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4 Jun 18

Warranty costs used cars

Warranty specialist CarGarantie, managing 2.1 million contracts and 23,000 partners, has published the results of a study into the evolution of average repair costs. 750,349 warranties for used cars and 229,898 warranties for new cars expiring in 2017 were analysed, covering all brands and models. Fleet Europe looks into the results.  

2017: sharp increase in repair costs

The study showed a clear increase in average repair costs, that rose from an average of € 502 to € 514 per claim, the largest increase in years. This growth is due to the ever increasing technical complexity of vehicles. New cars have increasingly sophisticated assistance systems that make driving much easier. However, in the event of a breakdown, repairing a group of complex parts also requires a greater workload. Over time, more and more modern components are also present on used vehicles. These are more likely to suffer from costly component failures, resulting in significant cost increases in both areas.

Engine-related issues are the No. 1 cost

The engine is clearly the source of most of the warranty interventions, for second hand cars as well as for new ones. On second hand cars, 24.2% of all interventions are related to the engine (22.9% in 2016), followed by the fuel system (turbocharger included) and the gearbox. The electrical installation and air conditioning are in 4th and 5th place of the claims ranking. For new cars, the engine accounted for 18.9% of all interventions (2nd place), after the fuel system that concerned 20.3% of all claims. Gearboxes caused 12.3% of all new car warranty interventions.

If we look into the high cost of engine and propulsion system failures and relate it to the frequency of interventions needed, the fuel system and the electrical system are in 1st and 2nd place, followed by the engine itself. More than one in ten technical failures is related to engine failure, making this type of interventions account for almost a quarter of all intervention costs. 

Claims occur earlier

On the basis of mileage, claims on used vehicles occur faster than in the 2016 study: the share of claims occurring before 15,000 kilometres increases. With a rate of 33.2% (2016: 31.7%), a third of claims occur during the first 5,000 kilometres.

For new cars, the trend remains essentially the same. In 30.3% of cases, the incident occurs during the first 25,000 kilometres (2016: 31.7%). Claims occur faster for both used and new cars: 83.3% of used cars (2016: 81.7%) and 54.9% of new cars (2016: 48.9%) had to benefit from warranty services during the first year following the start of the cover. Overall, claims occur faster, whether on the basis of mileage or based on the age of the vehicle.

Cover yourself

Taking into account the complexity of modern automotive technologies and the rising cost of repair or replacement costs in case of breakdown, a fleet manager who wants to keep control of the operational costs of his fleet has no other choice than to make sure that all vehicles are well covered as long as they are in the company fleet. Be it through a comprehensive manufacturer warranty program covering the complete period of use, by opting for operational lease contracts that have the leasing company cover all unexpected costs or by making use of the services of warranty specialists such as CarGarantie. If he fails to do so, the risk of excessive fleet costs due to expensive repairs is like a sword of Damocles hanging over the fleet managers’ head.

Laurent Geffard, Director West Europe at CarGarantie

"The sharp increase in average repair costs clearly shows that the technology of current vehicles is becoming more complex and requires more and more maintenance. In this context, for fleet managers, being able to count on a decent warranty is more desirable than ever. It protects them from bad surprises and helps them manage their operational budget.”

Authored by: Stijn Blanckaert