We live in an age of information and technology that has made everything around us smarter. Electronic and digital components have made life easier in our homes, offices, and automobiles.

Some of life’s bells and whistles, like nose hair trimmers, are no more than budget-grabbing gizmos. However there are many intelligent tools that can bring convenience and safety to our daily tasks.

In the vast world of "smart" technology, the automotive electronics market is king. Indispensable features such as anti-lock braking systems and electronic stability control are perfect examples of smart and safe automotive electronics.

Recent developments by industry experts have created a huge increase in the number of electronic devices installed at automotive plants. Just to give you an idea of how quickly cars have evolved electronically, the Apollo 11 space craft traveled to the moon and back using a mere 150 kilobytes of onboard memory. It’s remarkable to think that the typical CD player uses a whopping 500 kilobytes just to keep our favorite songs from skipping.

Listening to uninterrupted music is a mere iota of how electronics have impacted a car’s performance in order to benefit drivers.

Telematics is the term used for the technology that involves automobile communication systems. The term was originally used to describe the blending of telecommunications and informatics or information technology. This industry has been gaining more and more attention from car manufacturers over the past years. In the mid-1990s, industry insiders predicted that telematics would become "the" go-to technology; increasing overall sales and more importantly, transforming the automotive industry into a major player in mobile technology. In reality, these forecasts panned out to be less than what was predicted. From an initial industry projection of over $40 billion dollars, the figure has been whittled down to half as more conservative measures were considered.

Nevertheless, that is by no means an indication that the development of this telematics technology has been or will be abandoned. In fact, on average automobile manufacturers spend $2000 on electronic systems for every vehicle that comes off the line — in incredible increase from the $110-per-car budget of the early 1970s. This huge increase in spending is reflected in everything from engine performance to entertainment systems, security features to safety devices. Every component of the vehicle works together to provide automobiles that perform better, are more comfortable, and ultimately safer to drive.

Some of the most common smart and safe automotive electronics are as follows:

Controller Area Network More than one computer runs your car. There is actually a network of computers called the Controller Area Network (CAN). Like a LAN (Local Area Network) that’s commonly used in home and business computers, the CAN links computers together. In your vehicle, the CAN basically links the many separate computer systems together and allows them communicate with each other. These interconnected systems involve everything from critical systems like engine management, cruise control and anti-lock brakes and cruise control, to less-demanding applications like automatic window and seat controls.

Fuel Efficiency Skyrocketing fuel prices have forced automotive manufacturers to realize the need for fuel-efficient vehicles, and to meet that demand. Smart automotive electronics are used to create the more efficient burning of fuel, such as the electronic fuel injection system (EFI).

The technology used in hybrid vehicles takes this one step further, with electronic devices that allow the driver to automatically switch between gas and electric engines.

Safety Devices There are generally two categories of devices designed to protect the safety of the driver and passengers: active and passive safety devices.

* Active safety devices: These are systems that constantly work to ensure the safety of drivers and passengers. Examples of active safety devices are dynamic steering response (DSR), traction control (TCS), and acceleration slip regulation (ASR).

While the average driver may not notice these systems at work, they are constantly sensing road and driving conditions and adjusting the car’s performance accordingly to create a safer ride. Electronic Stability Control has been shown by researchers to have a large safety benefit in reducing single vehicle skids.

* Passive safety devices: While these features may be more visible and seem simpler, they are also controlled by smart and safe automotive electronics. Thanks to developments in electronics and technology, airbag deployment has seen a tremendous amount of improvement over the years. Early airbags would deploy too early or too late, offering little or no benefit to the driver and passengers. Now, more advanced systems have created devices in your car that are actually programmed to the conditions that can lead to a high collision impact. Airbag and seating adjustment systems are deployed to minimize impact and decrease the degree of injury to the people inside the vehicle.

Think of the advancements over just a decade, and you’ll agree that the car of today certainly is a far cry from its predecessors. Modern automobiles offer more than simply a means of getting from point A to point B. Smart and safe automotive electronics make "getting there" as comfortable and as secure as possible.

Number One: Not confirming the concern. Confirming a repair concern is a basic diagnostic principle frequently overlooked. To fix a problem, the first thing one must do is recognize it.

Number Two: Insufficient Road Testing. The importance of a thorough road test (even for an oil change) is well documented in automotive training manuals. Yet, many technicians consider driving the vehicle into the shop good enough.

Number Three: Misdiagnosing. For the above reasons and a multitude of others, your vehicle is misdiagnosed more often than not. Mechanics will spend hours chasing the wrong problem, wasting your time and money.

Number Four: Throwing parts at a problem. To compensate for lack of skills, mechanics often just throw parts at the problem in the hope of getting lucky. It’s common to hear mechanics say I replaced this, this, this, and that, and the problem’s still not fixed. This goes right back to mistake number one: confirm the problem with diagnostics, then proceed.

Number Five: Not addressing primary concerns first. Technicians often spend an inordinate amount of time looking for easy sells that will fatten their paychecks. There’s nothing wrong with this provided there’s no charge for the inspection, it doesn’t conflict with your time, and the upsell suggestions are valid (they’re frequently not). However, this type of free inspection and the subsequent upselling too often overshadows the primary concern. So…what’s wrong with my car?

Number Six: Overconfidence. Too often unqualified technicians get in over their heads. Rather than defer to a more experienced technician or facility, they often keep going and do more harm. How’s it go…The road to hell is paved with good intentions?

Number Seven: Taking shortcuts. In the ongoing effort to beat the clock, technicians will create a host of problems: breaking parts, snapping bolts, short circuiting sensitive electronics. Refer to Auto Repair: How Can They Screw Up an Oil Change for a great discussion.

Number Eight: Poor Repairs. Whether through incompetence or laziness, mechanics frequently don’t do repairs correctly. It’s often sloppy work. Forgotten bolts, parts not lined up correctly, or components not re-installed properly are common. It gets worse with computer repairs: incorrect software programming, coding, and resynchronization protocols are just a few.

Number Nine: Not confirming repairs. After a repair is complete, it’s important to re-check to ensure that the problem is indeed fixed. Too often parts are thrown in and the car is pulled out only to pull in another victim.

Number Ten: Making a mess. If the above nine mistakes weren’t bad enough, there are now greasy fingerprints on the hood and steering wheel, and two big greasy boot marks on the carpet.

How much insurance does one need? You have the big four: home, health, life, and car insurance. Then there’s a second category, which starts getting a little hazy with credit card insurance, purchase protection plans, fraud insurance and more. Extended warranties, also called extended service contracts, or extended service policies fall into the mist of this second category.

Extended warranties are supposed to pay (in full or in part) for specified repairs for a specific period of time after the expiration of the factory warranty. They can be a great value. They can also be a significant waste of money. It gets quite foggy in the details. What exactly is covered? How long? How much? Are there hidden charges?

There are numerous extended warranty companies and an even wider variety of warranty packages available: silver, gold, platinum, platinum-plus, and a host of other confidence-building words. What’s the best plan, and are extended service contracts worth the money? Extended warranties, like life insurance policies, are a numbers game. They’re a gamble. You pay $2500-$4500 for a 2 year, 100,000-mile protection plan and hope that you get at least that back in warranty repairs. The provider on the other hand, hopes to pay out less than it insured.

There are three major types of plan providers: The manufacturer, the dealership/third party, and third party providers. Each one has its assets and liabilities (discussed ahead).

What exactly is covered in an extended service plan? As mentioned above, what’s covered depends on the package purchased. Some plans only cover the power train: the mechanical components of the engine, transmission, and rear-end. Others cover the power train plus some electrical components. Still others cover electrical, advanced electrical, and computer components. Some only cover what’s listed in the contract. This is called a “Stated” or “Named” contract. This means that if it’s not stated, it’s not covered. Some cover bumper-to-bumper, similar to a manufacturer warranty, except trim pieces, upholstery, exterior components, cosmetic items, and a number of other exclusions.

Never before has the adage, “The devil’s in the details,” been so applicable.

Manufacturer Extended Plans: Extended service plans from the manufacturer are the best in terms of coverage, convenience, and quality. Coverage is similar to the warranty while the vehicle was under its original factory warranty—with similar exclusions stated above. The billing is direct, meaning you don’t have to pay out-of-pocket, except for a deductible, if applicable. Quality is great too, as an extended warranty from the manufacturer will only use factory parts. They also have money, so there’s less risk of bankruptcy.

The down side of manufacturer extended service plans is that they are not cheap. These plans are generally the most expensive, require low mileage standards, and necessitate servicing your vehicle at a dealer for coverage.

Dealership/Third Party Plans: Extended warranties from a dealership are actually from a third party insurer. These providers are “generally” reputable, but not always. However, if there is an issue (such as the warranty provider filing chapter 11, which is quite frequent in the extended service contract business), the dealer “may” step in to cover any repairs that would have been covered under the defunct plan. Also, claims are easier: billing is direct because the dealership has a working relationship with the provider, and there is usually agreement on price.

Some dealers set up their own “internal extended warranty,” which is honored by the selling dealer. This is rare, and should not be confused with a manufacturer warranty. Important: extended warranties are often passed off as “manufacturer” warranties. They’re not. This is a sales trick. Also be aware that there is a significant mark up, as the dealership is merely acting as the middle man. Lastly, extended warranty companies often go bankrupt without warning.

Third Party Plans: These plans are called third party plans because they are outside the responsibility of the manufacturer and the service center performing the repairs (unless there’s a working relationship with a repair shop as stated above).

There are hundreds of extended service contract companies. Some have good reputations, some don’t. Third party plans are frequently sold by used car dealers. You may also receive an official looking notification in the mail stating that your warranty is expiring, and directing you to call an 800 number ASAP. This is a marketing tactic by an independent warranty provider. Despite the “official” appearance of the postcard or envelope, it’s not from the manufacturer. Manufacturers do not send out reminders about warranty expirations.

Given the wide-variety of third party plans there are numerous red flags.

1) Claims: Extended warranty companies will be quick to tell you that filing claims is easy, and that the service center gets paid immediately via a credit card. Thus, there’s no out-of-pocket expense for you. However, the warranty company can’t dictate a service center’s policies. Some service centers will only accept payment from the repair customer. Thus the burden is on the repair customer to fill out the forms, contact their warranty company, and await reimbursement via check, which can take 2-8 weeks.

It is the service center’s responsibility to contact the extended warranty company to let them know what’s wrong with the vehicle and to check coverage. This process can take anywhere from 20 minutes to 20 days, sometimes more, depending on the degree of repairs and especially the amount. (See $1000 and Adjusters ahead)

Service centers and extended warranty companies frequently battle over the “fair” price of repairs. Many repair shops no longer negotiate, and just state the price, leaving the contract holder (i.e., the service customer) responsible for the difference.

2) Rentals: Rental coverage is a great benefit. However, there are fixed rates and time limits. In other words, the warranty company is not going to pay to have you drive a Mercedes-Benz, even if you drive a Benz. Rental allowances range from $25 to $35 per day. Also, rental coverage is based on the number of hours it takes to repair the vehicle, NOT how long your car has been at the shop.

3) $1000 and Adjusters: Repairs that approach $1000, or that require a significant amount of work, will be cause for the warranty company to call in an adjuster to confirm the diagnosis. This will delay the repairs by a minimum of 24-48 hours. It may cost you additional money when an adjuster is involved. You may be charged to have your vehicle pulled back into the shop for inspection, as well as for the time spent with the adjuster.

4) Tear-down Charges: In many cases, an extended warranty company will require that a particular component be taken apart for inspection to determine if the repair is indeed needed and covered. This puts the service customer in a very awkward position. The customer will have to authorize potentially hundreds of dollars of tear-down expense in the hopes that the repair is covered. If it’s not, the customer is out the hundreds in tear-down PLUS the actual repair. This does happen!

Common Myths:

1) “Extended warranties cover maintenance services and brake work.”

No. Extended warranty plans do not cover maintenance or wearable items. Brake pads and rotors are wearable parts. Maintenance such as coolant, brake and transmission flushes, tune-ups, services, oil changes, bulbs, wipers, and more are not covered.

2) “They told me it’s bumper-to-bumper, so it covers everything right?”

Wrong. Not even a factory warranty covers everything. When pitching the sale for the extended warranty, one is very often lead to believe that he or she will have nothing to worry about. This is just not true on so many levels. For example, if your bumper falls off it’s not covered.

3) “I don’t have to pay anything, right?”

Wrong. Despite the claims of 100% coverage, there are many factors involved. The labor rates, labor hours, diagnostic times, parts prices, and machine work are just a few items that often conflict with a service center’s policies. Some extended contracts only pay a maximum of $55 per hour, and only allow one half hour for diagnostic time. This is generally unacceptable to the service center, as labor rates have skyrocketed to over $100 per hour at many dealerships, and average $75 at local shops. Moreover, with the complexity of today’s vehicles, diagnostic time is at a premium. The customer pays the difference.

4) “If I have an expensive problem, I can just purchase an extended service contract.”

It’s unethical, but it’s an option many attempt. However, most service contracts have a minimum time requirement before the first claim can be filed: usually three months. Also, many contracts require that your vehicle be inspected by a service center to check for pre-existing conditions—just like life insurance.

5) “My contract lasts up to 100,000 miles.”

Only if the time limit doesn’t run out first. All extended warranty plans have a time limit. For example, a typical contract will state that the vehicle is covered for two years or 100,000 miles, which ever comes first. During the sales pitch, however, the emphasis will be on the 100,000 miles, not the time.

6) “If my car breaks, it gets fixed like new.” Actually, depending on the contract, an extended warranty company can insist on installing remanufactured or even used parts.

Items commonly not covered by extended warranties: • Any component with a pre-existing condition • Any component related to a Technical Service Bulletin (TSB) • Many components that has been updated by the manufacturer • Extra components necessary “due to manufacturer updates” to complete the repair • Trim pieces: molding, cup holders, dashboard, console, body parts, glass • Many accessories: radios, DVD players, TVs • Many expensive electronics: climate control units, navigation assemblies

Service contract positives: Some service contracts are transferable, and may thus increase the resale value of a vehicle. Many come with trip interruption reimbursement, towing and 24-hour road side. Some plans can also be financed, or have E-Z Pay Plans. Others offer a money-back guarantee.

What should you do? You’ll get lots of advice about doing the research, comparing plans, and reading the fine print. This is all sound advice. But what about doing the math?

Let’s say a plan costs $2500 for 2 years or 100,000 miles, whichever comes first. To break even you’ll need a minimum of $1250 per year in covered repairs, excluding regular maintenance. Remember covered is the vital word here.

Another way to break it down is to anticipate having to pay $104.17 per month over the next two years in “covered” repairs. Do you want to take that bet?

What could happen? You could double your money or more in repair work. You could conceivably get a new engine and transmission (or used ones anyway). You could also easily spend $2500 for a service contract, and still have to pay another $2500 for repairs, which for a variety of reasons, were not covered under your plan. Now you’re out $5000.

Alternatively, you could keep the initial $2500. In many ways all an extended warranty does is prepay for repairs. You could stick the money in the bank and collect interest. Then you could withdraw the money for repairs as needed.

Another consideration that’s rarely discussed is the cause of the problems. Many car repairs problems are the result of wear and tear, neglected maintenance, physical damage, or acts of God—such as flood damage. None of this is covered. The gamble only covers failed components.

If the vehicle you’re driving does cost $2500 to $4500 in repairs due to outright failed components, is it a vehicle you even want to consider keeping? A vehicle that needs this kind of repair work due to mechanical, electrical, or computer failures may not be worth it. The $2500-$4500 would be better spent on an upgrade to a quality vehicle rather than insuring a lemon.

There’s no question that auto repair is expensive, and even quality cars break from time to time. But do they breakdown to the tune of $2500-$4500? That’s a hefty bet on a “possibility.”

Terence O’Hara from the Washington Post makes an excellent assessment about extended warranties in general. He writes:

…extended warranties play upon a basic human trait to avoid loss, even if it means sacrificing a possible future gain…the gain is all the other things of value that a consumer could buy with the money that was spent on a warranty

What’s the best plan? Money in your bank account!

While there are a number of factors why it’s difficult to get your car fixed right the first time, the primary reason is the skill of the mechanic doing the repair.

According to studies, 70% of automotive technicians are not qualified to work on your car. This includes technicians from dealerships, local shops, and franchises.

Over a decade ago, automotive manufacturers were predicting widespread shortages in “qualified” technicians. Now, given that 80% of the functions of the average car are controlled by electronics, qualified technicians are in even greater demand. This is evidenced by the numerous advertisements for master technicians which include a $1000 to $5000 sign-on bonus.

The local mechanic is obsolete. Today’s mechanics must be “technicians” in the true sense of the word. Technicians need an in-depth understanding of the advanced interactive theory of mechanical, electrical, and computer systems. Today’s cars are literally a network of computers on wheels.

The true technicians are the guys who can navigate multiple systems of theory to diagnose what’s causing your car to intermittently stall at highway speeds in cold weather, on Route 66 every other Thursday morning, when it rains hard. Unfortunately, these guys are very rare.

Automotive technology has advanced far beyond local mechanics, most of whom are still struggling with basic electronics and computer diagnoses (see the Acceleration of Price-Gouging @ www.repairtrust.com/articles.html).

The service industry has always lagged behind in adequate training. It has responded somewhat in recent years, but it’s too little too late. Training alone will not make up for the years of lost time, coupled with the technological advancements to come.

This leaves you, the service customer, paying top dollar to have an amateur poke and prod your vehicle. Not only is your car unlikey to be fixed correctly, paying top wages for an amateur is a classic car repair scam!