How Poor Reliability Affects Warranties: An Analysis of General Motors’ Powertrain Warranty Reduction

In 2015, General Motors (GM) announced, it was reducing its powertrain warranty from five years/100 000 miles to five years/60 000 miles. GM stated that warranty coverage did not influence consumers' decision-making process when purchasing a new vehicle. However, this paper presents an alternative perspective, offering insight into GM's decision by exploring the historical trends for powertrain warranty coverage, including a timeline of events at GM, a synthesis of GM's revenue, and market share before and after its decision, analysis of the financial impact on GM of recalls leading up to the decision, and an examination of the organizational culture at GM and its influence on employee effectiveness.