EXTENDED WARRANTY MARKET ANALYSIS

Global Extended Warranty Market size was valued at US$ 123.4 million in 2023 and 193.7 Mn in 2030 and is anticipated to witness a compound annual growth rate (CAGR) of 6.6% from 2022 to 2030. 

Extended warranty covers both routine maintenance and accidental damages such as liquid spills, theft, or shattered displays. The growing concerns of customers over the safety of their electronic equipment after the end of original warranty is the main driver fueling the market growth. Due to the rise in price-conscious consumers and a shift in consumer preferences in favor of an easy-to-use after-sales experience, there is an increased demand for extended warranty services. As consumers become more aware of warranty extensions available through brand stores or the internet, they are choosing to extend their warranties owing to the benefits they provide. It can last between three and five years after the manufacturer's warranty expires, depending on the package the customer chooses.

Increased sales of high-end autos and consumer electronics like smartphones, tablets, laptops, and wearables are also boosting the product adoption. By offering value-added services, such as simple replacement and door-to-door services and implementing digitalized technology for managing extended warranty claims, well-known enterprises are boosting the market demand. Other factors propelling the market growth include increased consumer disposable income, the urge to extend product life and value, and high maintenance and repair costs.

Global Extended Warranty Market: Regional Insights

Global Extended Warranty Market is dominated by North America, and this dominance is likely to continue throughout the forecast period. This is attributed to the rising demand for warranty coverage for consumer electronics like smartphones, laptops, and home appliances. Customers are increasingly opting for extended warranties to protect themselves from exorbitant repair costs as a result of the persistent rise in product prices.

North America's largest market for extended warranties is the U.S. followed by Canada. The growing use of connected devices and Internet of Things (IoT) technology in a variety of end-use industries, including automotive, healthcare, and consumer electronics, is also driving growth in this region. Typically, dealers offer warranties for at least five years on new vehicles, which encourages customers to buy extended warranties from the same dealers in the country.

On the other hand, it is anticipated that Asia Pacific will experience significant growth during the forecast period. This growth will primarily be driven by factors like the rapid expansion of the e-commerce sector and growing awareness of warranty benefits.

The regulatory frameworks governing the extended warranty market vary from country to country within the EMA region. Terms and conditions, cancellation policies, pricing transparency, and consumer protection measures may be governed by regulations.

Figure 1: Global Extended Warranty Market Share (%), By Region, 2022

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Global Extended Warranty Market Drivers:

Increased awareness for extended warranty

At the time of purchase, many products carry a hefty price tag. As a result, the demand for extended warranties for those products has skyrocketed. In addition, the coverage of extended warranty has increased in the consumer electronics and mobile devices sectors as a result of consumers' frequent concerns about the safety of their electronic products following the expiration of the seller's warranty. Additionally, consumers' awareness of extended warranties, particularly for used vehicles, has grown. The extended auto warranty industry has seen new developments and innovations as a result of recent technological advancements like block chain technology. In addition, offering a longer warranty contributes to customer retention. As a result, the market is expanding as more people become aware of extended warranties.

One example of expanded mindfulness for service contracts is in the buyer hardware industry. With the rising costs of top of the line cell phones and other electronic gadgets, customers are turning out to be more wary about safeguarding their ventures. They know that the standard maker's guarantee normally covers just a restricted period, generally one year, and may exclude incidental harm or other normal issues. Therefore, numerous buyers are choosing maintenance agreements that offer longer inclusion and extra advantages.

Rise in the penetration of laptops, smartphones, and tablets

The demand for the protection for laptops, smartphones, tablets, and other "brown goods" has increased at a faster rate in the market. As a result, the availability of extended warranty for these products has increased competition in the market. Extended warranty solutions for these goods are undergoing constant development and are anticipated to dominate the market over the forecast period. Constant climb being utilized and gathering of workstations, phones, tablets, and other gritty shaded stock fuel the improvement of administration settlement keeping watch.

For instance the entrance of PCs, cell phones, and tablets should be visible in the training area. As of late, there has been a critical expansion in the utilization of innovation in schools and colleges, with PCs, cell phones, and tablets becoming fundamental devices for understudies and educators the same.

Global Extended Warranty Market Opportunities:

Expansion of products and Services

An extended warranty might be very advantageous for the market for products and services that are already in existence. The options for the insurers are vast, including collaborating with other companies to provide clients value-added services and expanding their selection of goods and services. Retailers and manufacturers boost their profit margins and gain customers' confidence through agreements and collaborations. As a result, it is projected that extended warranty providers will have an opportunity in the upcoming years through the strengthening of contracts and alliances as well as the development of current goods and services.

For instance, an air conditioner manufacturer may offer a one year warranty on its entire range of Split AC and can offer to enhance the deal by adding another two or three years warranty into the package, thereby differentiating its product in the market. This additional extended warranty is backed by insurance.

Untapped potential of emerging economies

Creating economies offer huge open doors for back up plans to grow their business by reinforcing approaches to boost the improvement of maintenance agreement in the area. It is anticipated that emerging economies' increased purchases of consumer electronics, home appliances, and wearable devices will present lucrative growth opportunities. In addition, the expansion of extended warranties is anticipated to be speed up in the coming years due to a number of government initiatives and an increase in demand for longer warranties. Infrastructures for aftermarket services may be inadequate or fragmented in emerging economies. Extended warranty providers might profit from this chance by integrating maintenance and repair services in their packages.

Global Extended Warranty Market Trends:

Increasing adoption of technology

One of the main reasons propelling the expansion of the worldwide extended warranty market is the growing utilization of technology. Technology is being leveraged by extended warranty providers to enhance the client experience.

A lot of suppliers now let clients monitor and file claims online, making it simpler for them to acquire the assistance they want. The effectiveness of extended warranty providers is also being improved via the use of technology. Additionally, technology is being employed to create new extended warranty goods.

For instance, in 2022, Assurant, a global provider of risk management products and services, launched a new AI-powered claims chat bot that can help customers quickly and easily file claims. The chat bot can answer questions about coverage, process claims, and even schedule repairs.

The growing importance of data analytics

The process of gathering, cleaning, and evaluating data in order to derive useful insights is known as data analytics. Analyzing customer demographics, purchase histories, and product usage data can be used to identify customers in the extended warranty market who are at risk of experiencing a product failure. Information examination can be utilized to distinguish fraudulent claims, to decide the seriousness of harm, and to speed up the cases interaction. Products and services are rapidly creating an increasing large amount of data. This data can be used to learn more about how customers behave and make products and services better.

The major players operating in the global extended warranty market are launching new products to gain a competitive advantage in the market. For instance, an extended warranty program that covers eligible products purchased with an American Express card has been developed in collaboration between Geico and American Express. Appliances, electronics, and furniture are just a few of the many items covered by the program. Accidental damage, mechanical breakdown, and labor costs are covered for two years.

Global Extended Warranty Market Restraints:

Decline in sales of PCs

PC (PCs) is one of the critical characterization under purchaser equipment, which for the most part purchases administration arrangement incorporations watching out. However, as PC sales have decreased in recent years, so has the demand for extended warranty. In addition, it is necessary to strike a balance between the market's sales of personal computers and its various other applications in order to address consumer experiences and the adoption of extended warranties. Additionally, the global decline in PC unit shipment limits the expansion of the Global Extended Warranty Market

For instance, according to Gartner, a U.S.-based technological research and consulting firm, global PC shipments fell by 15% in 2022, marking the fourth consecutive year of decline. The decline was driven by a number of factors, including the COVID-19 pandemic, the war in Ukraine, and the global chip shortage.

Counterbalance

While traditional desktop PCs may be experiencing a decline, there is still a significant demand for laptops and hybrid devices such as 2-in-1 laptops and convertible tablets. These portable computing devices offer versatility and mobility, catering to the needs of modern users who prioritize flexibility and convenience. As the sales of laptops and other portable devices continue to grow, the demand for extended warranties specific to these products remains steady.

Regulatory challenges

Extended warranty providers must hold a license to operate in some jurisdictions. This procedure may be costly and time-consuming. In the jurisdictions where they operate, extended warranty providers are required to adhere to consumer protection laws. This may be a complicated and dynamic landscape. Providers of extended warranties need to be on the lookout for scams. False warranty claims can be costly and can harm the industry's reputation. Terms and conditions that are easy for customers to understand and that are clear and concise should be developed by providers.

For instance, in 2022, California passed a new law that requires extended warranty providers to disclose more information to consumers about the terms and conditions of their products. This new law is expected to make it more difficult for extended warranty providers to mislead consumers.

Counterbalance

Regulatory requirements and licensing procedures exist to protect consumers from fraudulent or unscrupulous warranty providers. While obtaining a license may involve costs and time, it serves as a barrier to entry for unreliable or illegitimate operators, thereby promoting a more trustworthy industry.

Figure 2: Global Extended Warranty Market Share (%), By Coverage, 2022

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Global Extended Warranty Market Segmentation:

The Global extended warranty market report is segmented into coverage, application, distribution channel, end user, and region.

Global Extended Warranty Market is segmented on the basis of coverage into standard protection plan and accidental protection plan. The standard protection plan is typically less expensive than the accidental protection plan.

Global Extended Warranty Market is segmented on the basis of distribution channel into manufacturers, retailers, and others. As consumers become more aware of the advantages of these products, there is an increase in the demand for extended warranties. Furthermore, the market is segmented on the basis of end user into businesses and individuals. Extended warranty providers now have the ability to sell their products directly to customers, which opens up new opportunities for them as the e-commerce market expands.

Based on application, the market is segmented into automobiles, consumer electronics, home appliances, mobile devices & PCs, and others.

Automobiles: The extended warranty market is dominated by the automobile sector. This is because automobiles are frequently used for extended periods of time and require high repair or replacement costs.

Shopper hardware: The extended warranty market also includes a significant portion of the consumer electronics market. This is because consumer electronics are typically pricey and susceptible to damage.

Appliances at home: The extended warranty market is expanding in the home appliances category. This is because home appliances are frequently used for extended periods of time and can be costly to repair or replace.

PCs and mobile devices: The extended warranty market is expanding in the PC and mobile device categories. This is because mobile devices and personal computers are frequently used for extended periods of time and can be costly to repair or replace.

Others: Products like sporting goods, jewelry, and watches make up the others segment. These products are frequently pricey and susceptible to damage.

Region wise Global Extended Warranty Market is segmented into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.

Global Extended Warranty Market: Key Developments

In July 2022, Hyundai India introduced a 6th or 7th-year extended warranty policy for all Hyundai vehicles. The current market for automobiles will likewise be covered by this extended warranty.

In August 2022 Aviva, a British insurance company, partnered with Google Cloud to develop a new extended warranty platform that uses Artificial Intelligence (AI) and machine learning to automate claims processing and provide personalized customer service.

For example, CEVA went public to raise $100 million and expand its global footprint in 2023. CEVA is a marketplace for extended warranties, and it has over 100 million customers in 12 countries.

 In 2022, SquareTrade, a U.S.-based provider of extended warranty service launched a new subscription-based extended warranty for electronics. The new warranty is available for smartphones, tablets, and laptops, and it offers coverage for accidental damage and malfunctions.

In 2023 Apple, a U.S.-based multinational technology company, launched AppleCare an additional warranty program. It includes hardware repairs, technical support, and software issues for a certain period after the initial purchase.

Global Extended Warranty Market: Key Companies Insights

The global extended warranty market is highly competitive. Due to the rising cost of repairs, the increasing complexity of consumer electronics and appliances, and the rising popularity of subscription-based models, the market is expanding rapidly.

As the demand for extended warranties continues to rise, it is anticipated that the market will continue to expand in the upcoming years.

Some of the key players in the Global Extended Warranty Market are ASSURANT INC., American International Group, Inc., AXA, AmTrust Financial, Asurion, CARCHEX, CarShield LLC, Endurance Warranty Services LLC, Edel Assurance, SquareTrade, Inc., and others.

*Definition: Products and services covered by a global extended warranty are covered beyond the standard warranty period. It can be bought for appliances, electronics, and automobiles, among other things. Either the manufacturer, a retailer, or a third-party provider can sell extended warranties.

Most of the time, defects, malfunctions, and accidental damage are covered by global extended warranties. They might also cover shipping and labor costs. Before purchasing an extended warranty, it is essential to carefully read the policy because the terms and conditions vary.