Archived Copies of Warranty Week

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December 2002 to Today

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.

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.

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.

Commercial Service Contracts, Part 1: The importance of extended warranties sold to commercial customers is steadily increasing, as measured by the percentage of revenue they represent for manufacturers, and by the amount of business they represent for insurance companies. And in response, industry leaders have launched a new trade association for commercial service contracts.

December 7, 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.

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

International Aircraft Warranties: The bigger the plane, the higher the price, and the lower the warranty expense rate as a percentage of that average selling price. The products of the top seven aircraft manufacturers in the world can basically be ranked in size order, with the largest paying under 0.4% on warranties and the smallest paying 4% or more on warranties.

Materials Handling Equipment Warranty Report: Though it's difficult to figure out who's in and who's out of this industry, there's no doubt that they're reducing their warranty expense rates to the lowest percentage of sales revenue seen since at least 2003.

Computer OEM & Supplier Warranties: Are the computer OEMs paying a growing or shrinking percentage of the warranty costs of their industry? Are the warranty costs of their suppliers rising or falling as a result of their efforts to make them split the bill?

September 4, 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

Supplier Recovery Efforts: Are the automotive OEMs paying a growing or shrinking percentage of the warranty costs of their industry? Are the warranty costs of their suppliers rising or falling as a result of their efforts to make them split the bill?

August 21, 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

Sports Equipment Warranties: While the makers of sports-oriented vehicles are cutting their warranty costs, those who make the equipment used by players aren't making much progress. Most of them spend about the same percentage of sales on warranty costs now as they did a decade ago.

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.

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.

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.

Top 100 Warranty Providers of 2012: While most of the largest manufacturers continued to reduce their warranty costs last year, some saw dramatic increases. Here are the top up and down percentage changes of the year for three warranty metrics: claims, accruals, and reserves.

Dell's Extended Warranties: Though its hardware sales have flattened, the importance of Dell's extended warranty program continues to rise. While a few years ago it was twice as large as the product warranty operation, now it's four times larger. And it accounts for a rising percentage of the company's total revenue.

January 24, 2013

Most Improved Warranty Metrics, Part 1: While many companies manage to reduce the percentage of revenue they spend on warranty, some do it better than others. Rising sales helps. So does building a better product. And then some companies are merely returning to normal after ending a "warranty excursion."

October 11, 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.

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.

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.

Top 100 Warranty Providers of 2011: While most of the largest manufacturers continued to reduce their warranty costs last year, some saw dramatic rises. Here are the top percentage increases and decreases of the year for claims, accruals, and reserves.

Automotive Warranty Report: As vehicle makers get back to normal and sales rebound, one thing that's not bouncing back is their warranty expense. Key warranty metrics continue to decline, including claims as a percentage of revenue. And once again, the warranty reserve fund balances of the top vehicle makers and their suppliers are growing.

September 22, 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.

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

Medical & Scientific Equipment Warranties: Though warranty costs have remained within a tight range for eight years, there's a definite seasonal pattern to the data that's tied into the school calendar. And though these equipment makers typically spend a small percentage of sales on warranty costs, some products have much higher averages.

December 16, 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.

Annual Warranty Totals & Averages: While claims were up slightly in 2008, both warranty reserves and accruals actually plunged last year. And as sales fall, the percentage of product revenue spent on claims has risen. With no less than 21 charts, we detail the industry totals and averages for the past six years.

Homebuilders' Warranty Accruals: Rather than looking at warranty costs as a percentage of sales, would it be valid to calculate warranty costs per home? Using such a metric makes some homebuilders look very precise and consistent, while others look like they're just guessing how much to accrue per home.

Top 100 Warranty Providers of 2008: Of all the companies spending the most on warranty, none of the largest reported massive percentage changes in 2008, which confirms the stability of their warranty programs. But there were plenty of big changes in claims and accrual rates further down the list, some for the better and some for the worse.

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

Top 100 Warranty Providers: Compared to a year ago, much has changed in terms of warranty claims, accruals, and reserves. Key ratios suggest that some companies are enjoying vastly reduced repair costs thanks to quality gains. However, for the largest manufacturers, the percentage of sales they spend on warranty hasn't changed much.

September 5, 2008

Five-Year Warranty Trends, Part Four: Warranty costs as a percentage of sales have remained rather stable since 2003. But while some industries are always below the overall average, others are always above it. And that depends not only on the product being made but also on the maker's spot in the supply chain.

Five-Year Warranty Trends, Part Two: While several of the biggest warranty spenders have compiled remarkably consistent results since 2003 in terms of the percentage of revenue they spend on warranty work, others have managed to reduce their costs considerably over time. And then there are the handful that saw costs rise by remarkably high amounts.

Top 100 Warranty Providers: While manufacturers' warranty costs shouldn't be compared directly against one another, they can be compared against themselves over time. And when one looks at those with the biggest percentage increases and decreases, one sees the biggest warranty winners and losers of the past year.

January 10, 2008

Product Warranty Spending: With most of the third quarter financial reports behind us, it's looking like warranty spending is up only slightly in 2006. But the changes at some of the top warranty providers are very large, in both dollar and percentage terms.

December 12, 2006

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.

Computer Warranties: It's entirely possible that HP, Dell, and IBM are each now paying roughly the same percentage of their hardware revenue to satisfy warranty claims. A year ago, HP was paying much more, and Dell and IBM were paying less.

November 9, 2005

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

Top 50 Warranty Providers: Manufacturers spent more than $25 billion last year on warranty claims, but sales rose a bit faster, so claims as a percentage of revenue fell slightly. Most of the top 50, however, saw their claims rates fall more.

Industry Segments: Year to year, each industry's overall share of warranty claims changes slowly, as do their individual claims rates as a percentage of sales. But because many companies operate in more than one industry, precise calculations are elusive.

Declining Warranty Claims: In both dollar amounts and as a percentage of product sales, warranty claims took a steep dive during the first quarter of 2004. Was it caused by cyclical factors? Was it due to rising sales? Or has there been a product quality improvement?

Automotive Warranties: Ford and GM are not only the largest providers of automotive warranty. They're also paying a higher percentage of their revenue in claims than everyone but the makers of RVs and rider mowers.

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