Jan/Feb Feature Article: Extended Warranties For Cars- Sound Investment or Terrible Scam?

Having worked in the auto repair industry for the better part of the last decade, I am often reminded of one of the biggest scams going on in the business today. A recent conversation I had with a long-time client who was considering an extended warranty for the vehicle he was about to purchase reminded me of this and has prompted this month’s feature article.

For years, car dealerships have profited greatly from the sale of extended service contracts on new and used vehicles. Although most people realize that they’re not a sound investment at the time, they convince themselves (or are convinced by the financier) that it’s a good idea to buy them anyway. This happens for a variety of reasons, but mostly they’re purchased out of fear that catastrophic and costly repairs may one day be necessary to maintain their new vehicle.

But, what most people don’t realize is just how bad of a deal these warranties actually are. Lets examine the main factors of what makes this such a negative proposition.

1) Cost. Depending on the age of the vehicle and term of the contract, an extended warranty for your new or used car will likely cost between $1500 & $2500. We’ll use the figure of $2000 for an average.

But is that the only cost? No! Chances are, if you’re buying a new or used car from a dealership, you’re likely financing at least part of the sale price. This means you’ll also be financing the cost of the service contract. Even at 7% annually, you’ll likely pay $400 – $500 in interest on the contract you’ve financed. So now the average cost is up to $2500.

2) Many contracts have deductibles for every claim. The typical deductible is around $100. Let’s say you average one repair claim per year for the five years of the term. That’s an additional $500 you’ll pay even though you have the service contract.

3) Adjusters. If the estimated repairs exceed a certain predetermined amount, most warranty companies will employ an adjuster to inspect any repairs before they’ll give approval. This can extend the downtime while your vehicle is in disrepair. This can also cause additional expenses for you such as rental cars, extra time missed from work, etc.

4) Some contracts are written in such a way that certain non-routine repairs are not covered. In other words, the contract contains language to allow the warranty company potential grounds to deny claims. Many contracts do not cover gasket failures, for example. Furthermore, they don’t cover items damaged as a result of the gasket failure. So while cylinder head damage may be covered, for example, if it’s determined by an adjuster that the damage was the result of gasket failure, they have grounds to deny the claim.

5) Limited Coverage. Almost all contracts state that the cost of the covered repairs will be paid as far as replacement parts/labor is concerned, but additional items such as fluids replacement, wheel alignments and other items that may be necessary to complete the job are not covered. What this means is that along with the deductible, you’ll potentially be responsible for other costs as well.

6) Increased turn-around time. Some warranty companies can be slow to pay their portion of the repair bill. The facility performing the repairs will likely not release the vehicle back to you until payment has been made in full. This means you’ll likely have to pay the bill out of pocket and seek reimbursement from the warranty company or increase downtime without your vehicle while you wait for them to pay.

7) The risk/reward ratio is very poor. In other words, it’s very unlikely the service contract will pay for itself. If the average repair is about $350 or so, you’ll likely have about $1750 in repair bills over the course of the warranty term. With deductibles and other miscellaneous items you’ll have to pay for with each repair, you’re probably only likely to save about $1000 over the course of the contract. In essence, by buying the warranty you’re spending a guaranteed $2500 to save $1000 or possibly even less. The only real value in the warranty would be in the event that a truly catastrophic and costly repair were to be necessary.

When shopping for a new vehicle, instead of throwing money away on a warranty, invest the time and energy into researching the vehicle you’re considering for purchase. All new vehicles come with a standard warranty (many to 100,000 miles), anyhow. If you’re looking at purchasing a pre-owned vehicle, take the vehicle to a reputable repair facility for a thorough bumper to bumper inspection. While no technician has a crystal ball, he/she will be able to give you the piece of mind as to whether the vehicle you’re considering is a sound choice. You should be able to accomplish this for $50 or less, which is a heck of a lot better than $2500.

December Feature Article: Oil Life Indicators: An Objective Look

If you own a car or truck built in the last 10 years, chances are that your vehicle is equipped with an “Oil Life Indicator” (OLI) feature that supposedly lets you know how much longer you should drive your vehicle before taking the car in to have your regular lube, oil & filter service performed. While in theory these in-dash reminders may be helpful with remembering to drop it off every three months, following them religiously may actually shorten the overall lifespan on your vehicle’s engine.

To clarify, modern vehicles equipped with oil change reminders are represented in two different ways. The first is with a simple light that comes on after X,000 miles have been driven or when a preset amount time has elapsed since the light was last reset. The other way is with an LED indicator in-dash, showing the amount of oil life remaining expressed as a percentage.

(NOTE: This is not to be confused with the actual oil light that appears in dash when there is a malfunction within the engine’s oiling system.)

I can recall countless occasions where clients have inquired as to the validity and accuracy of the OLI phenomenon. One in particular however illustrates the concept wonderfully.

“Jack” brought his 2006 Chevy Avalanche in for it’s first oil change service since he had purchased the vehicle. Jack had bought the truck with about 20,000 miles on the odometer. The truck had 26,500 miles on it when he brought it in for service.

Upon our initial courtesy inspection, we noted that the oil level was reading about one quart low on the dipstick. Furthermore, the oil was excessively darker than what we’d normally see on such a young vehicle. When I advised Jack of this, he became somewhat alarmed as his OLI showed that he still had 18% oil life remaining. He explained that he didn’t think it’d be a good idea to wait until it got down to zero, and was having the service performed earlier than necessary as far as he was concerned.

When I advised Jack that he should stick with a routine of having the LOF service performed every 3-4,000 miles, he was apprehensive about taking my advice. In Jack’s eyes, and in the eyes of many of those who own vehicles equipped with such a feature, he felt as though the engine’s computer was monitoring the oil and that the percentage expressed was 100% accurate. The truth is, these OLI indicators are often anything but.

The vehicle’s OLI system does not actually monitor the condition of the oil. It doesn’t monitor the amount of oil in the engine, either. In reality, the method by which the OLI system determines the percentage remaining is formulaic. The PCM, or Powertrain Control Module is the main on-board computer for the engine (and often transmission, too). The PCM, through a multitude of sensors, monitors and stores a wide variety of information including engine speeds, engine temperatures, oil pressures and temperatures, environmental temperatures, air/fuel intake and consumption, etc. The OLI system takes data from the PCM and, along with information relating to your driving habits, applies the formula and estimates the amount of time before the oil with be completely worn out. Depending on the data regarding driving conditions and how the vehicle is operated, the OLI will then calculate the percentage that displays on your dash, which can take anywhere from 4,000 to 12,000 or more miles to get to zero.

A simpler way to put it is that if a car that’s primarily driven on the highway, where engine speeds and temperatures are more constant, the OLI will likely reduce the percentage gradually and at a much slower rate than a Chevy K2500 Pickup truck that is constantly being used to haul a large trailer from job-site to job-site.

After discussing all of these points with Jack, he still wasn’t quite convinced that the OLI wasn’t indeed infallible. I finally convinced him by performing the LOF service as he watched. Then when the service was complete, I had him start the vehicle.

The first thing that he noticed was the OLI still showed 18%. The OLI system couldn’t determine that the vehicle had fresh oil installed. It has to be manually reset.

In truth, following the OLI as a guide as to when to have your vehicle serviced is an acceptable practice as far as maintenance schedules are concerned. You can drive your vehicle 9,000 miles between LOF services. Many manufacturers specify right in the owner’s manual that the engine oil only needs to be serviced in 5,000, 7,500 and sometimes 10,000 mile intervals depending on the manufacturer. Although in theory following the OLI is feasible, the real question is, should you?

Furthermore, all engines consume oil to some degree, even newer ones. It is common for a vehicle to consume up to a quart of oil every 3,000 miles. If a five quart motor consumes one quart, that leaves only four quarts of oil to do the job designed for five quarts. Combine that with the fact that the remaining oil in the system has 3,000 miles worth of wear to it, thus reducing it’s lubrication & heat reducing properties and rendering it much less effect than new, clean oil.

My answer, as it is anytime this topic of discussion comes up, is that no, you shouldn’t drive more than 3-4,000 miles in most cases between LOF services, regardless of what the OLI indicates. There are a few reasons for this.

Along with oil consumption that occurs with all vehicles, the main reason I advocate regular changes is the purpose for which oil serves. Oil serves three functions simultaneously: Lubrication, Heat Reduction and Particle Suspension. Particle suspension is the element of motor oil that ‘traps’ dirt and debris within the oil itself, preventing it from continuing to circulate freely throughout the engine. Throughout the course of 3,000 miles of driving, oil becomes thicker, dirtier and has sustained damage that prevents it from functioning as well as new oil does. Running a motor with worn oil (especially if the level is less than full) will definitely have long term repercussions if the practice is continued over a long period of time.

Although a vehicle technically can go longer periods of time between LOF services, I’d recommend you stick with the same every 3,000 miles schedule that’s served generation after generation. That is your best bet to getting the most life out of your investment.

Next month’s Article: Aftermarket Used Car Warranties

Have an idea for an article or a question you’d like to see answered? Send me an email at jautomike@gmail.com, call me at 896-9342 or simply leave a comment. Send me an email or give me a call and if we decide to use your question, we’ll buy you dinner!!

Why is it Necessary to Flush the Power Steering System?

I am often asked, especially by our clients with over 25 years of automobile ownership experience why it is necessary to service the power steering system when they’ve never had to in vehicles they’d owned in the past. It’s a good question, as for years no service was required to the power steering system in order to keep it operating properly. But recently, power steering fluid flushes have become the most overlooked element of auto maintenance today.

For years, power steering was a luxury option usually found only in high-end cars like Lincolns and Cadillacs, and little maintenance was required. Even as power steering became a more commonly equipped option, auto manufacturers didn’t include any power steering services as recommended scheduled maintenance, as it was often an unnecessary procedure. It’s only been relatively recently that servicing the power steering system has become an important procedure in preventing costly repairs in the future.

The reason for this is the fact that power steering systems operate under considerably more pressure than they did a generation ago. This is due to the much smaller rack & pinion units that are found in cars and trucks today. The smaller racks are great for manufacturers because of the reduced curb weight and lower production cost benefits, but these smaller units require up to 2500 psi of pressure to operate properly, as opposed to only 500 psi that was required by older systems.

While the new, smaller racks are great for efficiency and are essential due to space limitations of smaller front-wheel-drive cars, the additional pressure on the system has some negative side effects. The additional pressure raises the operating temperature of the fluid to about 178 degrees Fahrenheit, which over time causes the fluid to become burnt, discolored & oxidized. Add to that the contaminants that naturally accrue over time in the system and the result is fluid that simply does not last forever.

Contaminated fluid is harmful to the power steering system in several ways. Dirty fluid is thicker than clean, fresh fluid, causing the components such as the pump and rack and pinion to have to work harder, which can lead to premature failure of those parts. Burnt, oxidized power steering fluid is also very stressful to seals, and is the leading cause of seal failure in pumps and steering racks today. Furthermore, burnt fluid also contributes to the failure of the high pressure lines, as it causes the rubber to deteriorate from the inside out.

Although power steering maintenance doesn’t appear on a lot of manufacturers’ recommendation lists, we strongly encourage this service after the vehicle odometer has reached 60,000 miles and every 30,000 miles thereafter. When you consider that the average rack and pinion repair costs between $600 and $1000 or more, and the average power steering pump repair can cost $300 or more, the semi-annual service of the system is a sound investment in the long term well-being of your automobile.

Flushing the power steering system on a regular basis is the single best way to maximize the life expectancy of your car’s essential steering components. Right now at Jamestown Automotive take $20 off the regular price of a power steering system flush just by mentioning this article!!!

October Feature Article: When to Fix it Vs. When to Sell it

As a service adviser, I am often faced with the challenging task of giving advice as to whether or not costly repairs are worth authorizing, especially when the vehicle reaches the age where long-term reliability is less of a certainty.

After witnessing countless valued clients contemplate and agonize over this difficult decision, I’ve put together some guidelines that I offer when the time to comes to make that heart-retching choice of whether to fix ‘er up or abandon ship.

“Joan” brought her family’s 1998 Pontiac Montana van in for service to address a heating/cooling concern.

We diagnosed the problem, and the preliminary estimate for the repair came to about $950.

After I called her and explained the necessary procedures that would be required to solve her vehicle’s problem, Joan was understandably apprehensive about authorizing such a costly repair. Because of the fact that the vehicle had 140,000 miles on the odometer, combined with the age of the van, Joan found herself suddenly in the uncomfortable and awkward position of deciding whether to invest the money into the current vehicle or begin the search for a new or newer automobile.

After talking at length, Joan decided to go ahead and authorize the repairs. The following questions were major factors in how she came to her decision:

– Are any more major repairs likely going to surface in the coming months?

While no one has a crystal ball, periodic routine safety inspections can help predict whether breakdowns are likely to occur in the foreseeable future. Along with the diagnostics performed to determine the cause of her concern, we also performed a ‘courtesy check’ on Joan’s car – a basic visual inspection to see if there were any other issues that may cause problems down the road.

– How well has the vehicle been maintained up to this point? Are all of the scheduled maintenance recommendations being performed at their suggested mileage intervals?

A vehicle that has been properly maintained has a significantly longer life expectancy than one whose fluid flushes, wheel alignments, filter changes, etc. have been neglected. Knowing that the maintenance services have been performed regularly makes the occasional repair bill easier to stomach, as the next significant breakdown is likely to be much further down the road. Since Joan has been coming to us for her automotive needs since 2001, we had over 25 service records to prove that the oil changes, transmission services, power steering flushes, cooling system services and braking system maintenance had also been performed as needed. Because of this, we can be confident that future breakdowns are much less likely to occur than on a vehicle that had been neglected.

– How satisfied are you with the vehicle’s performance (aside from the current state of disrepair)?

If the vehicle has other issues that may need to be addressed, like worn tires, transmission performance concerns, etc., it may be better to start over with a newer vehicle than to repair the one you have.

– How does the cost of the repair compare with to the Blue Book Value of the vehicle?

In Joan’s case, the estimate of $950 is considerably less than the $3500 blue book value of her van (Source: www.kbb.com). That is a value-to-cost ratio of about 3.5 to 1. That is quite favorable. Our general guideline is that if the value-to-cost ratio is 2 to 1 or worse, it’s generally not a good idea to proceed with the repairs.
In Joan’s example, it would be beneficial for Joan to authorize the repairs and invest the money into her current vehicle, even if her ultimate intention is to sell the van after it’s repaired. The reason is that she stands to profit considerably more than her initial $950 investment. Even if she were to sell the vehicle for an amount as low as $2500, she’d still profit over $1500 from the transaction. So now, instead of having $950 to use as a down payment on a new vehicle, she’d have two and a half times that!!

– Will the vehicle, after repaired, be better than most used vehicles she’d likely be able to purchase for the cost of the repair?

To put it another way, what kind of used vehicle can Joan buy for $950? Will she be able to buy a car that will be a better value than her van will be after it’s repaired?

– If she’s in the position where she’ll have to finance her next vehicle with monthly payments, will the repaired vehicle likely outlast the number of monthly payments the money would otherwise be spent on?

“The NADA estimates the average car payment in the United States is around $400 a month over five years (Source: AssociatedContent.com, 5-22-07)”. By this logic, Joan’s $950 bill would cover about two and a half months worth of payments on the new vehicle (and this doesn’t even account for the difference in auto insurance costs). In other words, Joan’s break-even point for her investment is two and a half months from the date the repairs are completed (assuming that Joan doesn’t already have a car payment for her current vehicle). For every day that Joan drives the van after that, the van is making money for her.

Choosing whether to invest money into an aging vehicle is always a gamble. But hopefully now you’ll feel more confident when the time comes to make the tough choice of whether to keep ‘er on the road or not.

Next month’s article: Oil Life Indicators

Have a subject you’d like to see addressed or a car-related question you’d like answered? Send me an email at jautomike@gmail.com, call me at 896-9342 or simply leave a comment. If we use your question in a future article, we’ll buy you dinner!!

Introducing BG 44K: The BEST Fuel System Cleaner on the Market!

In all of my time working in the auto repair industry, I’ve always been skeptical about fuel additive/engine cleaner types of products. The claims made by their manufacturers made them sound as if you’ll double your fuel economy just by pouring a $7 bottle of cleaner in the fuel tank once in a while. This defied logic, and never sat well with me.

My experience in this industry has convinced me that not only do the claims they make not hold true, using these products can actually do more harm than good.

So when Joe, our sales rep from BG made his monthly visit for stock replenishment, he seemed surprised by the unusually low number of cans of the “44K” fuel system cleaner that we had been selling. He went on to tell me that 44K is one of BG’s best moving products in three territories.

I explained to Joe that while I believe in the quality of BG Products as a whole, I was apprehensive about advising our clients to invest $25.94 in a product with which I had very little experience. Furthermore, my lack of confidence in similar products bolstered my reluctance.

Then Joe and I got to talking about 44K.

44K is not a new product. It’s been on the market for some time. 44K is only available through certain repair facilities, Jamestown Automotive being one of them. BG products are professional grade meant to be installed by professional technicians.

I explained to Joe that my past experience with similar products has made me a little gun-shy about 44K. Joe agreed with me 100%, then he explained to me what makes BG 44K different from the rest.

Most fuel cleaner additives are alcohol based, allowing them to become diluted to the point of ineffectiveness. The alcohol may provide a temporary ‘boost’, but the long term benefits are virtually non-existent. The alcohol element can also in some cases clean carbon buildup from the valves and pistons like they’re advertised to do, but it can clean them so fast that the debris can actually plug catalytic converters and foul fuel injectors, causing drivability issues that weren’t there before.

BG 44K, Joe explained, does not function in this manner. instead of cleaning the system all at once, 44K gradually cleans the fuel system a little at a time over the course of a couple hundred miles. Cleaning the system gradually prevents the problems that are common with other products. Furthermore, 44K is 100% ALCOHOL FREE. This means that instead of being diluted by the fuel like other alcohol based additives, 44K is able to clean the fuel system from the sending unit all the way to the fuel rail and fuel injectors like it is designed to do.

As an adviser, my personal guideline with products and services is that if I wouldn’t buy it for my own vehicle, I certainly won’t recommend that our valued clients do so. On that principle, I decided to give it a shot and see what all the excitement is about.

One afternoon, after filling up the gas tank on my ‘95 Buick LeSabre, I bought a can of 44K and added it to a full tank.

For the first couple of days, I didn’t notice any difference as far as performance was concerned. Then, on the third day, after having driven over 100 miles since adding 44K to my tank of fuel, I happened to glance down at the fuel gauge on my dashboard. It still read that I had 3/4 tank of fuel remaining! Typically, I’d get roughly 20 miles per gallon, so one full tank of gasoline would allow me to drive about 360 miles or so. I ended up driving 396 miles on that tank of gas before refilling, a 10% increase in fuel economy.

Some quick math showed that the 44K essentially added 1.8 gallons worth of fuel for every fill-up. At $4.00/gallon, I stood to save $7.20 every trip to the pump. The $26 I spent for the can of 44K would show a profit after only 4 tankfuls. And this doesn’t even account for the additional benefits of a more efficient, smoother running engine.

Although I didn’t see the power boost I was hoping for, I am completely satisfied with the results. ANYTHING that can save a little money on gas is worth the investment, and BG 44K has definitely made a believer out of me.

In fact, we are so confident that adding 44K to your fuel tank will yield positive results, that we’re extending a no-risk guarantee to you: Give 44K a shot. Let us add a can to your fuel system and drive your vehicle 250 miles. If you aren’t satisfied with the results, let us know and we’ll credit your purchase price to your next order, no questions asked!!

Have a story to share about your 44K experience? Feel free to leave a comment – we’d love to hear from you!!

Five Tips for Improving Fuel Economy

High fuel prices are an issue that affects us all. Unfortunately, not all of us can afford to just run out and buy a Toyota Prius or a Chevy Tahoe Hybrid, nor can we comfortably fit our family of five into a Toyota Corolla or Ford Escort to save a few bucks on gas costs. For that reason we have to try to get the best fuel mileage as possible out of the cars and trucks we do drive.

Here are five simple things you can do to improve your fuel economy:

1. Keep your tires properly inflated. Under-inflated tires cause drag, requiring your engine to work harder to move the vehicle. This in turn, leads to extra fuel consumption. On your vehicle in the driver door jamb there is a sticker from the manufacturer that describes the tire size & inflation guidelines for your car or truck. Most passenger vehicles like cars & minivans have a rating of 32 – 36 psi. Trucks & SUVs vary more, due the the vast differences in load rating, curb weight, tires equipped, etc. Most will have a psi recommendation of 32 – 44 psi, with bigger trucks having a max inflation of around 80 psi.

NOTE: It’s important to point out that this is different that the maximum inflation rating stamped on the outside of the tire. This should not be used when determining how much air to inflate the tires with. The reason is that the manufacturer of the tire simply doesn’t know on which vehicle the tire will be mounted. The max inflation stamping is simply there as a guideline.

2. Drive slower. The ratio of fuel consumed per mile driven increases significantly after about 60 mph, and increases further at even higher speeds.

3. Avoid “stop & go” driving whenever possible.

4. Have your fuel injection system cleaned every 30,000 miles. For a short news story about the fuel injection service we perform, click here, then click on “fuel savings news story” in the lower right-hand corner. Save $20 on a fuel injection cleaning at Jamestown Automotive just by mentioning this article when you have the service performed.

5. Keep up on your vehicle’s scheduled maintenance recommendations. Dirty air filters, excessively dirty engine oil, fouled/mis-gapped spark plugs, improperly performing cooling systems, etc. all cause the engine to require more fuel. Keeping up on the maintenance suggested by your manufacturer will allow your engine to run more efficiently, consuming less fuel. All vehicles have different scheduled maintenance guidelines. Consult your owner’s manual or simply stop by Jamestown Automotive anytime for a free scheduled maintenance printout.