Warranty Week Industry Headlines

Warranty Expense Inflation: Prices rise and so does the cost of warranty. Over the past 17 years, prices in dollars have risen almost 40%. If we were to adjust warranty expenses for inflation, it makes the most recent claims and reserve data look a bit worse.
January 30, 2020

GE & UTC Service Contract Estimates: Their jet engine operations may generate billions a year in service contract revenue, as evidenced by the tens of billions of dollars in deferred revenue carried on their balance sheets. But without hard numbers to go by, we have to estimate the size of their protection programs.
August 2, 2018

Commercial Truck Service Contracts: At roughly one percent of revenue, commercial extended warranties for trucks represent more of a convenience for customers than a major additional source of profits for manufacturers. Still, we know they bring in more than a billion dollars a year just in the U.S., even though only a handful of truck manufacturers report the relevant metrics.
July 26, 2018

Worldwide Aircraft Warranty Report: With warranty expenses that exceed a billion dollars annually, the manufacturers of airliners, business jets, and propeller planes are a major sector within the warranty industry. And over the past decade, they have learned how to reduce warranty costs while increasing revenue, as demonstrated by their declining claims and accrual rates.
July 20, 2017

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.
May 18, 2017

Service Contract Pricing: Digital Cameras: Some service contract providers charge more than half the price of an inexpensive camera to protect it from drops and spills. Others charge less than the sales tax for service contracts that cover cameras selling for multiple thousands of dollars. There seems to be much less consistency in the pricing strategies for digital camera protection plans than there is for the products themselves.
October 20, 2016

Appliance & HVAC Warranty Report: HVAC manufacturers have lower warranty costs but are more cautious than other kinds of appliance makers, keeping a much higher ratio between claims and reserves. But neither group has done much to reduce their warranty expenses, though some companies have cut their costs by hundreds of millions of dollars.
May 19, 2016

Declining Accruals in Detroit: This news can't wait for summer: Ford and General Motors set aside less in warranty accruals per vehicle sold last year than ever before. Thanks to a well-timed coincidence of rising sales, falling warranty costs, rising reliability, and reduced recalls, the top two passenger car and light truck makers in Detroit are cutting their warranty expenses to just a few hundred dollars per vehicle sold.
February 25, 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

Top International Warranty Expense Reductions: While HP saved itself a billion dollars a year, two German carmakers have saved themselves twice as much. Three others have cut their annual claims payments by hundreds of millions of dollars a year in the past decade.
January 22, 2015

GM's & Ford's Warranty Adjustments: Both automakers have recently run into trouble, and have had to add hundreds of millions of dollars to their warranty reserve funds to pay for all the unexpected warranty work. But because it's unexpected, it doesn't show up on charts that track only the "regular" warranty accruals.
November 6, 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.
August 8, 2013

New Home & RV Warranties: When sales were falling, builders cut their warranty accruals. But, worried by claims payments that didn't fall as fast, they didn't cut accruals enough. So now some have built up excess levels of warranty reserves that may be in the multiple millions of dollars for at least 10 homebuilders.
January 5, 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

RV Extended Warranties: As sales plummet, the nameplates are dropping like flies. But the dealers have to make a living, and they've found that extended warranties -- sold at a discount or practically given away -- are a great way to induce skittish buyers to drop a quarter million dollars or more on an otherwise as-is purchase.
June 11, 2009

Five-Year Warranty Trends, Part Three: Measured in dollars, claims were up by only $400 million last year (+1.4% since 2006) while accruals rose $1.5 billion (+5.5%) since 2006. But Microsoft's Xbox 360 debacle accounted for much of those increases in a year that saw warranty expenses decrease or remain the same for manufacturers in many industries.
April 10, 2008

Warranty Reserve Levels: Most large companies seem to pick a size and stick to it, even as sales and claims vary. Whether measured in dollars or as a multiple of claims paid per month, the size of most of the largest warranty reserves has changed very slowly over the past four years.
January 30, 2007

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

Top 50 Warranty Providers: While 20 saw declines in the percentage of revenue spent on warranty claims, all but 12 paid out more claims in dollars during the first half of 2005. Rising product sales made the difference.
August 30, 2005

Warranty by Industry Sector: While claims grew by 4.9% to $25.1 billion in 2004, warranty's slice of revenue actually shrank a bit as sales grew faster. In some industry sectors, both dollars and percentages actually fell, but computer and automotive OEMs still process the vast majority of all warranty claims.
May 10, 2005