Rising Warranty Costs: A New Era of Opportunity?

Several leading U.S. equipment manufacturers are experiencing rising warranty costs, but are reducing warranty accruals on their financials (less set aside for future claims). However, companies like Paccar report growth in amortized revenue from extended warranties, while Trane highlights increased sales of new service contracts. These shifts indicate a growing reliance on extended warranties and service plans to manage costs and improve customer satisfaction.

This strategic pivot by manufacturers signals both challenges and opportunities. As warranty expenses climb, manufacturers increasingly turn to extended warranties and service plans to manage costs and enhance customer satisfaction.

💡 What does this mean for business owners in the warranty inspection industry?

The growing complexity of warranty programs creates prime opportunities for inspection companies to step in as mission-critical partners:

    •          Enhance claims accuracy

    •          Reduce fraudulent claims

    •          Streamline warranty operations

Is it time to capitalize on this moment?

If you’re considering selling your business or planning your next growth move, these trends could significantly impact your valuation and strategic options.

What’s your take on these shifts? Are you seeing similar trends in your industry? Share your insights below! 👇

At Colonnade Advisors, we specialize in guiding business owners through pivotal moments like these. If you’re curious about how these industry shifts could influence your company’s trajectory, let’s start a conversation.