Archived Copies of Warranty Week

December 2002 to Today

Chinese Auto Warranties: It's not a topic you hear much about, with good reason. While more new cars are now sold in China than in any other country, most of the top ten manufacturers report that warranty costs are a minor expense. And even though the competition is fierce, warranty remains a minor concern.
October 18, 2018
Japanese Auto Warranties: While Toyota, Nissan and Honda dominate, six other companies also pay claims and make accruals for cars, trucks and buses made in Japan, or made elsewhere by a Japanese company. And while none besides Toyota & Honda report all their warranty metrics, most leave enough clues for outside observers to plug the holes with estimates.
October 11, 2018
Midyear Auto Warranty Expense Report: Though passenger car sales have slowed a bit from last year's record pace, there's no sign of a slowdown among truck makers or their suppliers. More worrisome is a slow but steady rise in warranty expenses that's been under way for several years, after more than a decade of gradual cost reduction.
October 26, 2017
Service Contract Insurance Stocks: Though there are very few publicly-traded companies that derive most of their revenues from sales of extended warranties, almost a dozen public companies have a significant share of the business. Whether it's from home warranties, auto, electronics or mobile phones, the success of their protection plan sales efforts provide investment opportunities to outsiders.
September 28, 2017
U.S. & European Auto OEM Warranty Report: While Volkswagen and Fiat have seen their warranty costs rise significantly in recent years, BMW, Daimler and Tesla have driven their expense rates down. And somewhere in the middle this year are Ford and GM.
April 6, 2017
Retail Product Warranties: Though it's not common, there are some retailers, primarily in the auto parts business, that provide their own product warranties above and beyond what the manufacturers offer, and report those expenses in their financial statements. But it's likely to become more common in other lines of business, as more manufacturers open their own retail outlets or sell directly to consumers online, and more retailers begin to sell their own brands.
August 18, 2016
U.S. Truck & Auto OEM Warranty Report: While falling sales drive Navistar's claims rate upwards, Paccar finds ways to cut warranty costs. And both GM and Ford continue to report some of the lowest warranty cost per vehicle metrics in the world, while Tesla gets its warranty costs under control.
July 21, 2016
Asian Auto Warranty Report: Honda sees its warranty costs soar because of air bag recalls, forcing it to set aside more money for warranty work than GM and Ford combined. Meanwhile, Toyota, Tata, and Hyundai struggle to maintain steady warranty expense rates for their nameplates.
July 7, 2016
European Auto Warranty Report: Warranty expense rates are climbing for several manufacturers in Germany, Italy, and France. But Volkswagen has set a new record for warranty costs in the automotive industry as it prepares to clean up the diesel engine mess. Daimler is the only OEM showing any stability in its warranty metrics, let alone cost reduction.
June 30, 2016
Auto Parts Supplier Warranty Report: Suppliers of engines and transmissions keep larger warranty reserve balances and pay higher warranty expense rates than do suppliers of other automotive components. But those other suppliers have done a better job of cutting their warranty expenses over the past decade, though they've lost ground recently.
April 7, 2016
European Auto Warranty Report: In this initial piece of a two-part series, we look at the claims rates and accruals-per-vehicle rates of five of the top European automotive OEMs. Whether we count in euro or dollars, some of them have the most expensive factory warranties in the world. But a few have managed to cut those costs over the past decade.
July 9, 2015
Auto Parts Supplier Warranty Report: Compared to the automotive OEMs, the suppliers have kept their warranty costs low and ytheir expense rates stable. And while some saw costs drift upwards last year, on average the group remained about the same, as they have for the last few years.
April 9, 2015
Auto Parts Supplier Warranties: Of course the drivetrain component manufacturers pay more in warranty costs than other kinds of automotive parts suppliers. But who knew that the automotive electronics manufacturers pay out almost as much as the drivetrain companies?
December 4, 2014
Auto Parts Supplier Warranty Report: Turns out it's the large truck and bus manufacturers and their engine, axle and transmission suppliers who haven't done much to reduce their warranty expenses over the past decade. Passenger car makers and suppliers of auto parts besides drivetrain components have done a much better job of cutting costs.
April 24, 2014
European Auto Warranties: Their annual reports tell a simple story: Daimler and BMW are reducing their warranty costs. VW is doing just fine. And Fiat is now absorbing the warranty costs of Chrysler.
July 5, 2012
Aerospace Warranty Report: Unlike the auto industry, the suppliers of this industry account for the bulk of its warranty spending. And yet these suppliers have been steadily cutting their warranty costs year after year, while the airframe makers are paying more than ever before.
January 12, 2012
Disk Drive & Semiconductor Report: Warranty costs are falling for most of the high tech component makers, both in dollars spent and as a percent of sales. And unlike in the auto industry, the computer OEMs are not yet as accomplished at pushing their warranty costs back onto their parts suppliers.
April 28, 2011
Vehicle Service Contract Administrators: As we conclude our VSC industry tour, we take a look at the financial strength ratings of the underwriters, the end user revenue of the administrators, and the myriad of links they have with each other, with auto dealers, and with the vehicle manufacturers.
September 9, 2010
Auto OEM Accruals per Vehicle: Measured as a percentage of revenue or as an amount of money set aside per vehicle sold, warranty accruals have declined dramatically for Ford and GM. Some warranty metrics even put Ford slightly ahead of Toyota, though Honda remains the low-cost champ.
July 8, 2010
Top Auto Insurance Companies: One would expect a high correlation between those offering auto insurance policies and those offering vehicle service contracts or mechanical breakdown insurance to consumers. But Zurich is the only one with a major presence in both.
June 25, 2010
GMAC Service Contracts: While the huge downturn in GM's auto sales hurt GMAC's service contracts, what forced the finance company to seek a TARP bailout was a really bad bet on home mortgages. Now the government-owned company has become a bank and is pursuing non-GM dealerships.
June 17, 2010
Retail Auto Parts Warranties: While many of the major auto parts chains are willing to go above and beyond the warranties that manufacturers offer on products such as batteries, most are reluctant to begin selling service contracts. But at least one retail chain has taken that step, and has also begun to offer extended warranties on its own labor services.
June 10, 2010
VSC Industry Structure: In a business as opaque as the vehicle service contract industry, it's not always obvious who all the players are or how they all work together. And auto dealers who make the wrong choice of partners may not know it for years.
February 4, 2010
Vehicle Service Contract
Attachment Rates: Has the chaos of the Great Recession actually increased the appeal of vehicle service contracts? Auto dealers aren't selling as many as they used to, but for at least the past five years roughly one out of every three customers has bought one. And the recent trend seems to have been upwards, as unlikely as that sounds.
January 28, 2010
Used Auto Warranties: Signs of life are beginning to appear in the used auto industry as partnerships are formed and annual sales increases are claimed. One of the latest deals is struck between the makers of electronic contract and tax form software and a veteran administrator of service contracts sold by used car dealers.
August 6, 2009
Worldwide Auto Warranties, Part Two: It turns out that Volkswagen, BMW, and Fiat do disclose their warranty data, if one knows where to look and what to look for. And thanks to the help of a reader who's fluent in five languages, we now have hard numbers for the warranty costs of more than half the world's vehicles.
July 23, 2009
Selling Peace of Mind: With all the negative publicity generated by the "expiring warranty" telemarketing scam, these days it's the auto dealers that need some reassurance about the value of selling vehicle service contracts to consumers. Below is a list of some of the benefits of the different types of VSCs, followed by two different lists compiled by industry associations that can help consumers spot a scam before they buy into it.
July 16, 2009
Worldwide Auto Warranties, Part One: Why do Japanese automakers and heavy equipment manufacturers seem to have such low warranty costs? Though sales are down since last year, warranty costs remain under control, according to annual reports filed recently by Toyota, Honda, Komatsu and others.
July 2, 2009
Auto Part Supplier Warranties: Claims are up a bit but sales are down a lot. And while most suppliers have reduced accruals proportionally, at least one seems to have taken an accrual holiday.
June 25, 2009
Auto Warranty Trends: While the RV makers are imploding, the farm vehicle makers are thriving. Somewhere in between are the passenger car and light truck makers, for whom warranty has become an important issue in the government bailout. But the 1.9% gap in warranty costs between OEMs and their suppliers remains firmly in place.
March 19, 2009
"Expiring" Warranty Scams: Existing laws are not much of a deterrent and the lawsuits are merely a cost of doing business. But a group of auto warranty finance companies think they have a better way to stop the pre-recorded phone calls and misleading postcards: banding together and refusing to do business with the scammers.
August 14, 2008
Worldwide Automotive Warranties: Sure there are good numbers for the U.S.-based automakers, but what about the rest of the world? With a few educated guesses, we're able to estimate the worldwide auto warranty number to be $36.9 billion, roughly 3.4 times U.S. figures alone. But it's different for every size of vehicle, and exchange rate and warranty duration also have an effect.
May 30, 2007
Automotive Warranties: Thanks to reduced warranty expenses at GM, claims were up only slightly for the auto industry in 2006. With four years of data in hand, it's now possible to calculate typical claims rates by product or vehicle type. And while warranty expenses for some are on a downward trend, others have seen costs rise.
May 15, 2007
Auto Warranty vs. Quality: Does the total cost of warranty have any correlation to product quality? Based on the worldwide claims rates seen for the top five carmakers and quality data collected in the U.S. by J.D. Power and Associates, one does seem to be related to the other.
June 20, 2006
Shadow Drivers of Warranty Cost: Survey data suggests that some auto service technicians are wasting their time by replacing the wrong parts and perhaps too many perfectly good parts because they don't have access to the right information.
June 13, 2006
Auto Parts Warranties: Despite the best efforts of the OEMs to push warranty costs back up the supply chain, auto parts makers still have some of the lowest claims rates around. Notable exceptions to this rule include diesel engines and aftermarket replacement parts such as mufflers.
December 13, 2005
Warranty Report: A white paper commissioned by Microsoft finds that the auto industry needs better communications and collaboration tools to reduce warranty costs.
October 12, 2005
Aftermarket Financial Products: Auto dealers who reinsure their vehicle service contracts are pleased by a recent IRS ruling.
July 6, 2005
Extended Warranty Administrators: While auto and PC manufacturers have the top spots, insurance companies and third party administrators grab the bulk of the pie.
January 19, 2005
Auto Inspectors: Continuing our tour of the extended warranty industry, this week we take a look at a company whose detailed inspections help warranty adjusters decide whether or not to pay a claim.
October 5, 2004
Warranty Promotions: Once an afterthought for both manufacturers and customers, warranty is becoming the simplest way to express the quality of a product. Lengthened warranties, which began as a bid for market share by certain auto importers, are now spreading to computers and home electronics.
September 21, 2004
Auto Warranties: It's not just Ford and GM. There are numerous other types of vehicles, and numerous automotive suppliers to those OEMs who each have their own characteristics when it comes to warranty claims and accrual rates.
September 8, 2004
Is the TREAD Act Working? It may still be too early to say for sure, but recent auto safety-related announcements have been filled with specific quantitative data about warranty claims and failure rates. Could it be that the TREAD Act's Early Warning Reporting system is really doing its job?
March 16, 2004
Auto Warranties: While the Big Three sold two-thirds of the vehicles purchased in the U.S. in 2003, they settled three-quarters of the warranty claims. On average, Detroit pays twice as much in claims per vehicle as Toyota and Honda. But that's not the only quality gap. Recent research finds striking gaps between perceived and actual quality levels.
January 27, 2004
Warranty in the Auto Industry: Spending on warranty claims showed a slight decrease during the second quarter, while claims rates and reserve fund balances were both up and down. Here are the details.
September 15, 2003
Comparing Warranties at the New York Auto Show  
April 22, 2003
Motown Breakdown: Auto supply glut could drive Detroit into unprofitability, Ford seen as the most vulnerable of the Big Three.
March 17, 2003
Extended Warranty Deception: Two companies misuse the power of the Web to set their bait for unsuspecting auto warranty shoppers
February 24, 2003