Archived Copies of Warranty Week

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December 2002 to Today

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.

Auto Warranties & Quality Ratings: Few people would say that Chinese cars are the best in the world and that German cars are the worst. The quality and reliability studies certainly say otherwise. But the warranty data says Chinese companies spend the least and German companies pay the most. How to reconcile these contradictory data sets?

November 1, 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

Automotive Supplier Warranty Report: Of all the companies that supply parts and components to the car and truck manufacturers, those making engines, axles and transmissions pay the most claims and see the highest warranty expense rates. Last year, in fact, they broke records for claims paid, accruals made, and reserves held.

Semiconductor Warranty Report: Though the companies making capital equipment that's used to fabricate and test semiconductors and printed circuit boards continue to pay more warranty expense than their manufacturing customers, the gap has narrowed considerably over time. Some companies have cut their expense rates in half.

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?

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.

Appliance Protection Plans: When it's all counted together, a huge amount of money is being set aside to pay for product repairs. Manufacturers finance their warranties and consumers can purchase additional protection through either service contracts or home warranties. It all adds up to about $6.77 billion spent last year on protection plans.

January 28, 2016

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.

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

Truck, Bus & RV Warranties: Most of the manufacturers are finding ways to reduce warranty costs, but some of the recent increases have been spectacularly huge. Still, the OEMs pay out more than their suppliers do, though the gap is narrower than it is in the passenger car industry.

November 20, 2014

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

Mid-Year Service Contract Report: Consumers will pay nearly $40 billion this year for product protection plans, despite the best efforts of the watchdogs who tell them not to. It's mostly for smartphones and passenger cars, though, because everything else is perceived to be disposable and not worth fixing.

October 9, 2014

Homebuilder & Supplier Warranties: Unlike in the automotive industry, where the OEMs have compelled their suppliers to pay a larger share of warranty costs, the homebuilders are reducing their share by selling fewer new houses. It's the building material suppliers who have learned how to cut warranty costs by reducing their expense rates.

September 11, 2014

Appliance & HVAC Warranty Report: While we group them together, they're actually very different. Appliance makers pay higher warranty expense rates but for shorter durations. HVAC makers keep larger reserves on hand but they have to, given their longer-lasting warranties.

Extended Warranty Image Problems, Part 3: Does the industry need a spokesman to educate consumers about the value and convenience of service contracts? Or does it already have a spokesman that also acts as the industry's attorney? And if a new spokesman is needed, who will pay for what will be a costly and time-consuming ongoing expense?

October 3, 2013

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.

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

Warranty Marksmen, Part 2: In high-tech industries, a few dozen companies have apparently learned how to expertly tune their warranty accrual rates and reserve fund balances, so that there's always enough money set aside to pay claims. Here are the top 20.

December 6, 2012

Warranty Estimates, Part 3: Companies in the building trades are supposed to carefully estimate the size of their warranty liabilities. But sometimes, their estimates are too low, and the amount they set aside is too meager to pay all their expected claims.

November 21, 2012

Warranty Estimates, Part 2: Automotive companies are supposed to carefully estimate the size of their warranty liabilities. But sometimes, their estimates are too low, and the amount they set aside is too meager to pay all their expected claims.

November 15, 2012

Warranty Estimates, Part 1: Companies are supposed to carefully estimate the size of their warranty liabilities. But sometimes, their estimates are too low, and the amount they set aside too meager to pay all their claims.

November 8, 2012

Average Warranty Costs per Industry: One can get a good idea of the industries where warranty is most important by looking at both the amount they pay and the percentage of sales that those payments represent. And the data suggests that automotive, computers and appliances are at the top of the list.

Semiconductor Warranties: The companies that make the equipment that makes the semiconductors pay for more than half of the industry's warranty costs, even though their sales are less than a quarter of the total. But they've also done the most to cut their costs since 2003.

Computer Warranties: While the computer OEMs still pay most of the claims, they've been very successful at cutting the percentage of sales they spend on warranty. Meanwhile, suppliers such as disk drive makers have also streamlined their warranty outlays, but the peripheral makers haven't been so lucky and are watching costs rise as a percentage of sales.

Automotive Warranty Report: While suppliers seem to have gotten a reprieve from escalating pressure to pay a greater share of warranty costs, OEMs are enjoying fast sales growth and a return to old levels. Meanwhile, Ford has decided to begin reporting warranty and recall costs together.

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.

Truck Warranties: Unlike passenger cars, the truck OEM isn't usually responsible for the vehicle's entire warranty. Instead, many of the suppliers and component manufacturers issue their own warranties, and pay their own claims.

January 19, 2012

Solar Warranties, Part 1: They can last up to 25 years, but what does that really mean when the technology is changing so fast? And even if a company really expects to pay claims in 2036, how do they prepare for them now by making the right amount of accruals at the time of sale?

December 1, 2011

Aerospace Warranty Report: While the airframe makers and their suppliers pay out roughly the same percentage of product revenue for warranty claims, they keep very different levels of reserves. The airframe makers keep a balance equal to four years of claims, while their suppliers keep half as much in their warranty reserve funds.

Warranty Fraud Detection: SAS says send us your claims data and we'll show you the fraud. If upwards of 10% to 15% of claims are in some way suspect, such a system could pay for itself in just a few months. Does it sound too good to be true? GE Appliances was the first customer.

February 25, 2010

Home Warranty Association: Why are at least 90% of existing home sales in California covered by a home warranty? A mix of court rulings, government regulations, and industry response seems to have reassured home buyers that home warranty companies are both willing and able to pay claims. And thanks to a statewide educational effort, the realtors are able to explain how it all works to their clients.

November 12, 2009

New Home Warranties: One CEO recently said the worst of this cycle may be behind us. In terms of sales decreases and price declines, maybe so. But in terms of warranty costs, the worst is right now, as builders have less cash to pay for warranty work on units they sold at the end of the boom years. And then there's the question of how costly the defective Chinese drywall will turn out to be to replace.

September 24, 2009

The Value of Warranty Expertise: Is warranty management merely a clerical skill, or is there more to it than just paperwork? Some see warranty as not only a leading indicator of product quality but also a major chance to impress a customer. However, that conversation can only take place if the warranty professional is trained to do more than merely process and pay claims.

January 15, 2009

Security Equipment Warranties: Although big ticket military contracts don't usually include what we'd call product warranties, the maker so numerous other products that help protect people and property do pay claims and maintain warranty reserves. What follows are snapshots of the past six years of warranty expenditures for four of the market leaders in their respective corners of the security marketplace.

December 5, 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 Benchmarks, Part Two: Big companies really do pay more. The larger the manufacturer, the more warranty claims they pay. And in both the automotive and computer industries, OEMs tend to pay more claims than their parts suppliers.

October 31, 2007

Ten Worldwide Warranty Providers: It's holiday time in the U.S. this week, so we're taking the opportunity to present warranty data for ten global brands based in other countries. Despite the currency and accounting differences, many pay warranty claims at rates close to those turned in by their U.S.-based peers.

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.

Semiconductor Warranties: Although warranty costs are volatile across the industry, it's the makers of test equipment and production machinery that seem to pay the most. And it's the chip and circuit board makers that pay the least -- some so little that they don't bother to report it to the SEC.

Warranty Spending in 2006: With the total over $28 billion and climbing, warranty claims reported last year by US-based manufacturers have never been higher. But while some companies pay out more of their sales in warranty claims, others have cut some key ratios significantly.

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?

Computer & Electronics Warranties: As is the case in automotive, those with their brand names on the outside end up paying most of the warranty claims. But the computer OEMs don't pay out as much as some of the printer companies or the makers of high-end semiconductor production equipment.

Automotive Warranties: While GM and Ford spend the most on warranty, other types of vehicle manufacturers pay out a greater share of their total revenue on claims. And while most parts suppliers have relatively low claims rates, those in the aftermarket report some of the highest rates of all.

Top 50 Warranty Providers: While most large manufacturers saw warranty claims rise in 2005, most also saw sales gains that helped relieve the pain. Even GM and Ford saw only modest upticks in the percentage of sales they pay in claims. And some such as Boeing saw claims plummet.

Automotive Warranties: As seen by its third quarter financial statements, Ford is catching up to GM, both in terms of revenue and warranty spending. Ford has now become only the second American manufacturer to ever pay out $1 billion or more in warranty claims per quarter. Meanwhile, other U.S.-based vehicle manufacturers have their own warranty ups and downs to report.

November 15, 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

Computer Warranty Claims & Accruals: The companies whose brand names go on the front of the computer continue to pay the lion's share of warranty claims. Makers of disk drives, printed circuits, semiconductors, and most types of peripherals see a significantly smaller share of warranty claims.

August 24, 2004

The Warranty Cushion: Very large companies put aside proportionally more to pay warranty claims than either mid-sized or small companies, while very small companies allow their reserve fund ratios to rise and fall. The difference between them is their skill at the arts of warranty estimation and accruals.

Warranty Claims Rates: In both the automotive and computer industries, the OEM -- the brand name on the product -- is frequently left holding the bag when it comes time to pay warranty claims. As the latest data shows, their suppliers usually see much lower warranty claims rates.

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