover is limited to the motors and switches only. Both Plans 2 and 3 appear to offer adequate monetary cover. Plan 1 offers no cover. a. Window motors and switches do wear as do the mechanical lifting mechanisms, (wear is excluded). b. Estimated Labour: 1 hour @ $120 Parts $112 Total $232.

Explanation re coverage of warranties:  Conditions applicable to warranties. All warranty providers rule out wear and tear, misuse and pre-existing conditions in addition to other likely causes of problems, such as overheating or only part failure. In the final analysis virtually all claims are either pre-existing, caused by wear and tear or can be excluded for some other reason or another. Warranties have conditions that no purchaser of a used vehicle could possibly know, some even a dealer would not know, but they can be used to deny a claim. For example: a purchaser would not know what the vehicle was used for in the past, (say a former Rental car) a dealer on the other hand should know. A consumer would not know about a pre-existing fault, a dealer might, and so it’s a problem between the warranty provider and his agent, the dealer.  Prices: The quoted prices are to repair or replace parts or components that most likely require attention. Prices can vary enormously not only from one service provider to the next, but also from make to make and model to model and even from one model to the next. Franchised prestige car dealers charge $250 an hour for a late model prestige car and use genuine parts as stipulated in their dealer agreement. Small independent mechanics work on much lower overheads. They may charge Labour at $90 an hour and may use generic parts used from e-bay or other wholesalers of generic, refurbished or used parts and components. o There is no set pricing that can be used, it is always possible to do a repair for less than the estimates quoted and on the other hand there will always be some one that charges more.  Labour: Warranty providers naturally attempt to contain costs as much as is possible. For the purpose of Labour-costs we assume that non-franchised mechanics are used, that they charge $120 per hour. It is unlikely that any job will take less than, or at least is charged out at less than 1 hour. Few jobs take more than 4 hours as mechanics tend to replace complete and already reconditioned components/parts.  Components and Parts: To contain costs warranty providers are going to insist on the use of either second hand/used parts or refurbished/remanufactured parts and components if available, rather than-genuine parts/components. The Motor Dealer Act only requires parts and components to be of suitable quality having regard to age and usage (distance travelled) of the vehicle that is being repaired under warranty. For this reason, we priced components that can easily be obtained on a national basis via various resellers on e-Bay.  

General: • Mechanical failure occurs due to: I. Defects in the material used – a defect would manifest itself usually in a new or near new vehicle. And so it does, there are virtually daily recalls being announced from varying manufacturers. II. Faulty workmanship in the assembly process – a defect would usually manifest itself in a new or near new vehicle. And so it does, there are virtually daily recalls being announced from varying manufacturers. We subscribe to a web site that provides that information. III. Poor, flawed or no maintenance. IV. Moving parts that wear excessively. Moving parts are often shafts (Crankshaft, Camshaft, Turbo Impeller, there are Shafts in Water Pumps, Alternators, Compressors, Brake, Master and Slave Cylinders and Callipers, there are also drive shafts and axles, shafts can be found inside a gearbox/transmission), that are fitted with bearings inside a components housing and rotate. Where the shaft protrudes from the component a seal usually prevents dirt from entering the component and fluid from escaping. There is constant wear on bearings and seals, eventually bearings wear out and seals will leak. • At least in theory mechanical failure can be negated if proper procedures are followed. Aircraft engine maintenance demonstrates that whilst perfection eludes us, we can get close. I. Problems arise due to poor or no maintenance by the previous owner. II. Poor reconditioning by the seller. III. If a vehicle was maintained and parts and components were replaced when they should be, vehicles could last for more than a million kilometres, Taxis and Courier vehicles are good examples.

3.4. Other matters • In my opinion there are only two parties who benefit from the sale of extended after-market warranties, the dealer who charges for what is essentially of no, or at best of little benefit to the purchaser and the warranty administrator/warranty provider. • According to one warranty documented viewed, the issuer of the warranty is the dealer and the warranty company is purely the administrator. That may have licensing implication for the dealer (financial services licence). • It is ironic that when repairs and failure are much more likely to occur, i.e. in older aged vehicles, warranty is no longer mandatory. A statutory warranty for older vehicles would benefit everybody.  A Statutory warranty for all vehicles or at least cars would set the dealers apart from private sellers and give them the edge they currently do not have.  Cars would be better reconditioned, customer satisfaction with dealers would increase and cars would be safer.  Trade-in and sale prices would quickly adjust (down for badly maintained cars) and force older and unsafe cars off the road and being scrapped, leading to fewer old cars being offered for sale. • Consumers would benefit from knowing that dealer cars were warranted, of higher quality and safer. Most importantly they would not be confronted by sudden, huge and unexpected repair expenses shortly after buying a car. In addition, there would be a choice between warranted dealer cars and not warranted privately sold cars. • All motorist would benefit as fewer unsafe and polluting cars would be on the road causing less damage to the environment and other road users.

SUMMARY:  Virtually all after-market warranties offer cover for the components that are most likely to be the source of problems.  However, virtually all after-market warranties then EXCLUDE most of the parts that are fitted to, or are part of these components and are the source of the component failing/breakdown.  The net effect is that few, if any components are effectively warranted. The warranty is mostly illusionary.  By comparison a statutory warranty covers oil leaks and requires components and parts to work properly, without necessarily failing. Bearings, bushes and seals are covered just as leaks of fluid is covered.  

4. GlossaryAA ABS: Anti-lock Braking System. An advanced automotive braking system eliminating wheel locking and thus skidding. Air-conditioning The compressor pressurises and increase the temperature of the Compressor: the air-conditioning gas. Condenser: A radiator like component that converts the gas to a liquid as it removes the heat. Evaporator: The component that changes the gas from hot to cold. Alternator: An electrical generator that converts mechanical energy into an alternating electrical current. Calliper: A device that houses the brake pads. Clutch: The clutch allows the Gearbox or Transmission from being disengaged from the engine drive shaft to control the rotations so that gears can be changed. Clutch Plates: The pressure plate is a component of the clutch that puts pressure onto another Plate or disc to engage the flywheel and so connects the engine and the gearbox/transmission to the engine’s drive shaft. Coolant: Water that includes an additive that increases the waters boiling point and prevents rust forming inside the engine and radiator. CV Joint-Drive Shaft: The joint between two drive shafts that transmit power from the engine to the wheels. Cylinder Head: Contains the Valves, valve lifters as well as the spark plugs or injectors and sits on top of the engine block. The cylinder head gasket provides the seal between the engine block and the cylinder head. Brake Power Booster: Increases the hydraulic pressure, so that less driver effort is required to apply the brakes. Brake pads or linings: They apply the hydraulic pressure generated through the brake pedal onto the disc rotor to stop the wheel from rotating. Differential: A mechanical device that is fitted between the rear axles to equalise the rotation of the inner and outer wheels when driving around a curve where the inner circle is shorter than the outer circle. Engine: The power plant that provides the energy to move the vehicle. The engine comprises the cylinders within which the pistons that are connected by the connecting rods to the crankshaft move up and down, compressing air in the combustion chamber. As the air is compressed it heats up and fuel through injectors and sparks through the ignition system is injected causing the engine to “fire up”. The flow of the air is controlled via the camshaft, the timing gears and the valves. The bottom part of the engine is sealed off  from the combustion chamber by the piston rings. Ignition Module: The controlling part of the electronic ignition system, together with angular sensors it has replaced the old fashioned distributor and points found in superseded mechanical ignition systems. Master Cylinder: Converts the driver’s foot pressure into hydraulic pressure, which through the Slave cylinders and Callipers apply pressure to the wheels, via the disc rotors and brake pads or linings to stop the vehicle. Rack and Pinon: A pair of gears contained in the steering box that allows the driver to control the steering of the vehicle. Solenoid: An electromagnetic device that is used to activate vales or switches. Starter Motor: Uses the electrical energy stored in the Battery to start the engine. Supercharger: A simplistic Turbocharger. Turbocharger: A device that increases the power of a non-turbo engine.