Archived Copies of Warranty Week

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December 2002 to Today

European Auto Warranty Expenses: While Volkswagen continues to recover from a record-setting recent spike in its warranty costs, some of the other top European carmakers have continued to drive down their warranty costs. Six warranty metrics are detailed for four companies over the past 16 years.

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.

Homebuilder Warranty Report: All the metrics were up in 2018, and the growth continued into the first quarter of 2019. Claims and accruals are back to pre-recession levels, and warranty reserves hit a new record high. Meanwhile, the level of warranty expenses per new home sold show some curious and sudden spikes for some builders and long-term stability for others.

Appliance & HVAC Warranty Report: The HVAC manufacturers have lower warranty expense rates but keep vastly more funds on hand in their warranty reserves. And while the HVAC system makers have seen a recent upturn in their warranty expenses, the appliance makers have seen their lowest expense rates in more than a decade.

Semiconductor Warranty Report: Companies that make the tools and equipment used to manufacture semiconductors and printed circuit boards spend more on claims, set aside more accruals, and shell out a larger chunk of their revenue on warranty expenses than do their customers who make the actual devices. But the companies that make the devices keep more warranty reserves on hand than do the companies that supply them with tools and equipment.

Supplier Recovery Estimates: While automotive parts suppliers pay roughly 10% of the industry's warranty expenses now, their "fair share" could be as high as 37%. But there's no way to get them to pay that much, so supplier recovery efforts are stuck in a contentious standoff between the OEMs and their suppliers.

Automotive Supplier Warranty Report: For years, powertrain suppliers and other parts suppliers have more or less split the industry's warranty expenses 50/50. But in recent years, the powertrain segment's share has risen fast, thanks to emissions compliance trouble in California for some Cummins diesel engines.

Automotive OEM Warranty Report: Depending on the metric you look at, the makers of cars, trucks and other vehicles account for between 40% and 45% of the warranty expenses of all U.S.-based manufacturers. But despite their size, their claims and accrual costs have been relatively stable for the past few years.

Sixteenth Annual Product Warranty Report: Warranty costs are rising but sales are rising faster, meaning that the percentage of revenue consumed by warranty expenses remains at the low end of a decade-long decline. But can expense rates go even lower, or are we at the bottom now? A look at the totals and averages in 2018.

Worldwide Construction Equipment Warranties: Sales took a big jump in 2017, and so did warranty expenses. But the increases were more or less proportional, which means the warranty expense rates remained about the same. However, the industry's claims and accrual totals are still a bit below their pre-recession peak levels.

November 8, 2018

Worldwide Automobile Warranties: Manufacturers representing well over 90% of the world's car sales now reveal their warranty expenses in their financial statements. So we've fashioned estimates for the remainder to create some benchmarks for the industry's warranty expense rates: 2.6% of revenue and $577 per vehicle.

August 16, 2018

Mobile Home Warranty Expenses: While much of the industry collapsed a decade ago, the five large manufacturers that remained in business have made a steady comeback. Last year, claims and accruals finally surpassed their pre-recession peaks, even while most of the remaining manufacturers have been able to keep those expenses steady as a percentage of sales.

Homebuilding Warranty Report: Warranty expenses are rising but so are new home prices, keeping the average amount of money accrued industry-wide after each closing relatively steady, and allowing the accrual rate as a percentage of revenue to actually decline a bit. But many homebuilders continue to raise and reduce their warranty accruals rather impulsively, and sometimes skip them altogether.

Medical & Scientific Equipment Warranty Report: Though the companies producing systems that use lasers or X-rays continue to report elevated warranty expense rates, their costs have declined significantly and steadily since 2003. But in 2017, their warranty costs started climbing again, and in several respects have hit new heights. With other types of equipment, the outlook for warranty expenses remains mixed.

Telecom Equipment Warranty Report: As the U.S.-based telephone equipment industry continues to decline and move offshore, the domestic industry's warranty expenses have fallen in step. The exception is Internet and data communications gear, which has come to dominate the entire industry over the past 15 years.

Aerospace Warranty Report: Unlike the automotive industry, the manufacturers of commercial airplanes do not have higher warranty expenses than their suppliers, and do not spend a larger percentage of their sales revenue on warranty claims. But just like those land-based vehicle makers, airplane and helicopter manufacturers have been cutting their warranty costs for more than a decade.

Fifteenth Annual Product Warranty Report: All the metrics are down this year, including product sales. Some companies continue to cut their warranty expenses by huge amounts, producing better products with lower failure rates. But others are getting better at shifting more of their warranty expenses back onto their suppliers.

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.

The 80/20 Rule of Product Warranties: Almost 80% of all the warranty claims and accruals reported by U.S.-based companies come from only 20 companies. Upwards of 500 other manufacturers account for only 20% of the total. But the expenses of the largest warranty providers are also a higher share of their sales revenue.

November 16, 2017

Midyear Computer Industry Warranty Report: Even though numerous industry players have been acquired or have gone private, the remaining manufacturers have continuously cut their warranty expenses from one year to the next. But then along came the iPhone, and now Apple's frequent ups and downs are dominating the industry's statistics.

November 2, 2017

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

Construction Equipment Warranties: While most of the top industry players are diverse manufacturers of a wide variety of products, some make little besides construction and mining equipment. And these "pure plays" can provide us with clues about the typical warranty expenses of those manufacturers that don't include any details about their claims and accruals in their financial statements.

August 17, 2017

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.

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.

Medical & Scientific Equipment Warranty Report: Anything involving lasers or X-rays seems to have higher warranty costs than other types of medical devices and scientific equipment. But the gap between them has been narrowing for years, and may soon disappear. Meanwhile, several major medical companies don't think that warranty expenses are worth the effort to report, despite rules saying otherwise.

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.

Power Equipment Warranty Report: While the makers of electrical power generation equipment continue to adopt new storage technologies and new fuel sources such as solar and wind, the gap between the warranty expenses of the old and the new continues to narrow. But the makers of "green" and renewable energy equipment continue to set aside more money, just in case.

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?

Top 100 Warranty Providers of 2016: While we can't directly compare the warranty expenses of companies to each other, we can compare a company to itself over time, and can then make comparisons based on the rate of change. In doing so, we can spot the companies cutting their warranty expense rates significantly, as well as those whose warranty costs are beginning to spin out of control.

Automotive Supplier Recovery: Factors such as recessions and recalls seem to have as much influence as efforts by OEMs to recover larger reimbursements from their suppliers for warranty expenses. But no matter which factor contributes the most, the ratio between their parts of the total still seems to range between 80% and 90%.

August 25, 2016

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

Global Construction Equipment Warranties: Half the companies report warranty expense rates that range from 1.0% to 2.3%. The other half are either above or below that range, mainly because most of their revenue and therefore most of their warranty costs come from other industries. And though there's been a few anomalies over the past 13 years, most of these manufacturers report steady and consistent warranty expenses.

New Warranty Providers: Before warranty management became a major undertaking in recent years, we suspect that even some large manufacturers didn't do a very good job of keeping their warranty expenses stable and steady. They learned on the job, without the benefit of metrics or industry benchmarks. But they did so without any outsiders able to see the numbers, a luxury that new manufacturers don't enjoy.

Sports Equipment & Consumer Electronics Warranty Report: While they're not the top sources of warranty expenses, there is a lot of warranty activity in these industries. So rather than bury their claims and accruals in the "other" category, let's take a look at the warranty costs of everything from karaoke machines to golf clubs.

Power Generation & Material Handling Equipment Warranty Report: While the overall totals and averages don't change by much from year to year, some of the individual companies in these industries are seeing their warranty expenses rise and fall dramatically.

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.

Semiconductor & PC Board Warranty Report: For most of the companies making microchips and printed circuit boards, sales are up and warranty expenses are down. But expenses have fallen far more dramatically for the suppliers of the chip manufacturing equipment, who used to spend a far higher share of their revenue on claims than their customers did.

Medical & Scientific Equipment Warranty Report: Though product sales are down, warranty expenses are down by more. And while any equipment that uses lasers or X-rays has higher warranty expenses than units that don't, those manufacturers have cut their warranty costs significantly in the past decade.

Aerospace Warranty Report: Unlike the computer and automotive industries, the aerospace OEMs do not pay a vastly greater share of industry warranty expenses than do their suppliers. However, like their parts and component suppliers, they tend to provide longer warranties and keep larger reserve balances than manufacturers in other industries.

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.

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

HP's Warranty Accounting: Before the split, HP's warranty expenses were declining for multiple years. After the split, the laptop and printer company has much higher warranty expenses than the server and storage company.

February 18, 2016

U.S. Automakers' Warranty Expenses: Because there were so many big recalls in 2014, the amount spent on warranty soared. Last year, things began to get back to normal, but expense rates are still at elevated levels. Nevertheless, unit sales totals smashed a 15-year-old record in 2015.

January 7, 2016

Top Warranty Acquisitions: Every once in a while, a manufacturer or retailer is acquired and ceases reporting its warranty expenses, while the acquiring company reports the amount of warranty reserves it gained through the purchase. What follows are some of the largest transactions of and by U.S.-based warranty providers in the past 18 months.

November 12, 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

Heavy Truck Warranties: Six companies have 12 brand names that account for almost all the heavy trucks carrying freight on the highways and motorways of North America and Europe. And while it's not possible to figure out how much warranty costs on a per-truck basis, all six parent companies do disclose their total worldwide warranty expenses.

September 3, 2015

International Heavy Equipment Warranties: Compared to U.S. market leaders, the top Japanese and European makers of mining, construction and farm equipment have generally lower warranty expense rates. But that seems to have more to do with the way they divide their revenue into warranted and non-warranted sources than it does with the actual warranty expenses.

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?

Electrical Power Equipment Warranty Report: While the warranty expenses of most of these manufacturers are generally low, there hasn't been much of an effort to drive them even lower. However, some companies that are seeing costs increase are still cutting the amount they set aside for the future.

Sports Equipment Warranty Report: The makers of ATVs, jet skis, snowmobiles, and other sports vehicles are very serious about reducing their warranty expenses. But the makers of hockey sticks, helmets, camping gear and other equipment aren't. So for one side of the sports industry, warranty costs are dropping. But for the other, costs remain the same.

Home Appliance & HVAC Warranty Report: There are a few very large companies with operations in multiple industries that make it difficult to examine just the warranty expenses of the major appliance and HVAC companies. But if we set them off on their own, we can calculate industry averages for the expenses of others.

Building Materials Industry
Warranty Report: While some sectors have been able to reduce their warranty costs, others have seen them slowly rise. A few have seen costs rise as revenue falls, making warranty expenses even more painful to manage. But some have gotten their costs back under control after seeing them spike in recent years.

Semiconductor Industry Warranty Report: While the companies making semiconductors and printed circuit boards have kept their warranty expenses below one percent of revenue, the companies that make the machinery that actually manufactures the products pay much more. Even so, over the past decade the machinery makers have been much more successful at cutting their warranty expenses than their customers.

Computer OEM Warranty Report: As the industry shifts from desktops to laptops to smartphones, warranty expenses rise as the form factor shrinks. And after decades of competition, a few large players with huge warranty operations are left where once there were dozens of manufacturers.

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.

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 100 Warranty Providers of 2014: While we can't directly compare one company's warranty expenses to another's, we can compare each company to itself over time, and then compare the magnitude of the changes. What follows is a list of the manufacturers that have raised or lowered their warranty expense rates the most from 2013 to 2014.

Data Storage Warranty Expenses: While the traditional hard drive makers have more predictable and stable warranty costs, the newer solid state and flash memory systems seem to have lower costs. However, their price per gigabyte of capacity is much higher.

December 11, 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

Consumer Electronics Warranty Report: The traditional radio and TV makers are gone, and even laptops are giving way to smartphones. So it's no surprise to see the bulk of the industry's warranty expenses shift from Hi-Fi to Wi-Fi. But that expansion also drags in lots of business-to-business sales as well as heavily-exported product lines into the analysis.

Medical & Scientific Equipment Warranties: While most of the companies in this industry have relatively low warranty expenses, those whose equipment involves either X-rays or lasers spend a much higher percentage of revenue on claims. Yet those are the companies that have done the most to cut their warranty costs over the past decade.

Telecom Equipment Warranty Report: As the old guard making landline phone equipment declines, the makers of data communication equipment and smartphones are accounting for an increasing share of the industry's warranty expenses. Still, there's been an overall decline in both the expense totals and the expense rates.

Computer Industry Warranty Report: Thanks to the popularity of smartphones, Apple is now the largest warranty provider in the U.S. But most other computer makers are cutting warranty expenses, as are most disk drive makers. Even Microsoft is getting over the Xbox warranty calamity it suffered through a few years ago.

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.

Automotive OEM Warranty Report: While warranty expenses are down significantly among vehicle makers as a group, the real progress has been made primarily by Ford and GM.

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.

Eleventh Annual Product Warranty Report: While some manufacturers are having trouble with product reliability, others are seeing their warranty expenses rise simply because they're selling more product than ever before. Case in point: the new holder of the title of world's largest warranty provider.

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.

Manufacturing Excursions: When bad things happen to good companies, their warranty expenses soar. External observers can see the numbers, but can't always determine the cause. But sometimes, the numbers merely confirm what's already in the news.

Farm & Lawn Equipment Warranties: Six months after the peak in sales comes the annual peak in warranty expenses. And while some companies take a pay-as-you-go approach, others have mastered the annual cycle to such an extent that their accrual rates hardly budge from one season to the next.

Medical & Scientific Equipment Warranties: Most of the manufacturers in this industry have low warranty expense rates, except for those whose products use lasers or X-rays. But while their expenses are higher, they've also done the most to reduce warranty costs over the past decade.

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.

New Home Warranties: Sales are rising and so are some warranty expenses. Builders and their suppliers, slammed by the recession, are getting back to normal. But who is figuring out their accruals per home and why are they doing it so badly?

Supplier Recovery: If all the warranty expenses that were caused by suppliers were paid by suppliers, what would the industry split be between them and the OEMs that they supply? And are the OEMs now recovering a quarter of what they could, half of what they could, or three-quarters of what they could?

Tenth Annual Warranty Report,
Totals & Averages: The automotive manufacturers are cutting their warranty expenses while the computer makers are seeing higher costs. But put them together, and they're paying the smallest percentage of their revenue ever for warranty work on their products.

Homebuilding Warranty Metrics: The builders of single-family homes were always good at shifting warranty expenses to their suppliers and subcontractors. And though their warranty expenses are down considerably, that has more to do with slow sales than with anything else.

October 4, 2012

Computer Supplier Warranties: Unlike in the automotive industry, computer makers are not trying to reduce their warranty expenses by shifting more of the burden onto suppliers. Instead, both OEMs and suppliers are reducing their costs by increasing product reliability.

September 27, 2012

Aerospace Warranty Metrics: Unlike in the automotive sector, the aerospace OEMs and their suppliers split warranty expenses more equally, and have similar expense rates. But while the suppliers have been reducing their warranty costs lately, the OEMs are not.

September 20, 2012

Apple's Warranty Data: Warranty expenses began a swift climb at the end of 2009. But so did product sales, as the Mac and iPod gave way to the iPhone and iPad. And so, the share of total revenue spent on warranty didn't soar.

September 6, 2012

Fixtures, Furniture & Building Material Warranties: Though few of the companies in these segments are reducing their warranty expenses, some are actually seeing sales increases. In other words, some of the suppliers are seeing the beginning of a turnaround before the builders. How can that be?

New Home Warranties: The new home industry is like the car industry without a bailout: stuck at the bottom with no improvement. Warranty expenses continue to contract, but so does sales revenue. And some companies seem to be artificially managing their accrual levels.

Aerospace Warranties: The makers of Boeings, Cessnas and Gulfstreams haven't made much improvement in the past five years. But their suppliers continue to boost revenue, cut costs, and reduce warranty expenses as a percentage of sales. And that divergence got worse as 2011 ended.

Ninth Annual Warranty Report,
Totals & Averages: Warranty expenses rose in 2011, as the recovery continued to take hold. But sales grew a bit faster, and the percentage of revenue used to pay for warranty work fell to record low levels.

Consumer Electronics Warranties: Most of the best-known brands are imports. Most of the domestic brands are made by computer, appliance or telecom companies. Most of the emphasis is on sales of service contracts. So how can we analyze just the product warranty expenses of U.S.-based consumer electronics manufacturers?

January 26, 2012

Farming & Mining Equipment Warranties: Some of the companies whose heavy duty equipment is used to move the earth exhibit an annual pattern closely tied to the growing season. Others have seen the same recessionary rise in claims costs as the passenger car companies. But a few have been able to consistently reduce their warranty expenses across all cycles, both astronomical and economic.

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.

Telecom Equipment Warranties: Though the totals are down because of all the industry players that have headed for the exits, those who remain are also cutting their warranty expenses. And claims have never been lower as a percentage of sales.

December 23, 2010

Automotive Warranties: GM and Ford are cutting their warranty expenses and closing the gap with both their competitors and their suppliers. And it's beginning to get some notice in the daily newspapers. Truck makers aren't as lucky, but their year-ago figures weren't as dreadful.

Appliance & Building Material Warranties: The economic downturn that started with the homebuilders is showing its effects on the makers of appliances, fixtures, tools, furniture and building materials. But some segments haven't seen very big recent declines in warranty expenses, and some companies have actually seen their warranty costs rise.

Medical Equipment Warranties: While claims are increasing, sales are rising a little faster in the medical and scientific equipment industries. And at least eight companies have cut their warranty expenses by big percentages over the past five years.

October 2, 2008

Aerospace Warranties: Though the industry trend is upward, some aerospace companies have managed to reduce their warranty expenses significantly over the past five years. But a few have recently seen their warranty costs go back up.

Worldwide Warranty Providers: With the attention of Americans turned towards long weekends at the beach, barbecues and mountain getaways, we turn our focus to ten well-known international brands that are among the few non-U.S.-based companies to reveal their warranty expenses.

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.

Ford's Warranty Costs: Figures presented at the Warranty Chain Management Conference last week showed a massive drop in the automaker's warranty expenses. But that had much to do with the accounting for the soon-to-be-sold Jaguar and Land Rover divisions. Still, even after adjusting year-ago figures to account for that impending sale, Ford's warranty costs are down significantly.

Automotive Warranties: What once looked like a trend turned out to be a temporary spike. So the gap between the warranty costs of OEMs and their suppliers remains close to 2% wide. But the good news is that warranty expenses are no longer soaring for automotive manufacturers.

January 31, 2008

Computer & Peripheral Warranties: At midyear, it looks like many of the major brand names continue to cut their warranty expenses, as do many of their suppliers. But soon Dell will restate its warranty accruals and that could erase the declines completely. Or will it add to them?

September 18, 2007

Warranty Acquisitions: When companies merge, what happens to their warranty expenses? Is it just a mathematical sum of the two? Or does the frugal side of the business teach the other side how to reduce its warranty expenses?

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.

Consumer Electronics Warranties: While most of the brands are imports, there is a short list of American CE manufacturers. But while the Japanese brands have relatively low warranty expenses, the American brands pay claims at rates more like those seen in the computer and automotive businesses.

High-Tech Warranties: Designing products that can be fixed easily or replaced quickly will reduce warranty expenses. What's required, though, isn't so much better software as better teamwork and planning. Meanwhile, a hunt for patterns and anomalies also works for fraud detection.

Customer Recovery: While efforts to push warranty costs back onto suppliers have met with limited success, a handful of manufacturers have pushed most if not all of their warranty expenses back onto their customers.

January 24, 2006

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