How much is the warranty worth?

[BAS]

There are a lot of threads that touch on whether a warranty is lost or not as a consequence of modifying the car. So I thought I would have a cursory look into this to "value" the warranty. I am sure that ford rigorously goes through this process when pricing the vehicle and evaluating the length of warranty.

Just as a quick background: I have well and truly lost my warranty as my car has had a full LHD to RHD conversion. In addition, the car is in Australia so even if i wanted to, i couldn't get to a dealer for warranty work!!

I found this paper that has some data on the failure rate of a ford V8 460 vehicle from 1988 and looks into drivetrain failure ... http://www.plant-maintenance.com/articles/field_reliability.shtml

The article basically suggests that the failure rate is about 0.5% (average per month) or 35% over the period of 5 years. If we assume that the cost of failure is (max) $10,000 then we could conclude that the 5 year warranty is worth about $3,500. If failure rates have dropped since 1988 and costs of failure are contained, then this is somewhat on the high side.

Point is, all concerns over keeping warranty are assuming that ford retains the risk of failure: yet the reality is, if you modify the car you inherit this risk through losing the warranty. The real risk you inherit is around $3,500 over 5 years - which most of you would be more than happy to cover for the additional performance you are looking for through modifying your car. (A 35% chance of a $10k bill for repairs)

So is this too high a price to pay at some point down the line?

[not sure I made the point clearly, but hopefully you get my drift - and if the maths is sloppy, I spent 5 mins thinking it through and would welcome other views]

 

[Chris!]

Problem is...when you start modifying the car....that .05 chance of probability goes up drastically.

 

[Iceman5000]

Problem is...when you start modifying the car....that .05 chance of probability goes up drastically.

^^^^^^this.


Also, although I agree with your figures, the one thing you don't take into consideration is you are using all Ford vehicles in your calculations which makes the average cost of a vehicle right around 30k, and the average warranty cost\value of $3500.00, or about 12%. The GT500 is one of Fords most expensive vehicles, with the motor alone costing close to 30k. Carrying your figures forward to the average 65k GT500 and the value/cost of the warranty is approx $7k. That's quite a difference.

Now I am not walking around on egg shells in regards to my warranty. I did a few things the day I got it home, that a lot of members here are afraid to do, because it might void the warranty, I changed the oil to Amsoil 10w40, put a Amsoil oil filter on it, put Bob's oil separators and Van 13-6 kit on within a week of getting it home. I've been expecting my clutch to go out anytime, even though I have had no issues with it. I would not expect Ford to warranty it, due to my modifications, or the rear end for that matter, maybe the motor depending on if the failure was a direct relationship to the 13-6 kit. As far as voiding the warranty based on the oil I use, it will never happen. Ford voided the engine warranty on exactly 7 vehicles WORLDWIDE last year based on oil issues. 2 of them were ran critically low after a 3rd party oil change. 2 more were due to using 50w (diesel truck oil) in a passenger car motor. And 3 were overfilled either by the customer or a 3rd party. The bottom line is today's vehicles are very well built, as long as you don't go to extremes modding them, most will be just fine. My main reason for wanting to keep the warranty is for all the electronics. They can be hard to diagnose and expensive to replace. The motors have been tested, and ran hard for the equivalent of 150k miles, I don't worry about the motor failing.

 

[Husky44]

Your logic is a little rough, but your approach is valid. Iceman hit some of those faults in the logic. A great book called "Thinking Fast and Slow" takes you through a detailed analysis of the faulty decisionmaking that every person makes. Voided warranty aversion would be a great example in his book. Warranty value should be based on the cost of the potential event, factored by the product of the probability of the event occurring (engine failure) X probability of engine warranty claim being successfully denied for reason of use of a different oil (for example). So, let's say 1 in 100 engines fail (.01); chances of warranty being denied for using Amsoil is 25% (While they may initially make the claim, I believe I have the ability to make a credible argument that they cannot prove the oil I use, that exceeds their performance criteria--not spec--changed at proper intervals, therefore I believe that I have a 75% probability that I'll prevail). Engine replacement is $30k (using numbers cited above, no clue if that's accurate or not). Therefore, valuation of warranty FOR ME is $30k*(.01*.25)= $75, in the instance of an engine failure. Not worth the worry in my mind. Now, that doesn't take into account Iceman's point that the real value might exist in covering electronics, or paint failure, or some other issue--which won't be effected by my mods.

In other words, we spend too much time worrying about what might happen. Any time your concern is stated in the form of "if A happens, and B happens" (eg my engine fails and they deny my claim because of my mods) you're getting into some pretty low probabilities, that from a LOGICAL standpoint are not worth worrying about, unless the cost of the event is astronomical (eg, life).

But we're people, and that's what we do.



Bottom line is more around risk aversion: how much are you willing to forego to have a level of confidence that you won't have a major expense IF a highly unlikely event occurs?

 

[Crowley]

While I agree with a lot of the points stated in this thread. I always have believed that if you are going to begin modding your car, you should be willing to cover the costs if items break. While you may still have warranty work done (parts modded had nothing to do with what is broken), there is a chance that what you modded may cause an issue as well.

Other factors that may play in a persons decision is that if they are willing to accept the cost if warranty will not cover what is broken are if there are performance shops in the area that work with your car. In some cases you can get aftermarket parts installed for the same cost or perhaps cheaper than stock parts (at least for what the dealer would charge you).

Crowley

 

[masonh]

Problem is...when you start modifying the car....that .05 chance of probability goes up drastically.
____________________________________

I would say maybe that is a little generalized and that it depends on the modifications.

Putting on the biggest blower you can find and running race gas or E85 with the boost turned way up is obviously going to wear the motor out faster than a 2.8L blower with the boost same as it was on the TVS blower.

The 2.8L blower running 15psi may actually help your motor last longer than the TVS which is basically maxed out from the factory and you still gain power.

 

[Chris!]

I would say maybe that is a little generalized and that it depends on the modifications.

Putting on the biggest blower you can find and running race gas or E85 with the boost turned way up is obviously going to wear the motor out faster than a 2.8L blower with the boost same as it was on the TVS blower.

The 2.8L blower running 15psi may actually help your motor last longer than the TVS which is basically maxed out from the factory and you still gain power.

So you're saying a pulley, tune, intake, and exhaust doesn't put more stress on the motor engine and driveline? These are all basic mods.

And that it may not raise the probability of failure?

I've re-read your post 3 times now- am I missing something?

 

[mullens]

With my previous two GT500's I modded my ass off. Tunes, intakes, SC, you name it. I also modded smart, using reputable tuners and proven parts. That being said, it was still a risk and I was always prepared to pay the bill if something broke. I'm done with all that with the '13, but I don't fault anyone who wants more power. They just have to be willing to take the risk.

 

[662HP631TQ]

With my previous two GT500's I modded my ass off. Tunes, intakes, SC, you name it. I also modded smart, using reputable tuners and proven parts. That being said, it was still a risk and I was always prepared to pay the bill if something broke. I'm done with all that with the '13, but I don't fault anyone who wants more power. They just have to be willing to take the risk.

Agreed! I aksed myself at which point is it enough power from the factory.....This is enough. But like you said some guys track it and have other uses for theirs hell some may be racing nfor money in some sort of event. That makes sense to mod. For me though this is the car that FOR ME AT LEAST Has it all!

This is a very very interesting thread though and I love the dialogue in here! Keep it up it has me thinking and I love it!

Also I am picking up that book....another in my long list haha!

 

[Steve@BAS]

The only thing I ever had to warranty claim was the A/C flapper solenoid. Was making a run with some friends on the highway, just 'cruising' next to my buds SuperG, and all of a sudden loud clacking/ticking, immediately let off and had that sinking feeling. Pulled over, turned off car, clicking continued, and thanked god I didn't join the BMC club that day LOL.

Anyways, went to ford and had them warranty that. Tried to have them warranty the wear on the steering wheel switches for stereo and they wouldn't, said that was a wear item. Cheap SOBs...

Edit : found photo of the day I almost cried

 

[Husky44]

Also I am picking up that book....another in my long list haha!

I can't recommend it enough, but have to warn you, it's one of the most mentally challenging books I've ever read (and I read a lot of deep stuff).

I enjoyed it, but it's not light fare... You were warned.

 

[662HP631TQ]

I can't recommend it enough, but have to warn you, it's one of the most mentally challenging books I've ever read (and I read a lot of deep stuff).

I enjoyed it, but it's not light fare... You were warned.

I pretty persistent and open minded. It amazes me that people are so stubborn and won't change their life when presented plain facts. Such as stop eating you are too fat, stop smoking you have lung cancer, stop drinking yu have no liver left! but hey people want to feel that they are always right!


But I digress. I am willing to change my mind on anything when things are laid out and when I do more research on the matter which I am always willing to do.

But yes...Warranties.....hmmm!

 

[ObieFox]

With my previous two GT500's I modded my ass off. Tunes, intakes, SC, you name it. I also modded smart, using reputable tuners and proven parts. That being said, it was still a risk and I was always prepared to pay the bill if something broke. I'm done with all that with the '13, but I don't fault anyone who wants more power. They just have to be willing to take the risk.

I agree with this statement completely. I have been modding my mustangs since I bought my 87 GT after college. Like everyone, I was always looking to improve upon the factory performance. When I ordered my termi back in 03 the mods got more serious and continued with my different stangs throughout the next 10 years.

Mods are a slippery slop...improve one area and expose something else.

My 2013 is as close to factory nirvana as I have ever experienced. More power than I can use on the street, coupled with fantastic handling, ride and great looks. For now, it will stay stock.