Truck Warranties: Benefit or Expense?
June 7, 2022 - 9:11:07 am

While hearing the word warranty or extended warranty likely brings up nightmare visions of hundreds of spam phone calls, it’s an essential consideration for work truck fleets.

A warranty is a written guarantee provided to the purchaser of an item by its manufacturer that promises to replace or repair an item, if necessary, within a specified period.

Work truck fleets aren’t gentle with their equipment. They don’t deal in luxury and relaxation but dirt and hard work.

At the bare bones, “A warranty assists in offsetting the massive financial risk of a catastrophic breakdown for the trucks in your fleet,” Lindsey Grammel, VP of global brand development for TruNorth, said.

Why Consider a Vehicle Warranty for Vocational Trucks?

Work trucks are complicated, and each component ages and wears differently in these tough environments.

“Typically, the life of the body lasts three times longer than the life of the chassis. Extended warranties are one of the ways to help keep vehicles operating efficiently. Costs are covered for parts outlined within the warranty. Uptime is key for vocational trucks, and warranties are a way to help ensure uptime while keeping costs steady,” Mark Santschi, Kenworth director of after sales, in Kirkland, Washington, said.

There is no doubt commercial trucks are the investment that allows a vocational truck fleet to have a business.

“A semi-truck can last upwards of 1-million miles and 10-plus years. During the life of that truck, breakdowns are inevitable. Costs for repairs, especially catastrophic failure to such major equipment as the engine, can be a huge financial burden to a single truck or small fleet owner. Some repairs can cost tens of thousands of dollars,” Tim Ronan, chief marketing officer for National Truck Protection Co. Inc., said.

If an owner-operator doesn’t have a maintenance and repair fund set aside, a hefty repair bill could cost them their business.

“They could have more than one major failure with an older truck,” Ronan added.

Top Benefits of a Factory/OEM Warranty for Vocational Fleets

The warranty you choose and where you get it from matters.

“Having the backing of an OEM warranty/extended warranty or used-truck warranty vs. an outside company or third-party is much better for a fleet. The fleet manager knows they can reach out to that OEM to get support with the warranty and the vehicle in the same call, versus being transferred back and forth,” Brian Tabel, executive director of marketing for Isuzu Commercial Truck of America (ICTA), said.

There are several benefits of choosing a warranty from the OEM itself.

“There is comfort in having an OEM back the warranty. It provides the ease of one-stop or one phone call to resolve any concerns. The OEM warranties are also typically longer and more inclusive of parts and services. OEM warranties also have towing coverage included,” Tabel added.

Additional benefits, according to Santschi of Kenworth, include improved uptime and reduced operating costs (while the warranty is still active).

According to Ronan of National Truck Protection, all new semi-trucks come with an OEM warranty covering major equipment and components.

‘These warranties vary in coverage length but typically have coverage until about 200,000 miles. New buyers count on that warranty, so the manufacturer will take care of any early equipment failures,” Ronan added.

When Does an Extended Warranty Make Sense?

So, when does a warranty make sense?

“All the time! A warranty makes sense for vehicles new to the fleet or currently in the fleet that meets the qualifications,” Grammel of TruNorth said.

It was unanimous. The subject-matter experts all agreed that, for work truck fleets, it’s always a good idea also to consider an extended warranty.

“Extended warranties make much sense for customers that drive longer than the standard warranty coverage to give that comfort of the truck in a higher mileage situation. It also makes sense for customers who do not drive many miles but would like the extra time to cover any repairs needed,” Tabel of ICTA said.

Once a factory/OEM warranty expires, truck fleets should protect their trucks with an extended warranty.

“Used trucks are more likely to have equipment failures. For example, if the lifetime of a Class 8 semi is 1-million miles, 80% of the truck’s life is not covered for failures that will more likely occur as the truck ages. An extended warranty extends the peace of mind the fleet had when a factory/OEM warranty covered them. Once a factory/OEM warranty expires, having an extended warranty is critical, especially because the truck is what allows them to be in business. If their truck is down and they don’t have the funds to pay for the repair quickly, they won’t work and won’t be making any money,” Ronan of National Truck Protection said. Santschi of Kenworth added an extended warranty “always makes sense since vocational customers tend to keep the truck for its whole life.”

But, as is typical in the work truck industry, there is not always a one-size-fits-all solution, and there are a few times an extended warranty may not make sense.

“It can depend on the truck application; for example, if the truck is not used on the road and is unable to travel to an authorized dealer. Or, a truck that may drive in high excess of miles per year,” Tabel of ICTA said.

Additionally, extended warranties may not be the best option for a new truck purchase.

“An extended warranty does not make sense if the trucks are new – the factory/OEM warranty should cover them. It also does not make sense if the fleet is big enough to have repair facilities in-house,” Tim Ronan, chief marketing officer for National Truck Protection Co. Inc., said.

Paying for extra coverage may not be logical for businesses with large cash reserves, which many small fleets do not.

“I can’t think of a time unless the fleet has a massive load of cash reserves specifically laid back for repairs,” Grammel of TruNorth said.

Top Questions to Ask to Determine Warranty Needs

To better understand your warranty needs, it is recommended to ask the following questions:

1. “How long will you keep the vehicle, and what does your service network look like?” asked Santschi of Kenworth.
2. “What are your current costs for maintenance and repairs?” asked Grammel of TruNorth.
3. “Do they have adequate maintenance facilities/mechanics to properly care for their trucks and make major equipment repairs? Do they have adequate cash reserves to pay for truck equipment repairs, especially major repairs? How long will they operate each truck (before selling it/taking it off the street)?” asked Ronan of National Truck Protection Co.
4. “Fleets should really discuss the different applications and miles or time driven for the salesperson to recommend the best extended warranty for each truck purchased,” said Tabel of ICTA.

By Lauren Fletcher.

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