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The extended warranty market provides consumers with peace of mind over extended periods, covering their purchases beyond the original manufacturer’s warranty. This protects investments made in high-value, complex technologies such as smartphones, laptops, wearables and more. Extended warranties shield consumers from bearing high repair or replacement costs resulting from defects or hardware/software failures after the standard warranty expires. They give consumers flexibility to upgrade or replace a product at a lower price, allowing them to stay up to date with the latest technologies. The Global extended warranty market is estimated to be valued at US$ 140.2 Mn in 2024 and is expected to exhibit a CAGR of 6.6% over the forecast period 2024 to 2031.
Key Takeaways
Key players operating in the 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. These players are focusing on expanding their service networks and tailoring offerings to target various customer segments globally.
The growing adoption of IoT devices and electronics is creating new opportunities for extended warranty providers. Customers want protection for connected appliances, wearables and other smart home products to maximize value and minimize repair costs over longer usage periods.
Technological advancements are driving new service models in the extended warranty market. Players are leveraging data analytics, AI and blockchain to offer predictive maintenance services, improve customer experience and automate claims processing. This is enhancing transparency, preventing fraud and making warranty services more efficient.
Market drivers
The rise in average purchase costs of electronics and consumer appliances is a key factor driving demand for extended warranties. Customers want to shield high-value investments made in new products against risks of hardware/software failures. Additionally, lengthening replacement cycles of devices are prompting customers to seek longer coverage beyond standard warranties. Extended warranties provide affordable protection over elongated product usage periods. This is expected to fuel market revenues over the forecast timeframe.
Current Challenges in Extended Warranty Market:
The extended warranty market faces various challenges which need to be addressed for sustainable growth of the market. One of the major challenges is increasing penetration of do-it-yourself (DIY) culture among consumers. Many consumers prefer repairing or upgrading products themselves which reduces the demand for extended warranties. Secondly, emergence of cheaper generic and refurbished replacement products impact sales of premium extended warranty plans. The market also battles with lack of standardization and regulations. Product definition, claim settlement procedures and consumer protection needs standard guidelines across geographies for building trust among buyers.
SWOT Analysis
Strength: Covers additional repair/replacement costs; provides peace of mind to buyers. Weakness: Complex pricing structures confuse customers; low margins attract few players. Opportunity: Growth in sales of electronics and luxury goods; expanding middle class in developing nations. Threats: Alternative low-cost repair options reduce need; regulatory interventions on unfair practices.
Geographically, North America accounts for the largest market share currently due to high adoption of extended warranty plans among customers for automobiles as well as consumer durables. The Asia Pacific region is expected to witness fastest growth during the forecast period owing to rising disposable incomes, growing urbanization and increasing sales of consumer electronics in countries like China and India.
The Extended Warranty Market in Europe is majorly concentrated in Germany, UK and France. Germany has several manufacturers of automobiles and home appliances which boosts sales of extended warranty plans. On the other hand, demand is surging rapidly in Middle East & Africa since warranty protection encourages purchases of high value assets in risk prone regions. Overall, developing economies will drive future growth momentum for the global extended warranty industry.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
Money Singh is a seasoned content writer with over four years of experience in the market research sector. Her expertise spans various industries, including food and beverages, biotechnology, chemical and materials, defense and aerospace, consumer goods, etc.
