Archived Copies of Warranty Week

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December 2002 to Today

Warranty Claims Rates by Industry: The collected industry average claims rates for 23 product warranty categories over 16 years are sorted into high, medium and low-cost buckets, revealing a peculiar relationship between where the group is in the supply chain and how high or low their warranty expenses are.

Warranty Accruals per Vehicle Sold: Once again, Tesla comes out with the most expensive warranty while Hyundai is the least costly. But the warranty cost rankings of the passenger car and light truck manufacturers in between have shifted somewhat, with the Asian carmakers seeing their accrual rates per vehicle rise and the North American manufacturers seeing their warranty costs drop.

Building Materials Warranty Report: Warranty costs are generally rising in recent years among the suppliers of building materials, fixtures, and furniture. The latter group has seen the most noticeable cost increase, though expense rates across the industry are still generally on the low side (below one percent of revenue).

Automotive Supplier Recovery: While the OEMs are enjoying lower warranty expense rates, it's not all good news for their suppliers. While some of the cost reduction comes from OEMs manufacturing better products, some could be the result of increased reimbursements by suppliers. A few of the relevant warranty metrics hit new records in 2017, suggesting increasingly successful supplier recovery efforts.

Automotive OEM Warranty Report: The car manufacturers used to spend a greater share of their sales revenue on warranty work than the truck manufacturers did. But because of persistent cost-cutting, that is no longer the case. Last year, car manufacturers cut their expense rates to below-average levels, while the truck manufacturers were slightly above their long-term average at the end of 2017.

US Automaker Warranty Report: GM takes the lead as its warranty cost per vehicle dips below $300, allowing it to take a whopping $1.3 billion out of its reserve fund. Ford remains steady while Tesla still has unusually high warranty expenses. And GM is now third on the list of top warranty providers based in the U.S.

Managing Servicers and Dealers with Data: After, Inc. uses state of the art modeling techniques combined with industry know-how to help manufacturer's navigate the sometimes challenging relationship between manufacturers and TPAs with servicers and dealers. Implementing cost control changes with minimal friction is the goal.

Commercial Service Contracts, Part 2: Though the terms extended warranty and service contract are used interchangeably, in a commercial setting a service contract can mean much more than an insurance-like agreement. It can include maintenance and product support, with a focus on response time and cost, and may have only incidental ties to the repair of defects or malfunctions.

January 18, 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

Automotive Supplier Recoveries: A decade ago, the largest OEMs devised new warranty policies that helped to shift more of their expenses back to their suppliers. But then in 2014, an increasing number of safety recalls raised their warranty cost back up, leaving both them and their suppliers at higher expense levels.

New Home Warranty Report: With products such as single-family homes, it's possible to measure warranty accruals not only per dollar of revenue, but also per unit sold. And then it becomes clear which companies have mastered their warranty cost estimation process and which are still making it up as they go along.

Telecom Equipment Warranty Report: Claims and accruals have fallen dramatically in the past decade, both in terms of dollars and as a percentage of sales. Mergers and bankruptcies were a major factor, but so were cost-cutting efforts. Now, however, expenses are rising again and sales aren't, so expense rates are creeping upwards.

Warranty Analytics: One is an online service. The other is a suite of Salesforce components. Both are attempts by warranty management companies to package their vast expertise into easy-to-use and low-cost warranty analytics capabilities.

Fourteenth Annual Product Warranty Report: Warranty expenses are down but sales are up, which means a lot of companies have learned how to improve their warranty processes, increase quality, and reduce costs. But the cost reductions have become less steady in recent years, as if there's no more progress to be made. Is that the case? Or is this merely a pause before the next breakthroughs arise?

Service Contract Pricing: Microwaves: Built like electronics but sold like an appliance, the microwave oven is a hybrid of two different product categories. And with service contracts costing almost 19% of the product's price on average, it also has one of the highest average costs of protection. And there's a big difference in the cost of protection plans for units priced at the high or the low end of the market.

February 2, 2017

Service Contract Pricing: Ranges: After looking at household appliances that clean clothes, wash dishes, and store food, we round out the major categories with a look at the classic range: a combination of a stove and an oven used to cook food. What do their service contracts cost? Does it vary by brand or product price?

January 26, 2017

Service Contract Pricing: Refrigerators: The bigger the refrigerator, and the more it costs, the lower the ratio between its list price and the price of protecting it for a given length of time. And the longer the duration of coverage, the more it will cost, though the industry-wide ratio isn't close to a straight line in terms of cost per year.

January 19, 2017

Service Contract Pricing: Laptops: Laptop service contracts, as a percentage of the price of the product they protect, are more expensive at the low end of the market and less expensive at the high end. But there is a very wide variation between the top and the bottom. Laptop service contracts can cost anywhere between 4% and 91% of the price of the computer.

October 27, 2016

Solar Equipment Warranties: While product warranties that last for one or two decades are reassuring to buyers, they're not worth much unless funds are available to pay claims. That means betting on young startup companies eventually becoming old industry veterans. But who knows how reliable a system installed now will be in 10 or 20 years, and how much it will cost to repair or replace?

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.

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.

Telecom Equipment Warranty Report: Is most of the warranty cost reduction now behind them? Several parts of the industry, such as the Internet and data communications equipment makers, have seen their expense rates climb a bit in recent years. Others are letting their reserves run low, or cutting their accrual rates even as their claims payments increase.

Warranty Workshops: In less than two weeks, a team of warranty and service contract experts are going to conduct six half-day workshops aimed at both basic and advanced practitioners of topics such as warranty metrics, analytics, legal issues, service delivery, cost-cutting, revenue-raising, and ultimately an improved customer experience.

Microsoft Complete & AmTrust: Rather than keeping it in-house as they added more hardware to their product line, the manufacturer partnered with an insurance company to launch a suite of protection plans globally. And as the insurance company learned to work at the same Internet speed as the manufacturer, it also learned to love completely new product categories for which there's no loss cost data to help them.

December 17, 2015

Warranty Reserves & Foreign Exchange: The rising value of the U.S. dollar is impacting revenue, profits, and even warranty expenses. For U.S. companies, it's hurting exports. And for international companies in the U.S., it's helping to reduce the cost of imports and to increase the value of warranty reserves.

October 22, 2015

VW's Emissions Warranty Scandal: Some students cheat on tests. But companies rarely do, because the cost of getting caught is very high. And in the long run, someone usually snitches. So isn't it ironic that a bunch of students caught one of the world's largest manufacturers cheating on a test?

October 1, 2015

Honda's Warranty Expenses: Every major automaker gets their turn to suffer from massive recalls once in a while. So now it's Honda's turn. But is it possible that thanks to the apparently high cost of fixing airbag defects, Honda now has higher warranty costs per vehicle than GM?

New Home & RV Warranty Report: Put a home on wheels and its warranty costs rise. While the warranties on traditional site-built homes typically cost the builder about one percent of selling price, the warranty cost of mobile homes is somewhat higher. And the warranty cost of modular, prefabricated homes may be highest of all.

Computer Supplier Warranty Report: Data storage system manufacturers have been steadily reducing their warranty costs for more than a decade. But the cost reductions seem to have slowed down in recent years. Meanwhile, for peripheral manufacturers, warranty expense rates are now almost back to normal, following years of elevated costs.

Aerospace Warranty Report: Because a few big manufacturers dominate the industry, their problems or successes with warranty cost control can change the industry averages significantly. But over the long term, the trend is clear: aerospace suppliers have learned how to cut their warranty expenses and keep them low. The OEMs? Not so much.

Automotive Warranty Report: Dollar for dollar, the cost of a truck warranty is about the same as the cost of a warranty on a much smaller vehicle. But with trucks, the costs are spread more evenly among multiple companies, while with cars the OEM usually pays the most.

Twelfth Annual Product Warranty Report: Warranty expenses are once again rising and so are the associated expense rates. Much of that has to do with the increased cost of passenger car recalls, and some of it is caused by the soaring sales of smartphones. But could it be that some of the most successful warranty cost-cutters have let things slip back a little recently?

Top Warranty Expense Reductions: Using a list of just the top 200 warranty providers, we found one company whose warranty managers have cut costs by a billion a year within a decade, two more that cut hundreds of millions a year, and five that cut tens of millions a year from their employers' annual claims cost. And there were 16 more that deserved honorable mentions for their efforts.

January 15, 2015

New Home Warranty Accruals: While the average homebuilder sets aside about one percent of revenue to cover warranty costs, the average new home is expected to cost around $2,500 over the life of its warranty. Luxury homes will cost more, but even some average-priced units have high warranty costs. It all depends on the builder.

December 18, 2014

Appliance & HVAC Warranties: Expenses are down in early 2014, partially because of lower product sales and partially because of effective cost-cutting programs. But GE is leaving the business and the other top manufacturers are among the best cost-cutters. So expenses are likely to keep falling.

September 18, 2014

Aerospace OEM & Supplier Warranties: Unlike the automotive business, aerospace manufacturers seem to divide warranty expenses equitably between OEMs and suppliers, both as a percentage of their revenue and as a percentage of the total cost.

August 28, 2014

Asian Manufacturers' Warranties: While most consumer electronics products have relatively low warranty expense rates, as a percentage of revenue, computers generate as much warranty cost as passenger cars and major appliances.

August 14, 2014

New Homes & Building Materials Warranty Report: As sales recover, warranty expense rates are getting back to normal for the builders. But some of their suppliers, such as the makers of electrical and plumbing fixtures, are now enjoying the results of a decade of warranty cost-cutting.

Aerospace Warranty Report: The makers of the actual planes and helicopters haven't done much to reduce their warranty expenses but their suppliers have done a remarkable job with their cost-cutting efforts. In this week's report, we look at both groups together and separately.

The End of Warranty Cost-Cutting? For ten straight years, manufacturers steadily reduced their warranty expense rates from over 1.8% of their sales revenue to under 1.3%. But in the eleventh year, the declines stopped coming. Could it be that there's no more left to cut? And have manufacturers instead begun to spend more on the customer experience?

New Approaches to Warranty Management: For many years it was all about cost reduction. Now, there's little left to cut. And both manufacturers and retailers are looking for ways to improve the customer experience by launching new types of protection services and new generations of warranty automation systems.

Aerospace & Appliance Warranties: From airplanes to air conditioners, each industry has a typical cost of warranty based on the product it makes and what kind of customer it attracts. Business-to-business products such as airplanes have lower expense rates than consumer-facing products such as home appliances.

February 6, 2014

New Home Warranty Report: Sales are rising and home prices are increasing, but warranty costs are remaining the same. So the cost of new home warranties as both a percentage of sales and on a per-home basis are declining, in some cases to record low levels. Is this the beginning of a long-awaited recovery in the new home industry?

January 30, 2014

Automotive Warranty Report: For the first nine months of 2013, claims are up a bit from 2012 levels while accruals are down. More importantly, the percentage of revenue spent on warranty work is down as well. That means manufacturers expect to see lower warranty costs in the future, as they make more reliable vehicles that cost less to repair.

January 9, 2014

Warranty Cost Reduction: Billions of dollars have been saved in the past decade as American manufacturers find ways to reduce their warranty expenses. Now we're naming names and showing the decline in charts that measure warranty expenses as a percentage of product sales.

Warranty Accruals per Vehicle: The German OEMs still have the highest warranty costs worldwide, but the Japanese carmakers are no longer unopposed at the bottom. Both Fiat and Ford are cutting their warranty costs to within range of longtime low-cost leader Honda. And Toyota is well on its way to getting back to normal.

Food Service Equipment Warranties: The commercial appliances used in restaurants cost more to buy but less to keep in good working order. Over the past 10 years, the average warranty expense rates for professional food service equipment has been less than half as much as for home kitchen appliances.

Appliance & HVAC Warranties: With huge amounts of warranty cost-cutting reported by United Technologies and others, the industry trend for expense rates is now firmly downwards. But HVAC and household appliance makers used to spend even less on warranty a decade ago.

Semiconductor Warranty Report: Unlike in most industries, with integrated circuits the production machinery generates most of the warranty cost while the actual products made by those machines generate less. However, the machinery makers have done a much better job of reducing their warranty expenses over the past decade.

Service Contracts & Repair Costs: In the ongoing clash between those who sell extended warranties and those who say take your chances, the odds of saving money depend upon the cost and likelihood of needing a repair.

January 10, 2013

Warranty Week 10th Anniversary: Over the past decade, as warranty professionals began to pay more attention to warranty chain management, a publication was launched that paid attention to them. And warranties have never mattered more, or cost their providers less.

December 20, 2012

Computer OEM Warranty Metrics: There are multiple ways to look at the same statistics. And there are multiple ways to gauge cost-cutting, consistency, and accuracy with warranty totals and estimates. In different ways, using different metrics, Apple, HP and Dell are each leading their industry.

December 13, 2012

Warranty Marksmen, Part 1: Given the average duration of a company's product warranties and the predicted repair cost, a company should be able to accurately estimate how much they need to set aside. But some companies are better at it than others.

November 29, 2012

Most Improved Warranty Metrics, Part 3: While the short-term changes in warranty expense rates have a lot to do with the recession, the comparisons with 2003 and 2006 data have also identified numerous warranty cost-cutters.

November 1, 2012

Automotive Warranty Metrics: While the major OEMs have made great strides with their warranty cost reduction programs and with efforts to use warranty data to improve product reliability, their suppliers are struggling to get back to where they were before the recession hit.

September 13, 2012

Warranty Cost per Vehicle: When it comes time to budget for warranty work, corporate planners apparently expect a Ford to cost twice as much as a Honda; a Fiat to cost twice as much as a Ford; and a Mercedes to cost twice as much as a Fiat. Currencies play a role in their planning, but so does selling price, parts cost and local labor rates.

Appliance & HVAC System Warranties: While they haven't made much progress with warranty cost-cutting, they also haven't seen much increase. And given all the financial problems reported by builders lately, merely staying the same looks good in comparison.

Medical & Scientific Equipment Warranties: While it's true that systems using lasers or X-rays generate more than their fair share of warranty expense, it's also true that their manufacturers have been among the most successful warranty cost-cutters in recent years.

Warranty Cost Reductions: While the warranty costs of most companies are falling, the causes aren't always the same. The big companies are making the process more efficient. But for many of the smaller companies, the biggest cost reductions seem to arise after mergers and divestitures.

October 13, 2011

Mid-Year Warranty Report: The good news continues into the first half of 2011, with massive warranty cost reductions extending their streak into a ninth straight year. With sales finally getting back to normal, product reliability has never been better, and repair costs have never been lower than they are now.

October 6, 2011

Computer Warranty Report: After years of cost cutting, warranty expenses remained low last year and look to stay there this year, even as sales continue to rebound. Apple, meanwhile, is beginning to feel the effects of the increased warranty cost that comes in small packages.

HVAC & Appliance Warranties: Both claims and accruals have taken a nosedive this year. But that's good news if it's the result of increased quality and reduced cost, rather than merely a symptom of slowing sales. The problem is, it's hard for external observers to tell the difference.

October 7, 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.

50/50 Warranties: Dealers who sell used vehicles sometimes can't afford or won't risk the cost of a limited warranty policy. So they ask customers to split the cost of repairs for the first 30 or 90 days. Some regulators say these types of warranties are unfair or misleading, but others say all that's needed is adequate disclosure.

Telecom Equipment Warranties: Though industry sales are down in general, a handful of telecommunications, data networking and broadcast equipment manufacturers have managed to reduce their warranty costs and increase their sales at the same time. But as dramatic as some of the recent cost reductions are, the companies rarely mention either the cause of the initial problem or how they solved it.

October 15, 2009

Top 100 Warranty Providers at Midyear: Was that the sound of the bottom of the recession? If so, financial data from the first half of 2009 provides a detailed record of how warranty providers reacted to a collapse in sales and a jump in claims. Though some of the largest warranty providers didn't make it, those that did are enjoying the benefits of recent claims processing automation projects and other cost-cutting efforts.

September 3, 2009

Sports Equipment Warranties: Everything from StairMasters to snowmobiles carries product warranties, and cost their manufacturers a significant amount of money for warranty work. But compared to the billions spent by GM, HP and others, it's easy to overlook their corner of the warranty industry.

December 11, 2008

Warranty Cost Cutting: The warranty reserve balance rises and falls, along with claims and accruals, in reaction to changes in sales volumes and product quality. But merely measuring the balance doesn't provide as much insight as does using it to measure a company's capacity to pay claims.

November 26, 2008

Warranty Cost Cutting: Among the top 100 warranty providers, more than half have reduced the percentage of sales they allocate to warranty costs in the past year. Some have cut their accrual rates by a third, a half, or even more. And many have also seen their claims rates fall, suggesting not only cost cutting but also quality improvements.

November 20, 2008

Warranty Software: SigmaQuest debuts a new root cause analysis module that helps manufacturers reduce the scope of product recalls and cut warranty costs. It's also priced by the month and uses a Web interface to reduce the cost, time and effort needed to begin using it.

November 6, 2008

Warranty Management: Value and price are affected by product quality, which can be measured by fluctuations in warranty cost. But warranty is too often treated as merely a cost that must be reduced, without heeding its link to quality, price, and ultimately profits. And warranty is very different from accounting in that a big part of the job is using probability functions to predict the future.

October 16, 2008

"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

Warranty Cost per Vehicle: If one has a figure for warranty accruals and for annual sales, one can quickly calculate an estimate of what a given automaker expects to spend on warranty claims over the life of its vehicles. And better yet, all the complexities of warranty durations, local currencies, labor and parts cost are built into the estimate.

Warranty Analytics: The Warranty Chain Management Conference in San Diego next week will feature both a workshop on loss cost analytics aimed at extended warranty providers and a warranty analytics software enhancement aimed at engineers and quality managers.

February 28, 2008

WCM Workshops, Part One: The day before the opening of the Warranty Chain Management Conference next month, attendees have a chance to hear two experts talk about the pitfalls of relying upon seemingly simple statistical measures of warranty cost.

February 14, 2008

Warranty Management: Warranty management for manufacturing and sales organizations is becoming an intense focus area. Warranty spending by US-based companies surpasses the Gross Domestic Product of some nations. But warranty is an avoidable cost, if managed efficiently and judiciously. As warranty also involves customers directly, the larger imperative of organizational image is at risk. A prelude to warranty management is information stability, consistency and transparency.

The Chief Information Officer plays a pivotal role to iron out the initial impediments before laying out a smooth track for warranty management in any enterprise. This article brings out the different sources of warranty data, a collaboration model for warranty data, the business dynamics of multiple stakeholders with respect to warranty management and displays ways to assess and improve warranty information maturity.

November 14, 2007

Fulcrum Analytics: New software tools give warranty and service contract providers new insights into cost, revenue, and profitability. But those who use them won't talk about them, to preserve the competitive advantage these analytical tools give them.

October 10, 2007

New Home Warranties: While sales are declining, warranty accruals are declining even faster. Is it because of warranty cost cutting? Could it be better quality construction? Or are they simply putting less aside and hoping that nobody notices? Also, a letter to the editor about compliance with state laws on service contracts.

The Chief Warranty Officer: Having detected something of a plateau in warranty activity, one speaker at the WCM Conference calls for the creation of a job position that cuts across the many departments with interests in warranty.

Yet some top executives still see warranty as nothing but a cost that needs to be reduced, and pay little attention to its potential to increase customer loyalty or build a brand's image of quality. Perhaps that's why a warranty champion is needed?

Warranty Management: The Next Frontier in Cost Reduction and Product Quality Improvement? A new approach for exploiting warranty data offers manufacturing organizations a means of quickly finding and fixing product failures.

October 3, 2006

Digital Projector Warranties: Engineers have known since the days of Thomas Edison that bulbs eventually burn out. For customers looking to buy a projector, however, the high cost of replacement lamps and the relatively brief warranties provided for them aren't always top of mind.

September 20, 2006

Digital Media Warranties: Digital music players and digital cameras, despite prices that sometimes surpass several thousand dollars, are never warranted for more than a year. Some manufacturers will cover labor charges for only the first 90 days, which pushes these units right to the edge of disposability, given the cost of repairs.

August 15, 2006

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.

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.

Warranty Legal Solutions: So often warranty cost reduction efforts are focused on either the product or the process. But what about the warranty itself? At the WCM Conference, an attorney explained how the right choice of words can limit liability and reduce warranty cost.

Semiconductor Warranties: In most industries, the consumer-facing brand name suffers most of the warranty cost, and their suppliers get off lightly. But with semiconductors, it's the production platform providers who are left holding the bag.

December 6, 2005

Warranty Webinar: Early warning systems allow manufacturers to detect emerging issues before they become major liabilities. In a roundtable discussion, experts suggest the best strategies for implementing these systems, and how to use them to reduce warranty cost, boost product quality, and increase customer satisfaction.

October 4, 2005

Setting Warranty Policy for Products That Generate Annuity Streams: Most warranty-management analysis concerns warranty as cost, the effect of warranty on customer satisfaction, or the signaling impact of warranty on customers. This article describes a study where the focus was not on the product under warranty, but rather on the effect that warranty length might have on the sales of related peripherals and supplies. These sales generate annuity streams for the manufacturer as long as the product remains in operation. However, cost savings from a shorter warranty period must be weighed against potential lost profit from reduced annuity streams. A shorter warranty policy might cause products to drop out of active use sooner, and the cost savings from a shorter warranty policy therefore might be outweighed by the lost annuity profits.

Don't TREAD On Me: Estimates of the cost of TREAD Act compliance vary all the way from the U.S. government's own $89 million figure up to a $1.7 billion estimate recently published by AMR Research. While small manufacturers continue to count their actual costs, the government continues to insist those costs will be close to zero.

November 3, 2003

More Details on the Top U.S. Warranty Spenders: Readers ask for the warranty cost of the 40 largest, with 85% of total warranty spending, to be retabulated on the basis of warranted product revenue only.

Dell Cuts Warranty Cost,
Raises Warranty Revenue: Doing both at the same time is possible with
a shift towards extended warranty options.

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