Spud_Racer

This is my second thread.....New Question.....The Question.....Extended Warranty

I bought my R500 back in December and took delivery on the 21st.

• The car is in mint condition, white with macadamia leather and burled walnut.
• 36,000 miles.
• It's a CPO 1 owner car from the dealer who originally sold the car.
• All the service has been done at that dealer since new.
• The exterior is flawless and the interior nearly so. They replaced the tires (Conti 4X4 Contact), battery, brakes (front and rear), fluids change (oil, transmission, diffs, coolant), wiper blades, spark plugs, engine air filter, cabin air filter, and transmission filter as part of the CPO process.

The dealer had the complete service history on the car. Throughout its history they have replaced

• The front struts @ 33,000.
• The air suspension compressor @ 17,000.
• Done the transmission fix for hard shifting @ 34,000.
• Replaced the valve cover gaskets @ 25,000.
• Replaced the power steering pump @ 31,000.
• Replaced the tailgate lock mechanism @ 34,000.

It's loaded with nearly every option but the AMG package (appearance) and the DVD entertainment system (don't care), rear seat heaters, and seat memories. So.......

• Leather seats
• Wood trimmed steering wheel
• Panoramic Sunroof
• Navigation
• Satellite Radio
• Harman Kardon Logic 7 surround sound w/subwoofer
• 6 Disc CD Changer
• Heated headlight washers
• Bi-Xenon headlights
• Curve tracking headlights and fog lights
• Speed Sensitive Air Suspension (I know, I know)
• ADS Adaptive Damping System
• Remote controlled liftgate
• Rear console
• Rear audio and climate controls
• Telematics (Bluetooth hands free phone)
• Parktronic
• Interior premium lighting package

Mercedes CPO program offers a 1 year max 100,000 mile warranty so it's essentially a 12 month 64,000 mile warranty in this case. So the car should be worry and cost free for a while with zero maintenance.

I got a second offer from the dealer today on extended CPO coverage......

• extend to 2 years = $2,195 coverage to month 24 and 120,000 miles
• extend to 3 years = $3,195 coverage to month 36 and 135,000 miles

The car is my winter daily driver and the family vacation hauler as well as the Home Depot delivery vehicle. It will see 6,000 - 8,000 miles per year max. So probably 55,000 - 60,000 at the end of three years. But nowhere near 100,000.

So, go for the additional coverage at this price? Negotiate more? Or pocket the $3,200 and take my chances? I have six days left to decide.

xxGenericSNxx

I've owned my car since April. I got the extended warranty in June from an aftermarket company that will cover 4 additional years and 50,000 additional miles. Cost $4k, so far the tally is $6k in payouts. It's paid for one keyless go handle, a new dvd player (part of RSE which you don't have), motor mounts, power tailgate struts, and one parktronic sensor.

With how complex these cars are and all of the things that can go wrong, I think at $3,000 it's a no brainer (for me) to go for the extended warranty as it's so easy to see your bill run up that high on one visit to the dealer. The air suspension system is so complex and prone to failure so I'm banking on the fact that I'll need to get some components replaced in the next few years.

But then again my car wasn't religiously serviced at the dealer and the previous owner(s) sort of beat mine up. It's in nowhere near as good of a condition as yours.

Does your car have P3 which has Distronic and Keyless Go? Those handles are notorious for going bad on our cars and other MBs from the same era. But luckily they're pretty inexpensive to fix (~$112 for a new handle + hourish of labor).

bumpersignal

That's a great deal - $3k for 3 years additional coverage. Definitely go for it. I've put 50k miles on mine and I've had two repairs that's cost over $3k.

Spud_Racer

Nah, I don't have keyless go or the distronic cruise control.

My guess is that my car was a P1 package with most of the separate option packages and stand alone options chosen separately.

The Airmatic system seems guaranteed to fail. Rubber bags + time = unavoidable.

But the front struts are almost new so that leaves the rears. And Arnott balloons are pretty affordable and an easy DIY fix with a lifetime warranty. I guess I'm really not afraid of the Airmatic system.

The R500 engine also doesn't seem prone to the same valve train failures that the R350 suffers. So I'm not worried there either.

The transmission has already been "fixed". I don't know what Mercedes record is on engineering a permanent solution for that well documented problem but research says they fixed it properly.

But, these cars are loaded with stuff that can break and Mercedes is not exactly shy about their OEM parts pricing. I think what scares me most is the electrical system and accessories. The horror stories from this forum have me leaning towards spending the 3 grand for an insurance policy.

xxGenericSNxx

Nav broke on my car, $2k from the dealer
Broken display on front climate control $900
Broken 3 zone AC unit $3k
New DVD player $2.8k
Motor mounts $300 in parts $700 in labor (although MB CPO warranty WON'T cover this)
New gas struts for tailgate $1000 repair job


Nothing is cheap with this car!

Spud_Racer

Holy schnikes!

Some of that stuff is weird. DVD player 50% more than Nav system. $1,000 for tailgate struts.

The 3 zone AC and motor mounts sound somewhat reasonable.

The extended warranty is looking good.

xxGenericSNxx

The reason the tailgate struts were so much was because of labor. The headliner needs to be partially disassembled in order to reach that area, and my MB dealer has the highest labor rate I know out of any dealer at $140/hr.

Spud_Racer

At those prices I suppose you need to start referring to the service staff as automotive surgeons rather than technicians.

Ya gotta wonder how much of this is a conscious decision of automakers to..............
A.) "Design" service revenue into the vehicle for their dealer network
B.) Value form over function / serviceability and total cost of ownership
C.) Lack of any concern about total cost of ownership.

I think that's one area where Honda stills outshines most competitors. Their cars generally don't break but when they do, they aren't really all that hard to fix. The Pacifica was like that too. The hatch strut design may not have looked as polished as the R500 but who cares? No one will ever see them unless the hatch is open and I can change one myself in half an hour.

And then you have Porsche with their full belly pan on the Boxster that requires the rear of the car be disassembled in order to do an oil change. Insane. That's just one of the reasons I bought an S2000 instead of a Boxster.

R. Reyes

Don't hesitate. Get the extended warranty, IT WILL pay for itself with this car.

My tally:
motor mounts, valve body, new rear light harness/assembly & wiring, 2nd row armrests, rear trunk latch, camshaft sensors, timing chain, DVD player, CD player, rocker switches for 2nd row windows, belly pan (floor-reinstalled incorrectly).

And that's just off the top of my head in the 6 years I have owned the car. My warranty cost roughly $2800, MBUSA has paid over $4000.

Don't try to own this vehicle out of warranty. It's just a money trap waiting to happen.

xxGenericSNxx

How can all of those things only cost $4,000 to repair? The DVD player itself is already $2,800 and the valve body is another $2,700.

BTW how did MBUSA cover your motor mounts? It's pretty hard to get those covered.

And out of curiosity, how did your DVD player break? Did it flat out die or was it still in passable working condition? Mine was deemed broken as it skipped when playing a movie and would hesitate for a split second.

supernsx

If you are sure that you will keep the car for long, I would definitely go for an extended warranty for as long as you plan to own this car.

On the other hand, if I read your post correctly, are you saying $3195 will get you "2" additional years of coverage? If that is the case, I am wondering can you find a better deal.

Spud_Racer

My R500 is a CPO vehicle so it comes with 1 year of extended warranty up to 100,000 miles. $3,195 buys me 2 additional years for a total of 3 years and 135,000 miles.

I'm sure someone will write a risk policy for a longer term but as the car ages, the risk and price will skyrocket. And it's already 6 years old. I've checked with non-Mercedes policy providers (USAA) and the cost was almost double.

I sort of like the Mercedes warranty that guarantees Mercedes parts and technicians without a hassle.

gforaker

I know that I often disagree with many on this list who always recommend an extended warranty. I really think you have to factor in how many miles you will drive during that warranty. I drive around 18,000 miles a year on my 2010 model so when my warranty expires next year, it would probably make sense. Since you only drive 5,000 miles a year I am not so sure it is a good idea. Incidentally, the 2010 has been pretty trouble free so far.

Spud_Racer

Yeah, that's what I'm struggling with. I plan on keeping this thing for 10 years. But that will only put me in the neighborhood of 100,000 miles.

At the end of a 3 year term, I will probably only have 60,000 miles on the car, tops. So, a 3 year warranty with a 135,000 mile cap is not something I'll really get full value from.

The real question is what can I expect to fail in the next 3 years and say 24,000 miles. And I'm already covered for 12 months and 100,000 miles with the CPO purchase. Given that a lot of the known failure modes have already been addressed on my car, it is just a matter of what random failures may occur in the subsequent 24 months and 16,000 miles.

However, it sounds like any random failure of even an innocuous component could rapidly exceed the $3,200 warranty cost.

It's a gamble with the policy writer. That's why they call it a risk policy.

supernsx

Umm... 10 years?? If this is really your expectation and plan.... I don't know R-class is the right choice. I will never put myself in a situation that the car will worth less than surprise repair bills. I saw many of my friends who made this mistakes and were in a lose lose situation. Car worth less than $10K and the repair bill was $8K to make it drivable. Even after the repair, the car was a money pit. Beside push the car off the cliff, there will be no good solution. For the R-class with that many options (yours is similar as mine), you are taking that chance.

Now, if you are willing to reduce your expectation to 5 years, then I think it may be ok if you can extended your warranty for another 3 years. Spend couple hundred bucks to have the car fully inspected by the dealer right before your extended warranty ends and the car may last another two years without major issues. A big maybe though since my R500 ramp up over $10K repair bills during the two years after my factory warranty ended, even I paid for a dealer inspection before I bought my extended warranty.

Btw, not trying to scare you and it is just what I will do and think.

Spud_Racer

supernsx,

Try looking at it this way. I set up a spreadsheet with a buy (my car) and then 3 consecutive 3 year leases and compared the two scenarios over a 9 year period. My R500 had an MSRP of $64,500 so I looked for an equivalent car as a lease comparison. Luckily, Mercedes has a current 3 year lease on a GL450 that has an MSRP of $63,900. Pretty darn close for this purpose.

I laid out the price of my car + tax - residual value of 5% as the total cost ignoring maintenance and repairs. Total cost of ownership = $27,010. Over 9 years (108 months) the cost is rather conveniently $250 per month.

Next, I set up 3 back to back 3 year leases of a GL450 based on todays MB offer of $63,900 and a lease payment of $699 along with up front costs of $6,493 each time you lease. Total cost of ownership = $94,971. Over 9 years (108 months) the cost is $879 per month. That's $629 per month more than my "old" R500. Every single month. Guaranteed. That's $7,500 per year.

So, the lease will cost you almost $68,000 more than hanging onto my used car for 9 years. Every month I go without repairs, I put $629 in my pocket. Every year I build a $7,500 cushion against future repairs.

Upside of lease.....

• New car every 3 years, new style, new technology
• Always covered by warranty for major or minor repairs

Downside of lease.....

• You ARE paying for depreciation in the lease payment
• You ARE spending $68,000 for that warranty coverage
• You have NO residual value
• You MAY have additional expense at lease turn in

Upside of holding onto a car for the long term......

• Far lower outlay of cash unless there are major repairs
• If that car is out of production, you get to hang onto a car you really like.

Downside of holding onto a car for the long term......

• You WILL spend more cash on major and minor repairs
• You're driving an older car, older style, older technology

So, in my case the question becomes, do I think I will spend $68,000 on repairs between mile 36,000 and mile 100,000? Not bloody likely! $25,000? Yeah, maybe with this car. But that's peanuts compared to paying to always be under warranty in a new equivalent car. And I really like this thing. I don't want a GL450 or any other truck like SUV.

And, with a service contract (extended warranty) I can mitigate some of that repair cost for 3 years, or 1/3rd of the 9 year term for a measly $3,200. Personally, I think there's no way I'm not ahead of the game to keep the R500 for 9 or 10 years vs constantly updating an equivalent luxury vehicle.

I didn't create an example for buying a GL450 every 4 years but it would probably be just as bad since you'd be absorbing all of the front end depreciation and paying all of the sales tax each time. New luxury cars that are turned over quickly are not a smart buy. They are status symbols and toys. They are not great economic moves.

EDIT: OK curiosity got the better of me so I ran an analysis for the same GL450 as a buy on two consecutive 4 year deals to match up with the Mercedes warranty period. I assumed the same $63,900 price that Mercedes is currently offering, a 3% borrowing cost, 10% down payment, 90% financed, 48 month term, and 60% depreciation based on what I could find on the web for Mercedes SUV's. Oddly enough, or maybe not so oddly, the buy cost looks pretty much the same as a lease. Total cost of ownership = $83,868 or $874 per month for 96 months. My monthly costs go up to $281 per month since I'm amortizing the same costs over a shorter term (96 vs 108 months). The difference is about the same as the lease scenario at $592 per month or $7,200 per year. At the end of 8 years, I'm $57,000 better off (excluding repairs) by keeping my car rather than worrying about being "under warranty".

All of this leaves me firmly convinced that you are MUCH better off buying a used (4-5 year old) low mileage car in great condition and keeping it for 10 years. As the common wisdom goes, let someone else take the depreciation hit. Let the OEM warranty find and fix all the infant mortality problems on expensive systems. Let the recalls work themselves out. Use an aftermarket warranty or OEM CPO program if you like to mitigate any risk. If you can't afford top own the car out of warranty, then you couldn't afford to own the car in the first place.

gforaker

I think some people are forgetting why these used cars are such tremendous bargains. Everyone seems to agree that they are wonderful cars when they are running right. They may be priced used $10,000 or more below what they should be if the car of this quality were bullet proof reliable. You also just might have $10,000 in repairs ahead. It also might be $15,000 or only $4,000. Oh yes, the maintenance is also high, but that is to be expected. Just don't save gobs of money on the front end and not expect to pay any money later on down the road. There is a reason the resale price on the R Class is low. Incidentally, the depreciation on the S Class is even worse.

gforaker

My last post seems a little negative in tone to me. I really do love the car. I saved over $16,000 by buying it used with only 5200 miles on it from the dealer. I do plan on driving it well over 100,000 miles and expect to keep some of that $16,000 in my pocket after repairs. So far it is 40k miles and no repair costs.

Spud_Racer

I don't see it as negative. I see it as realistic. I'm a predator when it comes to car buying.

The R Series was a flop for Mercedes. No need to sugar coat the news. The majority of consumers want SUV's that look like big macho trucks even though 99.9% will never leave the pavement or tow anything heavier than well.....nothing. They don't want something that looks like a minivan or station wagon even if it functions better with lower step in height, lower cargo floor, a better 3rd row, or more car like ride and handling.

This was true for the Chrysler Pacifica to a lesser degree as well. Consumers just rejected the look of the car. What exacerbated the problem for Chrysler & Mercedes was that while an entry level Pacifica MSRP'd in the low $30K range and a loaded Limited model topped out around $43K. Few people were ready to fork over $43K for a Chrysler. The Mercedes math was just as bad. The R series started around $45K for an R350 and could top out at $65-$70K for a loaded R500. If you didn't like the look to begin with, you really didn't like it after you scanned the window sticker. There are cheaper ways to transport the family. Ford Explorers start to look good.

I consider this nothing but good news because I guess I'm a contrarian when it comes to this 2X3 format. While I admit the looks are a little well.....different, I absolutely love the overall design of this car, crossover, SUV, station wagon or "Grand Sports Tourer". Whatever you call it, it works great for our family as a winter daily driver, vacation car, ski trips, shuttling kids back and forth to college, trips to Home Depot, or going out to dinner with three couples.

The depreciation cliff for these cars means someone else's financial shellacking is my windfall. I paid $28.5K for a $65K car with 36,000 miles on it. That's 56% depreciation on a car that's hardly been used. And my car was reconditioned as a Mercedes CPO and it comes with a 1 year, 100,000 mile warranty. If these cars were the hottest commodity on the road I probably would not own one. But the fact that I can own one because no one else wants it in part for fashion, makes it worth considering. The fact that people who couldn't afford it in the first place are dumping low mileage examples as soon as the warranty ends makes it a perfect predatory target for buyers like me.

bumpersignal

I'll have to agree with you on this. I had an 04 BMW 745i and when it approached 100k miles I thought owning outright would outweigh any sort of repairs that might come in. Well sure enough after 100k miles the warranty was expired and the first thing that hit me was the $5000 water pump repair. Then after that another $5000 power steering / rack pinion failure. That was enough for me, I unloaded the car for practically nothing and ran as fast as I could. Moral of the story , I should've listened to everyone that told me owning these cars out of warranty wasn't a good idea. I think that has made up my mind - at the end of this year when my warranty goes out I'm going to trade it in for a Dodge Durango and buy the Lifetime Warranty and hopefully never have to buy another car again. What do you guys think?

gforaker

I guess that the point I was trying to make was some people would not mind paying $5000 or even $10,000 a year to own a wonderful 740i (or R Class). You and many others would prefer to have it paid in car payments and someone else might do it in repairs. In the end, it all comes out the same, though there can be much more fluctuation with the repairs. Are you an optimist or a pessimist? Repairs might just as easily be lower than expected by a pessimist.

bumpersignal

$10k/year is higher than a car payment for a newer and probably higher model. So that makes no feasible sense no matter who we're talking about.

Spud_Racer

Are people so afraid of repairs that they will spend big $$$ guaranteed every month to avoid paying a dime out of pocket for repairs? It makes no sense!

In a 2002 Car & Driver test of a BMW 745i they listed the MSRP at about $70,000. Let's say BMW gave you a 4 year interest free loan and sales taxes are 6%. That's $74,200 total. Let's say you financed the whole thing because you hate big out of pocket expenses. You'd pay off the car in 4 years at $1,546/mo or $18,600 per year. At average mileage (12-15K annually) after 4 years, you'd own the car with 48,000 - 60,000 miles on it.

Then, no more payments for another 3-4 years until you reach 100,000 miles. That's between $56,000 and $74,000 you will have avoided in monthly payments before the water pump fails. So, you pay the $5,000. Then the power steering fails and you pay another $5,000. You are still ahead of the game by $46,000 - $64,000.

What if the 745i gives you another 50,000 trouble free miles? Not at all unreasonable these days. That's another 3-4 years and another $56,000 and $74,000 you've pocketed. While a water pump failure at 100,000 miles is a bit early in my opinion, do you really expect to be able to drive a car forever without any mechanical failures? Would you really rather pay $1,500 per month without fail rather than incur repair costs maybe once every one or two years? Seems crazy to me.

gforaker

Absolutely true, Bumper! I have been down this path before, back in the 90's when I drove a Volvo 740 turbo wagon over 230k miles. The last 40k miles were with increasing repair incidence and at least back then, Volvo repairs were as expensive as Benz. When it was fixed it was wonderful. In retrospect, I kept it way too long to make financial sense, but in its last few weeks I owned it, it saved my life. Driving along on a 2 lane highway a large truck suddenly backed out into the road maybe 70 feet in front of me blocking almost the entire road. I was quickly able to swerve over to the gravel berm on the left of the road and bring it back on the road in a fraction of a second. There were trees lining both sides of the road and I missed the truck by inches. I am pretty sure the R Class would not have allowed me to do this maneuver.

I have no certainty that $10k a year in repairs is typical for a 740i at 100k miles. You may have been past the worst or you may have had a lemon. Who knows?

This will be the 3rd European car I expect to go over 100k miles with. The Audi is now over 180k miles. At least with my experience, the repair frequency does not usually increase much until after 150k miles, sometimes higher. Repair cost is usually pretty awful, but can be helped by using a good indy garage. Also to be considered is each person's threshold of repair pain. I have friends who would go to almost any extra expense to avoid an unexpected repair. They often choose to drive inferior cars just to try to avoid repairs. I usually have 3 cars on hand to drive and don't really mind a reasonable amount of repairs as long as they don't cost significantly more than car payments would cost. Hey, I own a 30 year old Fiat, so repairs must not scare me.

Naturally, the important word there is "reasonable" and is completely subjective. I am not criticizing your decision. Your car may have been a lemon or your dealer a crook, only you can judge that. There is also one's possible aversion to repair pain or one's willingness to gamble on the future. I think I am pretty much a gambler when it comes to cars I like. Yes, I have the scars to prove it.

Spud_Racer

Only if you're leasing with zero asset value (for you) at end of lease. Or, you're stretching the payments over such a long term that you're upside down on the car from the moment you drive off the lot.

It's pretty simple. A $40,000 car with an interest free loan would cost $10,000 per year for 4 years. And that ignores taxes of $2,400 @ 6%.

How exactly do you figure you're able to buy a new car with a price higher than an R Class for less than $10,000 per year when finance costs are not zero and neither are taxes? This ain't rocket science.

In reality, you'd be looking at a $35,000 car for $10,000 per year. Or, you could go for a 7 year loan and be underwater for years. Or lease and have payments forever. There is no free lunch.