April 11, 2007 |
ISSN 1550-9214 |
Product Warranty Claims, 2003-2006:Signs are emerging that suggest a peak in warranty spending by American manufacturers. Is it better management? Shorter warranties? Or could it be nothing more than sales rising faster than costs? With four years of data to examine, there's evidence for each scenario.Could it be? American manufacturers seem like they're getting a handle on their warranty spending, slowing the rate of increase and making sure there's enough set aside to avoid earnings surprises. US-based manufacturers have so far reported $28.1 billion in product warranty claims during calendar 2006, an increase of 2.6% over the previous year. Accruals actually fell by $400 million to $28.4 billion, the first time that's ever happened since warranty expenditures became public information. In fact, the traditional fourth quarter peak in warranty spending, seen in 2003 and the again in 2004, simply failed to materialize in the latest accounting. Claims paid during the fourth quarter of 2006 were actually slightly below the $7.1 billion total seen in the third quarter, suggesting that perhaps we've reached something of a plateau. Waiting for the Late FilersHowever, we've yet to hear from Dell Inc., Navistar International Corp., UTStarcom Inc., Armstrong Holdings Inc., and roughly 30 other warranty providers, so that total is expected to go higher as their now-past-due financial reports are filed with the US Securities and Exchange Commission. What we've done for the time being is to use place-saving estimates for each company, until the actual figures become available. Figure 1 only begins to tell the story. As the blue columns illustrate, warranty claims failed to increase during the fourth quarter of 2006, leaving the third quarter's total of $7.13 billion as the highest ever recorded. And while warranty claims as a percentage of product sales was up just a bit, it remains significantly below the claims rates seen in 2003. Part of the reason is increasing sales, but there also must be some increased efficiency in that equation. Figure 1 |
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This Week’s Warranty Week Headlines | ||
Circuit City reworks extended service plan terms to enable faster renegotiation of prices. This Week in Consumer Electronics, April 11, 2007 | ||
Dell discontinues Axim handheld; warranty support to continue. Direct 2 Dell, April 11, 2007 | ||
Sony discontinues the 20GB PlayStation 3; warranty support to continue. Daily Tech, April 11, 2007 | ||
PC-Doctor Inc. to sell system-health software through system builders, VARs and others. Press Release, April 11, 2007 | ||
"Will It Blend?" pranksters try to return a video camera they put through a blender. Blendtec Blog, April 11, 2007 | ||
More Warranty Headlines below |
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Warranty Headlines (cont’d) | ||
Mitsubishi Caterpillar Forklift America rolls out 4CS iWarranty software suite to dealers and customers. Press Release, April 10, 2007 | ||
LEDtronics announces T3¼ (9mm) single-contact screw-in LED bulbs with three-year warranties. Press Release, April 10, 2007 | ||
Corrigo upgrades Web-based work order software to display warranty info on products being serviced. Press Release, April 10, 2007 | ||
Dell to replace 17" Inspiron screens that develop a vertical line within 3 years of purchase. Direct 2 Dell, April 9, 2007 | ||
Best Buy vs. Circuit City Associated Press, April 6, 2007 | ||
More Warranty Headlines below |
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Warranty Headlines (cont’d) | ||
Costco vs. Sams Club Consumer Reports, issue dated May 2007 | ||
Technical troubles deep six sonar system used to defend Canada's coasts. Canadian Press, April 6, 2007 | ||
Circuit City's extended warranty sales drop to 2.9% of revenue in the quarter ended Feb. 28. Press Release, April 4, 2007 | ||
Solectron Global Services opens 500,000 square foott facility in Louisville, the company's largest. Press Release, April 4, 2007 | ||
Extended warranty, GAP insurance, and high interest rate turn £7,000 car into a £21,500 purchase. This Is Money, April 6, 2007 | ||
More Warranty Headlines below |
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Warranty Headlines (cont’d) | ||
Cisco's Smart Care Service makes service contracts available to small and medium-sized businesses. Press Release, April 5, 2007 | ||
New Zealand researcher finds a cluster bomb dud in Lebanon with a warranty that expired in 1974. Scoop, April 4, 2007 | ||
Microsoft will now pay round trip shipping charges for all Xbox warranty repairs. Press Release, April 3, 2007 | ||
Dell opens new spare parts and logistics center in Dubai. AME Info, April 3, 2007 | ||
Kia Motors (UK) Ltd. equips Carens with a five-year unlimited mileage warranty. Press Release, April 3, 2007 | ||
More Warranty Headlines below |
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Warranty Headlines (cont’d) | ||
FieldTurf Tarkett passes $5 million milestone in prepaid warranty insurance premiums. Press Release, April 3, 2007 | ||
D-Link offers 11-year warranty on its new Wi-Fi product line. IT Week, April 2, 2007 | ||
DaimlerChrysler to pay $1.2 million to settle Mercedes emission-related defect lawsuit Associated Press, April 2, 2007 | ||
Synapsis Technology's EMARS environmental compliance software now provides support for China's RoHS regulations. Press Release, March 30, 3007 | ||
Dell delays annual report filing, finds accounting errors and evidence of misconduct. Press Release, March 29, 2007 | ||
More Warranty Headlines below |
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Warranty Headlines (cont’d) | ||
Washington state lawmaker says bill requiring warranties on new homes appears to be dead this session. Associated Press, March 29, 2007 | ||
Home buyer rights bill gets past initial hurdles in Colorado legislature. Rocky Mountain News, March 29, 2007 | ||
Warranty registration cards mostly just fish for your personal info. NY Daily News, March 29, 2007 | ||
The Warranty Group to offer United Country Home Protection Plan on behalf of real estate company. Press Release, March 28, 2007 | ||
Assurant Solutions to offer a commercial equipment maintenance, service contract and repair program. Press Release, March 27, 2007 | ||
More Warranty Headlines below |
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