Extended warranties are GM's highest profit margin item, which means they are a bad deal for you. When GM makes a lot of money, it is the customer's who pays that money, it doesn't fall form the sky.
I am not saying that insurance to protect you from catastrophies is a bad idea, what I am saying is that they are way over priced. How many of you would think nothing of paying $10 a gallon for gas today? You all understand gas and realize that is way too high. How many of you understand the economics of extended warranties? When you buy these extended warranties, you are, in essence, paying $10 a gallon for gas. If I told you that the average extended warranty costs GM $100 and they charge $1,000 each, you would probably think their profit is excessive. Guess what guys that is what they are doing. There are going to be a few people who will tell you about how much the extended warranty saved them once, just like you will read about how rich a state lottery made some individual, but what about all of the rest who paid big bucks and got nothing in return?
One of the things to note is what they don't cover. Like all insurance they have exclusions. Many of them have conditons that you must comply with which many people forget.
Most products tend to fail initially, if they are faulty, and then much later when they wear out. In between they generally perform flawlessly. Guess what period the extended warranty covers - that flawless period.
I have had many new cars and products during my lifetime and the only ones that i can think of that failed during the extended warranty period was a computer monitor.
In summary, extended warranties are a very, very bad investment overall for consumers. Instead of buying them, invest the extended warranty money yourself and self insure. In the long run you will be much further ahead.
