Warranty Week

Our 21st Year of publication!


Recent Newsletters

March 2023
  • Twentieth Annual Product Warranty Report: With 99% of companies reporting, we begin to look at the annual 2022 warranty data, and present our new series of 20-year charts. Warranty claims, accrual, and reserves totals continue to set records in the vehicle and building trades sectors, while the electronics sector shrinks. Claims totals were up, and though accruals were down overall, they remain erratic in the wake of the unexpected expenses and losses of the pandemic.
    March 16, 2023
  • Wind Turbine Warranty Report: It's been a tough few years for the largest global wind turbine manufacturers, revealing high warranty claims and accrual rates. Chinese companies have rapidly expanded their market share, while the European and American giants are attempting to streamline their businesses in the wake of some public product failures.
    March 9, 2023
  • Women Of Warranty: The demographics of our industry are shifting, with more women and young people taking on roles. Angie Breedlove has formed a new group, Women of Warranty, to encourage and foster gender parity in warranty, especially in management and executive positions. The group will emphasize mentorship and networking.
    March 2, 2023
    • February 2023
  • Largest Nine-Month Warranty Reserve Fund Changes: Continuing last week's analysis of the top 110 U.S.-based manufacturers, we are comparing each company's warranty reserve balances to their year-ago levels. Comparing the size of these changes reveals a fuller picture of which companies have had a challenging or exceptional nine months.
    February 16, 2023
  • Largest Nine-Month Warranty Expense Rate Changes: While we can't directly compare one company's expense rates to another's, we can compare each company against their year-ago levels. And then we can compare the size of the changes, to reveal which companies are seeing costs fall and which are seeing them soar.
    February 9, 2023
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    Selected Newsletters

    World's Largest Warranty Problems:

    On the one hand, U.S.-based manufacturers are required to disclose their warranty expenses to investors. On the other hand, they try their best to obscure the news and bury it in plain sight when something really expensive happens. But as the saying goes, a picture's worth a thousand words. And in the charts that follow, it's hard to hide a billion-dollar warranty problem.

    Over the past few years, every once in a while, a set of warranty expense numbers comes in that makes us wonder if there's been a typographical error in a company's annual report. Suddenly, there's a billion-dollar warranty expense and there's no explanation at all anywhere in the document.

    Other times, a major safety recall or some other big event makes the news, and inevitably it gets reduced into a major escalation in a company's warranty expenses. For these, we don't need any additional explanations, but we never do find out exactly how much it costs.

    Apple's Product Warranties & AppleCare:

    The world's largest extended warranty program got even larger last year, reaching an estimated $8.5 billion in revenue. At the same time, Apple's product warranty expenses continue to shrink, with claims falling to a nine-year low even as product revenue soars in the fiscal year that just ended.

    Every cloud has a silver lining, the saying goes. And as awful as the pandemic and the lockdowns have been for the past two years in terms of both health and wealth, sales of both smartphones and protection plans have apparently accelerated over that period. People trapped in their homes, worried about their health, and fearful for their very lives, are apparently more likely to appreciate the peace of mind that protection plans offer, not to mention the relief from boredom a new smartphone can bring them.

    Apple Inc. follows a fiscal year that ends in September of each year, which is then followed by an annual report that typically is issued at the end of October. So that's why this edition of Warranty Week -- the first newsletter of November 2021, as well as the first of the month in past years -- is always about Apple's hot-off-the-presses product warranty and service contract metrics. And this year they tell a story about how a company can successfully turn the expenses of warranties into a profitable aftermarket service.

    Mize Merges With Syncron:

    What began as a discussion about how a warranty management and field service solution could be bolted onto an aftermarket service and parts management software platform has culminated in an international merger between an American and a Swedish software company.

    The news broke yesterday that Mize Inc., the warranty management software firm founded by Ashok Kartham, is merging with a Swedish company called Syncron AB that specializes in aftermarket and service parts management software. Both companies are privately-held, so there were no details about the value of the transaction or the ownership structure following its conclusion.

    Kartham founded Mize in 2012, taking the name from the phrase "Mobilize to Monetize." It was his second go-round at entrepreneurship, having founded the warranty management software industry when he launched 4C Solutions Inc. way back in 1995, when everybody else was using spreadsheets. Ten years ago, after building up 4CS and the warranty management software category, he sold the company to PTC, and moved to Florida, where he decidedly refused to sail off into the sunset.

    Solar Equipment Warranty Expense Rates:

    It's a bit of an actuarial nightmare. Relatively young companies in new and unproven industries issue very long warranties for which multiple years or even decades can pass before claims arise in volume. But eventually, products mature and claims exceed accruals, and reserves begin to deplete. Then the actuaries break the bad news: it's time to raise rates.

    It's almost a sign of maturity. When you launch a new product line in a young industry, one way to impress your customers is to issue extra-long warranties and then fund them generously during the startup phase. And then, as you reach your cruising altitude, you can readjust accruals to reflect actual spending.

    In the solar equipment industry, however, what's happening now is that prices are dropping, cutting into sales revenue, and some of the weaker companies are going out of business. Meanwhile, even the startups are getting old enough to see some serious warranty claims build up, and in some cases even exceeding the amounts they've been setting aside in accruals.

    Consumer Reports' 2006 Extended Warranty Ad:

    There was panic in the industry when one of the most trusted consumer advocates told its readers not to buy extended warranties. Ten years later, the magazine's advice is almost forgotten, and the industry is bigger than ever.

    In a few weeks we'll be marking a very important anniversary in the service contract industry. Just as the holiday shopping season of 2006 was getting under way, a major consumer product ratings publisher told shoppers that extended warranties were a waste of money. On Tuesday morning, November 14, 2006, the USA Today newspaper carried on the back page of the "Money" section (page 10B), the following full-page ad placed by Consumer Reports magazine:


    Figure 0


    Reaction was swift. Some said both the frequency of breakdowns and the average cost of repair was higher than Consumer Reports was calculating, making service contracts a better value than was admitted. Others said it was simply a matter of price, in that nobody would deny the value of a service contract priced at 0% of the product's price (in other words, free).

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