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Extended Warranties for New and Used Cars in Emerging Global Markets
Finaccord, March 2012
Extended Warranties for New and Used Cars in Emerging Global Markets investigates the market for extended warranties linked to sales of new and used passenger cars to consumers in ten important global markets. In total, Finaccord has calculated that across all ten countries this sector was worth in the region of USD 615 million in 2011 in gross written premiums and other revenues.
Based on a survey of 765 dealers in Argentina, Brazil, China, India, Indonesia, Mexico, South Africa, South Korea, Taiwan and Thailand plus an investigation typically covering between 30 and 40 automotive brands in each country, the study delivers unique insights into the market for extended warranties for passenger cars bought by consumers, with fully comparable and standardised market values split between new and used cars.
In addition to this market data, the survey measures the propensity of dealers to work with independent extended warranty providers as well as those tied to manufacturer brands, it reports on customer take-up rates for extended warranties at the point of sale, it identifies the leading non-tied providers used at the point of sale, and it describes the partnerships in place between manufacturer brands and extended warranty providers.
The report and the PartnerBASE™ that accompanies it may be used in one or more of the following ways:
- understand the current size and future potential of the market for extended warranties in ten of the most important growth economies in the world;
- appreciate how this opportunity breaks down between extended warranties for new and used cars;
- benchmark the degree of competitive intensity recorded for distributing extended warranties through the point of sale, and see where dealers are most open to working with non-tied partners;
- identify the foremost competitors in each country: have international companies such as Allianz, Assurant, AXA, MAPFRE and The Warranty Group established themselves in each market, or do national providers predominate?
- evaluate the potential for establishing partnerships with manufacturers and importers for branded or endorsed extended warranty schemes across these ten key markets.
0.0 EXECUTIVE SUMMARY
The value of the market across these ten countries was in the region of USD 615 million in 2011...
...with new car extended warranties accounting for three quarters of the total
Dealers’ provision rates range from below 5% to more than 95%
The take-up rate for extended warranties exceeds 50% for used cars in South Africa
Many opportunities exist for external providers to form partnerships with dealers and manufacturer brands
1.0 INTRODUCTION
What is this report about?
The focus of the report is on extended warranties related to the sale of passenger cars to individuals
Rationale
The provision of financial services is essential to support both car sales and profitability...
… with huge diversity in these services between countries and products…
… which have yet to be explored in detail
Methodology
Dealer survey
Manufacturer survey
Market data
Computation of market data is based on a complex set of assumptions and variables…
External sources
Definitions
Extended warranties
Captive, internal and tied providers
Abbreviations and exchange rates
PartnerBASE™
Finaccord
2.0 OVERVIEW
Introduction
Passenger vehicle data
The passenger car parc of these ten countries grew by 60 million vehicles between 2007 and 2011
New car sales fell in Mexico and South Africa over the same time frame
Brazil has the largest used car market...
... while South Korea has the second-largest market for used cars sold through dealers
The number of passenger cars per person is lowest in India and highest in Mexico
Toyota features in the ‘top ten’ in every country in this study
Extended warranties
Market size
South Africa is the only country with a large market for used car extended warranties…
Survey results
…while the provision rate by dealers was at its highest in Mexico
The highest numbers of competitors were found in China and South Africa, for differing reasons
Dealerships rely on manufacturer or importer extended warranty programs in most countries
Take-up rates for new cars are highest in Brazil and for used cars in South Africa
Overall take-up rates are very low in east Asia
A majority of manufacturer brands provide extended warranties in just three countries out of ten
3.0 ARGENTINA
Introduction
Passenger vehicle data
New car sales showed strong, fresh gains after a brief period of decline...
...while both dealer-intermediated and private used car sales maintained steady growth as well
European manufacturers make up most of the top ten brands in Argentina…
…with Volkswagen continuing to lead the passenger car market
Dealer partnerships
Extended warranties are unavailable for used cars, and are seldom purchased for new ones
Manufacturer brand partnerships
These are the exclusive domain of the manufacturer brands (or their importers)
Market size and segmentation
4.0 BRAZIL
Introduction
Passenger vehicle data
The number of new passenger cars sold in Brazil is rising at more than 8% per annum...
...whilst the numerically significant used car market also remains positive
Fiat, Volkswagen and Chevrolet each hold a large segment of the Brazilian market
Dealer partnerships
Around 40% of Brazilian dealers offer extended warranty schemes
Manufacturer brand partnerships
Specialist provider The Warranty Group underwrites two brands’ schemes
Market size and segmentation
5.0 CHINA
Introduction
Passenger vehicle data
New passenger car sales have soared in recent years...
...while the market for used cars still has to catch up
A large number of brands compete in China
Dealer partnerships
Customers are more likely to take out extended warranties for used than for new cars
Manufacturer brand partnerships
Extended warranties are normally offered through internal provision
Market size and segmentation
6.0 INDIA
Introduction
Passenger vehicle data
Sales of new passenger cars are rising at around 16% per year...
...with this rapid growth being more than matched by the increase in used car sales
In India’s concentrated market, Maruti Suzuki accounts for almost half of new car registrations
Dealer partnerships
Virtually all extended warranty schemes are linked to manufacturers
Manufacturer brand partnerships
Tata Motors’ scheme involves a specialist warranty administrator
Market size and segmentation
7.0 INDONESIA
Introduction
Passenger vehicle data
New car sales have displayed very strong growth in recent years...
...with used car sales only slightly behind
Japan-based manufacturer brands account for over 90% of new car registrations...
...with Toyota continuing to lead the passenger car market
Dealer partnerships
Only a couple of dealers offer extended warranties...
Manufacturer brand partnerships
... and only two manufacturer brands promote extended warranties in Indonesia
Market size and segmentation
8.0 MEXICO
Introduction
Passenger vehicle data
New car sales show a steep decline from which they have not yet recovered...
.. while used car sales through dealers are only just showing signs of life after a calamitous decade…
…as legal and illegal ‘chocolate’ cars imported from the US continue to have a dramatic effect on sales
Nissan continues to hold the top position among individual brands…
…while US-based manufacturers continue to struggle
Market shares overall remain fairly steady against declining sales
Dealer partnerships
Only one in ten new car owners buys an extended warranty at the point of sale
Manufacturer brand partnerships
Almost all manufacturers provide extended warranties themselves
Market size and segmentation
9.0 SOUTH AFRICA
Introduction
Passenger vehicle data
New car sales plunged from 2007 to 2009 then recovered strongly...
... while used car sales increased steadily
Premium German brands are strong sellers in South Africa, alongside Korean models
Dealer partnerships
SA Warranties leads, but multiple providers split the rest of this market between them
Manufacturer brand partnerships
Innovation Group’s partnership with Toyota gives it a leading position
Market size and segmentation
10.0 SOUTH KOREA
Introduction
Passenger vehicle data
The South Korean market for new car sales is still growing at a good pace…
…while used car sales are increasing even faster
Hyundai and Kia account for about four in five new car registrations
Dealer partnerships
Only a minority of dealers was found to offer extended warranties
Manufacturer brand partnerships
Long factory warranties mean that few manufacturers offer extended warranties
Market size and segmentation
11.0 TAIWAN
Introduction
Passenger vehicle data
New car sales bounced back after being hit during the global economic crisis…
…as did used car sales
Japanese brands manufactured in Taiwan dominate the market for new car registrations
Dealer partnerships
More than one in every five dealers are offering extended warranties
Manufacturer brand partnerships
Several manufacturer brands promote extended warranties in Taiwan
Market size and segmentation
12.0 THAILAND
Introduction
Passenger vehicle data
New car sales have grown much faster than the overall car parc…
…while used cars are still mostly sold outside the dealer channel
Toyota and Honda jointly account for more than 60% of the market in new car registrations
Dealer partnerships
More than a third of dealers promote extended warranties
Manufacturer brand partnerships
Manufacturers normally offer extended warranties on an internal basis
Market size and segmentation
LIST OF GRAPHICS / TABLES
0.0 EXECUTIVE SUMMARY
Four countries made up more than 90% of the market for extended warranties by value, 2011
Extended warranties sold with used cars dominated in two countries, 2011
In India and Mexico, extended warranties were offered by the great majority of dealers with new cars, 2011
Average take-up rates were a key driver of the total value of extended warranties for new and used cars, 2011
1.0 INTRODUCTION
Dealers contacted by Finaccord, segmented by country and manufacturer group affiliation
Manufacturer brands contacted by Finaccord
Manufacturer brands contacted by Finaccord (contd.)
2.0 OVERVIEW
Overview of the passenger car parc segmented by country, 2007 to 2011
Overview of new passenger car sales segmented by country, 2006-2011
Overview of used passenger car sales segmented by country, 2007-2011
Passenger car density by country, 2007 and 2011
Passenger car density by country, 2007 to 2011 (data)
Presence of manufacturer brands in the ‘top ten’ by country, by new car registrations, 2010
Approximate size of the market for extended warranties for new and used cars, 2011
Comparison of % of dealers offering extended warranties at the point of sale, 2011
Comparison of average number of providers used by dealers offering extended warranties at the point of sale, 2011
Comparison of tied / non-tied operating models used by dealers offering extended warranties at the point of sale, 2011
Comparison of tied / non-tied operating models used by dealers offering extended warranties at the point of sale, 2011 (data)
Comparison of average % of new and used car purchasers acquiring extended warranties at the point of sale, 2011
Comparison of overall % of new and used car purchasers acquiring extended warranties at the point of sale, 2011
Comparison of average and overall % of new and used car purchasers acquiring extended warranties at the point of sale, 2011 (data)
Comparison of % of manufacturers / importers with arrangements for branded extended warranties, 2011
3.0 ARGENTINA
Passenger car parc and new / used passenger car sales in Argentina, 2007 to 2011
Passenger car parc and new / used passenger car sales in Argentina, 2007 to 2011 (data)
New car registrations in Argentina, segmented by manufacturer brand, 2010
Provision of extended warranties by dealers in Argentina, 2011: provision rate and product sources
Provision of extended warranties by manufacturer brands in Argentina, 2011: provision rate and operating models
Approximate size and segmentation of the market for extended warranties for new and used cars in Argentina, 2011
4.0 BRAZIL
Passenger car parc and new / used passenger car sales in Brazil, 2007 to 2011
Passenger car parc and new / used passenger car sales in Brazil, 2007 to 2011 (data)
New car registrations in Brazil, segmented by manufacturer brand, 2010
Provision of extended warranties by dealers in Brazil, 2011: provision rate, product sources and provider share of non-tied partnerships
Provision of extended warranties by manufacturer brands in Brazil, 2011: provision rate, operating models and weighted provider share of partnerships
Approximate size and segmentation of the market for extended warranties for new and used cars in Brazil, 2011
5.0 CHINA
Passenger car parc and new / used passenger car sales in China, 2007 to 2011
Passenger car parc and new / used passenger car sales in China, 2007 to 2011 (data)
New car registrations in China, segmented by manufacturer brand, 2010
Provision of extended warranties by dealers in China, 2011: provision rate, product sources and provider share of non-tied partnerships
Provision of extended warranties by manufacturer brands in China, 2011: provision rate, operating models and weighted provider share of partnerships
Approximate size and segmentation of the market for extended warranties for new and used cars in China, 2011
6.0 INDIA
Passenger car parc and new / used passenger car sales in India, 2007 to 2011
Passenger car parc and new / used passenger car sales in India, 2007 to 2011 (data)
New car registrations in India, segmented by manufacturer brand, 2010
Provision of extended warranties by dealers in India, 2011: provision rate, product sources and provider share of non-tied partnerships
Provision of extended warranties by manufacturer brands in India, 2011: provision rate, operating models and weighted provider share of partnerships
Approximate size and segmentation of the market for extended warranties for new and used cars in India, 2011
7.0 INDONESIA
Passenger car parc and new / used passenger car sales in Indonesia, 2007 to 2011
Passenger car parc and new / used passenger car sales in Indonesia, 2007 to 2011 (data)
New car registrations in Indonesia, segmented by manufacturer brand, 2010
Provision of extended warranties by dealers in Indonesia, 2011: provision rate, product sources and provider share of non-tied partnerships
Provision of extended warranties by manufacturer brands in Indonesia, 2011: provision rate, operating models and weighted provider share of partnerships
Approximate size and segmentation of the market for extended warranties for new and used cars in Indonesia, 2011
8.0 MEXICO
Passenger car parc and new / used passenger car sales in Mexico, 2007 to 2011
Passenger car parc and new / used passenger car sales in Mexico, 2007 to 2011 (data)
New car registrations in Mexico, segmented by manufacturer brand, 2010
Provision of extended warranties by dealers in Mexico, 2011: provision rate, product sources and provider share of non-tied partnerships
Provision of extended warranties by manufacturer brands in Mexico, 2011: provision rate, operating models and weighted provider share of partnerships
Approximate size and segmentation of the market for extended warranties for new and used cars in Mexico, 2011
9.0 SOUTH AFRICA
Passenger car parc and new / used passenger car sales in South Africa, 2007 to 2011
Passenger car parc and new / used passenger car sales in South Africa, 2007 to 2011 (data)
New car registrations in South Africa, segmented by manufacturer brand, 2011
Provision of extended warranties by dealers in South Africa, 2011: provision rate, product sources and provider share of non-tied partnerships
Provision of extended warranties by manufacturer brands in South Africa, 2011: provision rate, operating models and weighted provider share of partnerships
Approximate size and segmentation of the market for extended warranties for new and used cars in South Africa, 2011
10.0 SOUTH KOREA
Passenger car parc and new / used passenger car sales in South Korea, 2007 to 2011
Passenger car parc and new / used passenger car sales in South Korea, 2007 to 2011 (data)
New car registrations in South Korea, segmented by manufacturer brand, 2010
Provision of extended warranties by dealers in South Korea, 2011: provision rate, product sources and provider share of non-tied partnerships
Provision of extended warranties by manufacturer brands in South Korea, 2011: provision rate, operating models and weighted provider share of partnerships
Approximate size and segmentation of the market for extended warranties for new and used cars in South Korea, 2011
11.0 TAIWAN
Passenger car parc and new / used passenger car sales in Taiwan, 2007 to 2011
Passenger car parc and new / used passenger car sales in Taiwan, 2007 to 2011 (data)
New car registrations in Taiwan, segmented by manufacturer brand, 2010
Provision of extended warranties by dealers in Taiwan, 2011: provision rate and product sources
Provision of extended warranties by manufacturer brands in Taiwan, 2011: provision rate and operating models
Approximate size and segmentation of the market for extended warranties for new and used cars in Taiwan, 2011
12.0 THAILAND
Passenger car parc and new / used passenger car sales in Thailand, 2007 to 2011
Passenger car parc and new / used passenger car sales in Thailand, 2007 to 2011 (data)
New car registrations in Thailand, segmented by manufacturer brand, 2010
Provision of extended warranties by dealers in Thailand, 2011: provision rate and product sources
Provision of extended warranties by manufacturer brands in Thailand, 2011: provision rate, operating models and weighted provider share of partnerships
Approximate size and segmentation of the market for extended warranties for new and used cars in Thailand, 2011
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