Nissan’s unexpected announcement of a dealer-servicing-activated 10-year/300,000km new-vehicle warranty with capped pricing scheme that is both conditionally retroactively applicable and transferable has stunned the industry and observers.
With Hyundai in Australia the latest amongst rivals that is reportedly scrambling to offer a more compelling after-sales packages than the five-year/unlimited kilometre norm, it highlights an evolving battlefront in the fight to win over buyers in a hyper-competitive market.
According to Nissan Oceania Vice President and Managing Director, Andrew Humberstone, proposing an offer to consumers with a transaction that brings them immediate and transparent benefits is one of the best ways of rebuilding trust in the brand after mismanagement and neglect.
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“For me, there were a number of reasons (why we moved to the extended warranty offer),” he told CarsGuide.
“One was having a clear sense of purpose and saying, what are we trying to achieve in the market? What are our priorities? Are we actually really, sincerely, putting the customers first? And how do we demonstrate that?
“How do we then deliver that message credibly, authentically to all of our customers?”
Humberstone said that offering cut-through warranty, lower service pricing and better after-sales care proved to be a very tough battle to win with Nissan head office in Japan, but there was little choice if the brand was to move forward.
“What are the options open to us,” he continued. “And then the question around warranty came, and then it was all around a business case, how do you finance it? How do you fund it? How do you see the incremental upside of that in terms of customer value, but also in terms, very importantly, of customer retention?
“And it was a big challenge, because it's a very expensive thing for us to do in the local market. There's a big cost for us. But we felt that it was worthy of our marketing strategy and brand strategy in order to differentiate us.
“And it was really important to have a unique proposition to be best in class.”
Nissan is not the only brand with a decade-long conditional warranty in Australia, with Alliance partner Mitsubishi being first in October 2020, and then China’s MG (with no pre-conditions) and XPeng following suit last year.
After years of three or five-year warranties being the overwhelming mainstays in Australia, Kia really started the ball rolling with its then-revolutionary seven-year/unlimited kilometre warranty back in October, 2014.
It has since been joined with similar schemes by KGM/SsangYong and GWM Haval (2018), Skoda (2022) and others.
It is in this environment that Hyundai is believed to be reconsidering its five-year/unlimited kilometre warranty (that matches market leaders Toyota, Ford, Mazda and, of course, Nissan, should buyers of the latter not elect the dealer-servicing-activated offer), since it likely prompts some consumers to go with Kia instead.
Finally, Humberstone believes that taking the unexpected extra step of backdating the scheme to new vehicles purchased and serviced with Nissan dealers (or approved similar) from January 1, 2021 is proof of the company’s customer-centric priorities from here-on in.
This also circumvents the situation of betraying loyal consumers who bought a new Nissan recently, and actually instead presents them with an unforeseen bonus.
“It was also really important to not start from today on current and future product, but look after existing (Nissan) customers,” he stressed.
“Given some of the evidence I'd seen in the market, what I didn't want was a situation where you bought a car last week or two months ago and you've missed out.
“We wanted to make sure that we looked retrospectively as well. This is all the good work of (our team here in Melbourne).”
Another architect of the warranty scheme, Nissan Oceania After-Sales Director, Michael Hill, revealed that no other warranty in the world offers such a thorough deal for Nissan buyers.
“In Spain and Italy, they're also running a 10-year warranty but it's purely only the warranty,” he said. We're the only ones that are running the flat price servicing with the warranty and (service-activated 10-year) combined roadside assistance.
“So yeah, from a comprehensive point of view, ours is the lead for Nissan globally.”
“We’re a pilot market in essence,” Humberstone added.
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