Archived Copies of Warranty Week

December 2002 to Today

Worldwide Heavy Equipment Warranty Report: Claims were down a bit in 2021, but accruals rose significantly, as did product revenue. The industry's average claims and accruals rates both fell in relation to total revenue, but the combined warranty reserve fund balances of the 56 companies we're tracking in this industry grew 11% to a record $10.81 billion.
January 12, 2023
Worldwide Heavy Equipment Warranty Report: Claims were up a bit last year but warranty accruals fell significantly, as did product revenue. As a result, the industry's claims rate was also up a bit while the average accrual rate fell. And the combined warranty reserve fund balances of the 52 companies we're tracking in this category grew five percent to a record $9.81 billion.
September 9, 2021
Worldwide Auto Warranty Expenses: Last year, claims fell -10% to $43.9 billion while accruals rose +4% to $51.0 billion. And with some additional adjustments along the way, that drove worldwide warranty reserves up to a new record balance of $114.9 billion. And because sales fell so fast, the average claims rate rose to 2.8% last year, while the average accrual rate jumped to 3.3%.
September 2, 2021
Top 100 Warranty Providers of Mid-2020: As we detailed in last week's newsletter, sales are falling faster than warranty expenses, so the average claims and accrual rates are rising. But that's just the average. Some companies are actually seeing sales increases, and for others so are their warranty costs. This week, we rank those changes, and spotlight the ten biggest percentage increases and decreases.
October 8, 2020
Solar & EV Warranty Report: Because the new vehicles and power generation systems that rely on renewable energy sources are new, their warranty expenses are somewhat unpredictable. But the warranty metrics for some manufacturers are beginning to settle down, and the average expense rates are pleasantly low.
June 18, 2020
Building Materials Warranty Report: The warranty expenses of most companies in this industry are reasonably steady and predictable. Charts for both the total expenses and the average expense rates are fairly flat, compared to most industries.
June 11, 2020
Warranty Claims & Reserves, Part 2: The electronics sector tends to have shorter warranties than other sectors such as vehicles. Yet their warranty costs have ranged all the way up to four percent of sales. And while the average size of their warranty reserves is on the small side, some industry segments keep very large balances.
February 13, 2020
Worldwide Automotive Warranty Expenses: With reliable warranty expense data in hand from 24 of the world's largest carmakers, we have calculated some worldwide metrics: $46 billion in claims, $50 billion in accruals, $115 billion in reserves, 2.14% average claims rate, 2.53% average accrual rate, and $543 in accruals per unit sold.
August 22, 2019
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.
June 27, 2019
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
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
Service Contract Pricing: Microwaves: Built like electronics but sold like an appliance, the microwave oven is a hybrid of two different product categories. And with service contracts costing almost 19% of the product's price on average, it also has one of the highest average costs of protection. And there's a big difference in the cost of protection plans for units priced at the high or the low end of the market.
February 2, 2017
Service Contract Pricing: Electronics: Though the overall average is 17%, there's a wide range of pricing variation based on the duration of coverage and the inclusion of accidental damage coverage. And then there are retailers and administrators that price high because they can. A simple shopping survey of product and protection plan prices reveals the difference.
December 8, 2016
Service Contract Pricing: TVs: Although the average price of a TV service contract is 17% of the TV's price, there is a tremendous amount of variation. One administrator wants $30 to protect a $400 TV while another wants nearly 2/3rds the price of a high-end Sony set for a service plan.
October 6, 2016
Computer Industry Warranty Report: Though their warranties are usually shorter than those on cars and trucks, their expense rates are almost as high, as a percent of revenue. And despite their higher-than-average claims and accrual rates, many computer, disk drive, and printer manufacturers prefer to keep their warranty reserve cushions as slender as possible.
April 21, 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.
August 6, 2015
Auto Parts Supplier Warranty Report: Compared to the automotive OEMs, the suppliers have kept their warranty costs low and ytheir expense rates stable. And while some saw costs drift upwards last year, on average the group remained about the same, as they have for the last few years.
April 9, 2015
New Home Warranty Accruals: While the average homebuilder sets aside about one percent of revenue to cover warranty costs, the average new home is expected to cost around $2,500 over the life of its warranty. Luxury homes will cost more, but even some average-priced units have high warranty costs. It all depends on the builder.
December 18, 2014
Food Service Equipment Warranties: The commercial appliances used in restaurants cost more to buy but less to keep in good working order. Over the past 10 years, the average warranty expense rates for professional food service equipment has been less than half as much as for home kitchen appliances.
June 13, 2013
Aerospace Warranty Report: While a huge increase in Boeing's warranty costs is driving up the average for aerospace OEMs, the suppliers of avionics, jet engines, spare parts and other aircraft components are seeing their lowest warranty expense rates of the past decade.
May 9, 2013
Warranty Marksmen, Part 1: Given the average duration of a company's product warranties and the predicted repair cost, a company should be able to accurately estimate how much they need to set aside. But some companies are better at it than others.
November 29, 2012
Japanese Electronics Warranties: Four electronics manufacturers that are based in Japan but export their products worldwide show below-average warranty expense rates. Part of the reason is what they make. But could part of the reason also be where they make it?
July 19, 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.
May 31, 2012
Warranty Reserve Capacity: The ratio between warranty reserves and claims payments is always changing. But by measuring departures from the baseline average, we can detect which companies have either too much or too little money in their warranty accounts.
November 17, 2011
Five-Year Warranty Trends, Part Five: American manufacturers now keep $41.1 billion in their warranty reserves, equal to 17 months' worth of claims paid. And it's been more or less steady at that capacity level for the past five years. Meanwhile, average accrual rates have stayed close to 1.7%, although different industries accrue for warranty at different rates.
April 29, 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.
April 17, 2008
The Warranty Reserve: With 18 months of data in hand, it's now possible to begin defining a normal range for the size of the warranty reserve fund, expressed as a multiple of the average amount spent per month on claims.
September 14, 2004
Warranty Reserves: While the average manufacturer spends 1.9% of product revenue on warranty claims and keeps a little over a year's worth of funds in reserve, each industry is different. Computer manufacturers and automakers fund their warranty programs at different levels than telecom or aerospace manufacturers. But in any group, as with any trend, there's always the odd man out.
April 6, 2004
Auto Warranties: While the Big Three sold two-thirds of the vehicles purchased in the U.S. in 2003, they settled three-quarters of the warranty claims. On average, Detroit pays twice as much in claims per vehicle as Toyota and Honda. But that's not the only quality gap. Recent research finds striking gaps between perceived and actual quality levels.
January 27, 2004
Warranties in the HVAC/R Industry: As temperatures climb, so does the need for air conditioner and refrigerator repairs. But even in the cold winter months, HVAC/R vendors spent an average of 1.9% of product sales to satisfy warranty claims, according to recently filed financial statements.
June 30, 2003