Market Challenges And Opportunities

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