Manufacturers working smarter, reducing warranty costs

With 2012 financial reports in the books for the vast majority of manufacturing companies across the U.S., Warranty Week recently examined the warranty expenses incurred by these organizations. 

Warranty Week’s Tenth Annual Warranty Report, Totals & Averages for 2012 found that the worldwide total for warranty claims payments made by U.S.-based manufacturers dipped by approximately 3.1 percent to just under $24 billion, down from 2011’s $24.75 billion. 

According to the publication, while warranty claims payments decreased from 2011 to 2012, sales of products with warranties actually climbed during that period. The reason, according to Warranty Week, is that companies are using technology to work smarter and reduce these costs. Improved, more efficient testing can extend product life and limit the amount of potential flaws. Further, analyzing the appropriate data and streamlining claims processes has helped manufacturers understand where they can improve and ultimately lower their warranty-related expenses. 

Though automotive equipment manufacturers kept the largest slice of the pie (35 percent) in terms of claims paid in 2012, their payments decreased between 2011 and 2012. Previously, automotive OEMs accounted for between 40 and 41 percent of manufacturer claims paid, the publication noted. 

For auto manufacturers in particular, warranty costs are always a principal concern. Volkswagen, for instance, which is recalling more than 384,000 vehicles in China, agreed in May to extend its warranty for transmission technology to 10 years, rather than the typical two, due to customer concerns. According to Bloomberg News, the shift in warranty term came after China’s quality inspector investigated complaints about Volkswagen gear boxes that were defective. The issue, the regulator found, was that the flaw could ultimately shut off power to the vehicle, leading to potential serious safety issues.