A detailed study of the warranty processing system used by the global automotive industry has pinpointed a lack of standardization in the way warranties are handled by dealers, suppliers and original equipment manufacturers (OEMs), which leads to unnecessary costs and inaccurate information. Moreover, new challenges from the surge of in-vehicle electronics, strategies by OEMs to shift more warranty costs to suppliers, and less-developed warranty processes in emerging nations all will present significant challenges to the industry in the near future.

The findings are detailed in a 25-page report, “The Warranty Process Flow Within the Automotive Industry,” developed by the Center for Automotive Research (CAR) and Microsoft Corp. as the first in a series of studies on automotive industry practices. This initial study aims to improve product quality and help the industry understand how warranty data may be used to improve business operations and future products. The full report is available online at http://www.microsoft.com/automotive.

The research, carried out by Ann Arbor, Mich.-based CAR and sponsored by Microsoft’s Automotive and Industrial Equipment Industry Solution Group in Southfield, Mich., gathered in-depth information from a highly targeted group of industry thought leaders, including executives from dealerships, suppliers and OEMs. The research uncovered the highly variable ways of collecting and reporting data on warranty repairs that not only were inconsistent among various manufacturers and dealers, but also resulted in internal systems that were guarded as competitive advantages. The report suggested the end results, however, likely were higher costs for warranty repairs and a failure to capitalize fully on information obtained from these repairs to prevent component failures in the future.