VW extends used-car warranties to all brands

The Volkswagen brand, as part of its push for 800,000 U.S. sales by 2018, has a new used-car warranty program to help dealers sell trade-ins from other brands.

This October, VW rolls out "WorldAuto," which extends a limited one-year, 12,000-mile warranty to used non-VW makes and models. It's an offshoot of a program begun in Europe two years ago.

There are more conquest trade-ins for VW dealers to move these days. In 2011, the number of new buyers coming from rival brands rose 21 percent over the prior year, according to R.L. Polk & Co. data. In 2008, the year-over-year increase was only 7 percent.

A pilot program started in February at 20 U.S. dealerships.

"Obviously we're going to be taking in more trade-ins when we get to 800,000 [in U.S. sales]," said Joe Gunther, a VW dealer whose dealership in Georgia was among those participating in the pilot. "And we can't wholesale all of them."

The limited warranty covers certain engine and transmission repairs, as well as those related to air conditioning and the suspension. Buyers also get roadside assistance.

Only vehicles with fewer than 75,000 miles on the odometer are eligible for the program. The cars must be no more than six years old, said Scott Weitzman, general manager of used-vehicle operations for the VW brand.

Like certified-used VW models, competitive vehicles must pass a 112-point inspection to be certified.

The move marks a shift in the way dealerships approach used-car sales, typically an extremely lucrative area of business for most stores.

While VW doesn't make money from used-car sales, the program is designed to boost dealers' used-vehicle business, Weitzman said. "We understand very well that a used-car operation is the linchpin to a successful new-car operation," he added.

Until recently, used-certified programs were virtually always covered by the brand under which the vehicle was purchased.

Then, in March, Chrysler Group launched a similar program, "Diversified Certified," which enables dealers to certify and sell used vehicles of other brands with a Chrysler-backed warranty.

Only 2008 and later vehicles with fewer than 48,000 miles are eligible. Buyers get a five-year, 60,000-mile warranty starting from the original in-service date.

Chrysler introduced the program in part to help its Fiat brand, which returned to the United States in 2011 after a nearly 30-year absence. Because of the brand's newness, Fiat dealers have had little service work and virtually no supply of used Fiats. In May, Chrysler Group expanded the program to its other brands.

Chrysler declined to say how many vehicles its dealerships have sold under the program.

VW's U.S. sales last year advanced 26 percent over 2010 to 324,402 vehicles, the brand's second consecutive year of double-digit sales growth.

Through July, VW's 2012 sales rose 34 percent to 245,739, compared to a 14 percent gain for the total light-vehicle market.

By Christina Rogers- Automotive News