Archived Copies of Warranty Week

January 1, 2018 to today

ASC 606 Causes Warranty Accounting Changes: Though it's mainly about revenue recognition, ASC 606 also forces manufacturers and retailers to separate product warranty from extended warranty, and account for each differently. But to get there, the FASB confuses the issue with new terminology and vague concepts.
December 20, 2018
Nine-Month Warranty Expense Data: While vehicle and building trade warranty expenses continue more or less unchanged, high-tech electronic warranty spending is still falling. And a new accounting rule is forcing companies to separate break/fix warranties from sales returns, reducing some expense totals significantly.
December 13, 2018
Nine-Month Auto Warranty Report: Though the headlines warn of layoffs, neither the sales nor the warranty expense data of the industry suggest any sort of imminent slowdown. On the contrary, many truck, car, powertrain, and automotive parts manufacturers are cutting warranty costs while enjoying rising sales.
December 6, 2018
New Home Warranty Expense Rates: Some industry metrics are at their highest level in more than a decade, and one set a new all-time high. And none of the builders are using the sleight-of-hand accounting tricks they employed before the last recession. So is there any substance to these talks of an imminent industry downturn?
November 29, 2018
Apple's Warranties & Service Contracts: While AppleCare is still the biggest extended warranty program in the world, it hasn't grown much in years. And while Apple is spending more on product warranties than either GM or Ford, that's not growing either. No wonder investors are spooked by the company's future prospects.
November 15, 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
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
U.S. & German Auto Warranties: Car manufacturers based in Germany have the highest warranty expense rates in the industry. But that doesn't mean they make the worst cars and more than it suggests that China, the country with the lowest warranty expense rates, makes the best cars. Somewhere in the middle are the U.S. and Japan.
October 25, 2018
Chinese Auto Warranties: It's not a topic you hear much about, with good reason. While more new cars are now sold in China than in any other country, most of the top ten manufacturers report that warranty costs are a minor expense. And even though the competition is fierce, warranty remains a minor concern.
October 18, 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
Civilian Aircraft Report: Warranty expense rates have been steadily declining since 2011 and are now at their lowest levels ever. That means the manufacturers of everything from biplanes to business jets are cutting their warranty costs by remarkable amounts. Meanwhile, per mile, air travel is even safer than walking.
October 4, 2018
B2B Service Contract Conference: Last year, a commercial service contract trade association was launched at the Nashville conference. This year, two half-day programs have been added to the main conference to delve into topics related to how commercial service contracts are priced, configured, and sold to businesses.
September 27, 2018
Tavant Signs Kubota: The second time around, experienced customers will perform sophisticated analyses of warranty claims processing platforms before making their choice. One company graded vendors on 350 different metrics before deciding which platform they were going to buy.
September 20, 2018
Solar Equipment Warranty Expense Rates: It's a bit of an actuarial nightmare. Relatively young companies in new and unproven industries issue very long warranties for which multiple years or even decades can pass before claims arise in volume. But eventually, products mature and claims exceed accruals, and reserves begin to deplete. Then the actuaries break the bad news: it's time to raise rates.
August 30, 2018
ServiceBench Signs HomeServe: When it came time to upgrade its field service management system, the home warranty company turned to Asurion's ServiceBench unit for a cloud-based service platform that could connect its customers, contractors, and service center team, helping them to make sure that the right contractor is assigned for the job and that they show up at the appointed time.
August 23, 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.
August 9, 2018
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
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.
July 19, 2018
Text Analytics for Warranty Claim Comments: Warranty comment data contains a wealth of useful information that is often overlooked or underutilized. A pragmatic text analysis begins by carefully converting text data into a structured format. Once that's been achieved, various visualizations and analytical reporting can be used to supplement findings from other structured data sources.
July 12, 2018
Honda & Toyota Warranty Report: Both companies are recovering from some bad years in terms of warranty costs: Honda in fiscal 2016 and Toyota in fiscal 2017. But according to the figures in their brand new annual reports for the just-finished year of fiscal 2018, both companies are now on the mend, with warranty costs that are still unusually elevated, but not as high as they were a year or two ago.
July 5, 2018
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.
June 28, 2018
HVAC & Appliance Warranty Report: The appliance makers have higher warranty expense rates but the HVAC makers spend more. They also maintain warranty reserves that are much larger than the appliance companies, because the warranties on their products have longer durations.
June 21, 2018
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).
June 14, 2018
Extended Protection Plans:
Breaking Down Risk Management Options: Service contracts sold by dealers or manufacturers to buyers of commercial products such as construction equipment can increase resale value, raise customer loyalty, boost uptime, and lower operating costs. But before extended protection plan sales can begin, the advantages and disadvantages of various risk management options must be considered.
June 7, 2018
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.
May 31, 2018
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.
May 24, 2018
Semiconductor Warranty Report: In this industry, the makers of the factory machinery that fabricates and tests the actual products seem to have much higher warranty expense rates than their customers. But they also have reduced their expense rates significantly over the past 15 years, while the expense rates of the device makers have remained more or less the same.
May 17, 2018
Computer Industry Warranty Report: The warranty costs of the top U.S.-based computer manufacturers are declining, but not at the expense of their suppliers. Instead, their costs seem to be declining together in parallel, with their expense rates now roughly half as high as they were 15 years ago.
May 10, 2018
The Global Warranty Services Community Is Reflecting a Return to Growth -- and Profitability!: After conducting its fourth annual Warranty Chain Management Benchmark Survey, Strategies For Growth president and principal consulting analyst, Bill Pollock, has put together a results package consisting of an Analysts Take paper, a webcast and a WCM Conference workshop. The webcast will be hosted by PTC Warranty and Contract Management on May 24, 2018.
May 3, 2018
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.
April 26, 2018
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.
April 19, 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.
April 12, 2018
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.
April 5, 2018
Warranty Claims & Accrual Rates: Among the seven largest warranty-providing industries, only a few have a consistent history of reducing warranty expense rates. Instead, most have seen their claims and accrual rates both rise and fall over the past 15 years, and a few have even seen sustained increases in their warranty costs.
March 29, 2018
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.
March 22, 2018
Top 100 Warranty Providers of 2017: While total claims and accruals fell last year, some companies saw their warranty costs soar. By comparing each company to itself over time, we can spot the most and least improved warranty providers. And we can also spot the accounting eccentricities of those few that act like nobody's watching.
March 15, 2018
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.
March 8, 2018
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.
March 1, 2018
WCM Conference Preview, Part 2: Travel plans are being made for the 14th edition of this annual warranty and service contract industry conference, which opens in less than two weeks. The agenda this year is a mix of both returning favorites and new topics suggested by both presenters and attendees at past conferences.
February 22, 2018
WCM Conference Preview, Part 1: The workshops are filling up, and travel plans are being made for the 14th edition of this annual warranty and service contract industry conference. The agenda this year is a mix of both returning favorites and new topics suggested by both presenters and attendees at past conferences.
February 15, 2018
ServiceBench Signs Cross Country: While the appliance service contract and home warranty businesses have remained separate and distinct, the products they protect are frequently the same. Now, the crossover between the two is increasing, with home warranty companies linking to the network used by many service contract administrators, and retailers selling home warranties in their stores.
February 8, 2018
Service Contract Market Size: There are signs that the market is topping out at current levels, although home warranty sales continue to soar. Other types of protection plans, such as vehicle service contracts, mobile phone insurance, and extended warranties for brown and white goods, are no longer growing like they used to, though jewelry and furniture protection programs showed slight growth.
February 1, 2018
Update on the A-Team of Extended Warranties: In a new burst of merger and acquisition activity, two of the top players in the extended warranty and service contract industry are moving things around. Assurant is buying The Warranty Group, AmTrust is taking itself private, and it's selling half of Warrantech to private equity investors.
January 25, 2018
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
Commercial Service Contract Association: Industry leaders have launched a new trade association for commercial service contracts, with the inaugural meeting scheduled for tomorrow morning. But unlike with product warranties, extended warranties, and protection plans aimed at the buyers of consumer goods, the boundaries of the commercial service contract industry are not as sharply defined.
January 11, 2018