While automotive manufacturers are good at processing warranty claims from dealers and measuring the overall warranty performance of the network, many make little effort to control the dealer warranty process or to link dealer warranty performance to control actions. As a result, this can lead to excessive warranty costs, ineffective repairs and customer dissatisfaction, according to research undertaken by MSX International.

MSX says that despite the progress that has been made over the years in terms of improving vehicle build quality and reliability, traditional warranty programmes are still estimated to account for around 2.5% to 5% of vehicle cost. Warranty, therefore, represents a substantial cost to the industry.

Tom Stallkamp, Vice Chairman and Chief Executive Officer of MSX International, a worldwide technical business services company, said: “Warranty represents a significant cost burden to all manufacturers and increasingly to component suppliers as they assume warranty cost responsibility. This report should be good news for many manufacturers, as it says that there is still a lot of room for improvement and potentially big cost savings.”

The MSX report is entitled ‘Driving Down on Warranty Costs in the Automotive Business’.