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The auto extended warranty market size is forecast to increase by USD 14.1 billion at a CAGR of 6.35% between 2023 and 2028. The market is witnessing significant growth due to various factors. New vehicle buyers increasingly opt for extended warranties to mitigate risks and ensure peace of mind. Similarly, used vehicle buyers also seek protection against unexpected repair costs. Flexible pricing schemes enable consumers to choose coverage plans based on their budget and needs. Companies are expanding their service portfolios to include offerings like Standard Protection Plans and Accidental Protection Plans. Loan terms often require buyers to purchase extended warranties, adding to market demand. However, consumer electronics integration in automobiles and the associated security threats pose challenges to market growth. Companies must address these challenges by offering cybersecurity solutions and transparent pricing to maintain customer trust and loyalty.
Mechanical components, such as the powertrain, and electrical components, including the electrical system and air conditioning, are commonly covered under extended warranty plans. These service contracts can be customized based on coverage options, durations, and mileage limits. The implementation of advanced technologies in vehicles has increased their complexity, making extended warranties even more valuable. Moreover, independent providers offer flexible plans, catering to the unique needs of consumers. Digital platforms simplify the purchase process, allowing consumers to easily compare coverage options and make informed decisions.
Consumer perception of trustworthiness is crucial in the extended warranty market. Genuine parts and reliable service are essential to maintaining the value-added services provided by these plans. In conclusion, extended warranties offer consumers protection against unexpected repair costs for wear and tear on mechanical and electrical components. With customized coverage options, digital platforms, and trustworthy service, these plans provide vehicle owners with peace of mind and added value.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD billion" for the period 2024-2028, as well as historical data from 2018-2022 for the following segments.
The personal segment is estimated to witness significant growth during the forecast period. Companies in the market cater to businesses like retailers and manufacturers by providing various extended warranty programs, such as extended service plans, mobile insurance, and protection plans. These programs offer risk management, covering the expense of wear and tear under an extended warranty. Additionally, extended warranties safeguard assets from manufacturing defects, enabling automotive manufacturers, distributors, and retailers to boost the value of their products. For instance, a car manufacturer may offer a one-year warranty and extend it by an extra two or three years. Implementation of advanced technologies like GPS, telematics, artificial intelligence, and powertrain coverage are transforming the market.
Moreover, the stated component coverage and exclusionary coverage are other significant features of these programs. With these enhancements, businesses can differentiate their offerings in the market and provide added peace of mind to their customers.
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The personal segment was valued at USD 23.40 billion in 2018 and showed a gradual increase during the forecast period.
North America is estimated to contribute 65% to the growth of the global market during the forecast period. Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
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The United States is the primary market for auto extended warranties in North America, driven by the presence of major automotive industries and leading manufacturers such as Ford Motor Company and General Motors Company. The US automotive sector is mature and projected to experience a steady growth rate, fueled by the country's high disposable income and consumer preference for luxury vehicles. Technological advancements and innovations, including GPS, telematics, artificial intelligence, and powertrain coverage, are increasingly being integrated into extended warranties. Stated component coverage and exclusionary coverage are also popular options.
Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Flexible pricing schemes are the key driver of the market. Auto extended warranties offer vehicle owners an optional protection plan beyond the manufacturer's warranty for mechanical and electrical components, including powertrain, electrical system, air conditioning, and more. The cost of these warranties is determined by factors such as vehicle type, usage, and previous claims. Discounts on premiums can be obtained through various means, such as having had insurance with the same provider on previous vehicles, bundling policies with multiple carriers, or the value of the car. Auto extended warranties provide flexibility in payment, allowing for annual, semi-annual, or quarterly payments, converting fixed costs into variable ones. Independent providers offer these warranties, providing consumers with a range of options beyond those offered by the manufacturer.
Expansion of service portfolio by companies is the upcoming trend in the market. The market is experiencing significant growth due to the increasing demand for additional coverage for wear and tear on mechanical and electrical components of vehicles. Independent providers are expanding their offerings beyond large enterprises to cater to small-to-medium-sized commercial entities. These companies provide services such as part replacement and maintenance for powertrain, electrical systems, air conditioning, and other mechanical and electrical components. The optional warranty market is expected to flourish as businesses and individuals seek to mitigate risks and reduce unexpected repair costs. Consequently, the market is poised for expansion during the forecast period.
Security threat is a key challenge affecting the market growth. The global market for auto extended warranties is witnessing significant growth as technology plays an increasingly important role. With the advent of digital platforms and online storage, companies are leveraging advanced processing systems, online data, and electronic communication to streamline operations and manage their businesses more efficiently. However, this reliance on technology brings new challenges, particularly in the realm of cybersecurity. As data becomes more accessible online and through connected devices, the risk of cybercrime and data breaches increases. Any unauthorized access or misuse of data can result in substantial financial losses for organizations. It is crucial for market players to prioritize strong cybersecurity measures to protect sensitive information and maintain customer trust.
However, independent providers of auto extended warranties offer coverage for mechanical and electrical components, including powertrains, electrical systems, and air conditioning, beyond the manufacturer's warranty. These optional warranties provide peace of mind for consumers and help mitigate the financial burden of unexpected repairs.
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
AAA Warranty Services - The company offers the demand for post-manufacturer coverage for cars, including used vehicles, as well as tire and wheel protection plans.
The market research and growth report includes detailed analyses of the competitive landscape of the market and information about key companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The extended warranty market for vehicles caters to consumers seeking additional protection beyond the standard manufacturer's warranty. As vehicles age and wear and tear sets in, optional warranty plans offer peace of mind for vehicle owners. Independent providers and auto dealers offer various extended warranty plans, including powertrain coverage, stated component coverage, and exclusionary coverage. New vehicles often come with basic protection plans, but extended warranties can cover mechanical components, electrical systems, air conditioning, and more. The implementation of advanced technologies, such as GPS, telematics, artificial intelligence, and digital platforms, has transformed the extended warranty market.
Moreover, the coverage options, durations, mileage limits, and transferability are essential factors to consider when purchasing extended warranty plans. Consumers can choose from third-party providers or authorized repair facilities staffed with qualified technicians using genuine parts. The complexity and advanced technologies of modern vehicles require specialized knowledge and expertise. Customized coverage options cater to individual needs, ensuring value-added services and consumer perception of trustworthiness. Extended warranties for vehicles are not limited to automobiles but also include consumer electronics, mobile devices, and home appliances. Understanding the various coverage options, durations, and exclusions is crucial for both new and used vehicle buyers, as well as those with loan terms, to make informed decisions.
Market Scope |
|
Report Coverage |
Details |
Page number |
133 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 6.35% |
Market Growth 2024-2028 |
USD 14.1 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
5.63 |
Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
Performing market contribution |
North America at 65% |
Key countries |
US, UK, Germany, China, and Japan |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
AAA Warranty Services, Allianz SE, AmTrust Financial Services Inc., Assurant Inc., Asurion LLC, AXA Group, Carchex LLC, CarShield, Concord Auto Protect, Corporate Warranties India Pvt. Ltd., Edel Assurance LLP, Endurance Warranty Services LLC, Hyundai Motor Co., Repair Ventures LLC, Tata Motors Ltd., and The Allstate Corp. |
Market dynamics |
Parent market analysis, market growth inducers and obstacles, market forecast, fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, market condition analysis for the forecast period |
Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by End-user
7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Opportunity/Restraints
10 Competitive Landscape
11 Competitive Analysis
12 Appendix
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