Extended Warranty Market by Distribution Channel (Manufacturers, Retailers, and Others), by Coverage Type (Standard Protection Plan and Accidental Protection Plan), by Application (Automobiles, Consumer Electronics, Home Appliances, Mobile Devices and PCs, and Others), and by End User (Individuals and Business) – Global Opportunity Analysis and Industry Forecast, 2023–2030
Industry: Retail and Consumer | Publish Date: 30-Nov-2024 | No of Pages: 243 | No. of Tables: 185 | No. of Figures: 159 | Format: PDF | Report Code : RC600
Market Overview
The global Extended Warranty Market size was valued at USD 130.9 billion in 2022, and is expected to reach USD 252.4 billion by 2030, at a CAGR of 8.8% from 2023 to 2030. An extended warranty, also known as a service contract or a maintenance agreement, is a legally binding agreement between a consumer and a manufacturer or retailer that provides additional coverage for a product beyond the manufacturer's standard warranty period. This type of warranty covers repair and replacement costs for defects or malfunctions that occur after the manufacturer's warranty period has expired.
Extended warranties can be purchased while purchasing a product or within a specified period following the initial purchase. The manufacturer can offer the extended warranty facility to customers or a third-party provider. It can be purchased for various products, including home appliances, electronics, vehicles, and others. An extended warranty covers electrical or mechanical breakdowns and accidental damage. However, it excludes coverage for mechanical failure of commodities due to owner abuse and malicious destruction.
Increasing Repair Costs of Electronics Have Led Consumers to Adopt Extended Warranty Services
As the cost of repairs for appliances and electronics is rising, consumers are increasingly opting for extended warranty coverage to protect themselves against these costs. This type of coverage is essential for high-end or expensive products, such as smartphones, laptops, and home appliances. Additionally, as technology evolves, parts become more sophisticated, with additional features and functions, making them challenging to repair or replace. This, in turn, increases repair costs.
For example, modern smartphones have numerous features such as facial recognition, wireless charging, and water resistance, making them more complex to repair than their predecessors. Similarly, modern home appliances and electronics, such as smart home devices, home theatre systems, and gaming consoles, are also becoming more complex. With this complexity, the chances of something breaking down increase, which can be stressful and costly for consumers.
An extended warranty guarantees customers that they do not need to bear the expenses of expensive repairs or replacements if their product breaks down. This relieves customers from financial burdens and ensures that they can avoid unexpected repair costs. This can also increase customer loyalty and satisfaction with the product, manufacturer, or retailer. Consumers also value the convenience of acquiring an extended warranty at the point of a product purchase, especially considering that many companies do not provide the option to obtain coverage later. All these factors combined lead to an increase in consumer demand for extended warranty coverage, driving growth in the market.
The Growth of E-Commerce Aids the Adoption of Extended Warranty Services
The growth of e-commerce has resulted in a surge in online purchases of extended warranties, which offer enhanced convenience for consumers. With the increasing adoption of online shopping, consumers can now purchase extended warranty coverage simultaneously while buying a new product. Prominent e-commerce platforms such as Amazon and Best Buy facilitate the addition of extended warranties at the point of purchase, streamlining the process for consumers. This streamlined approach can also boost retailers' sales since consumers are more inclined to buy an extended warranty when it is readily available and can be added to their online shopping cart. Additionally, many retailers provide online tools such as warranty calculators, empowering consumers to determine the cost of the warranty and compare coverage options.
Moreover, the accessibility of online platforms enables consumers to readily compare different extended warranty options from various providers, fostering increased market competition and more favorable deals for consumers. These factors collectively contribute to the growing popularity of extended warranty purchases through e-commerce, consequently driving the growth of the market.
Low Awareness of Extended Warranty in Underdeveloped Regions Restrains the Growth
In underdeveloped countries, awareness about extended warranties is limited due to a lack of education and information regarding their benefits and limited access to communication channels. Financial constraints and differing priorities among individuals also contribute to the low demand for extended warranties in these regions.
Moreover, several factors hinder the growth of the extended warranty market in underdeveloped countries. These include the need for greater trust in service providers, inadequate infrastructure and resources to support extended warranties, and cultural and societal factors. As a result, consumers in underdeveloped regions often rely on traditional repair or maintenance methods instead of purchasing extended warranties.
Integration of AI in Warranty Services
Integrating AI and other technologies in the extended warranty claiming process has opened up numerous opportunities in the extended warranty market. Using AI-powered chatbots and virtual assistants has significantly enhanced the customer experience by enabling quick and efficient service, reducing the time and effort needed to file a claim. This advancement has proven to benefit both customers and market players.
With AI-powered chatbots and virtual assistants, customers can receive prompt and accurate responses to their queries and concerns. These intelligent systems can understand natural language and provide relevant information, eliminating the need for customers to wait on hold or navigate through complex phone menus. By automating fundamental interactions and frequently asked questions, AI-powered chatbots and virtual assistants ensure that customers receive immediate support and assistance, improving customer satisfaction.
North America Holds the Dominant Market Share in the Extended Warranty Market
The North America extended warranty market report is a rapidly growing industry, driven by the increasing demand for the coverage of electronic and home appliances. The growth of the market can be attributed to factors such as the rising adoption of smart home devices & home appliances, the growing use of home automation systems, and the rising disposable income of consumers.
The U.S. is North America's largest market for extended warranties, followed by Canada. The growth in the region is also driven by the increasing adoption of connected devices and the Internet of Things (IoT) technology in various end-use industries, such as automotive, healthcare, and consumer electronics. Such technological advances have increased the sophistication of consumer electronics and significantly surged repair costs, thereby driving the market growth. The market is also driven by increasing offering of extended warranty services by manufacturers and retailers to retain customers and increase revenue.
In addition, the North American extended warranty market is competitive with the presence of many major players. Key players in the market include Assurant, Inc., Square Trade, Inc., Warrantech Corporation, and AIG Warranty. These players focus on strategic collaborations, partnerships, and mergers & acquisitions to expand their market presence and increase their customer base. For instance, in June 2019, AIG partnered with OnPoint Warranty Solutions. Under this collaboration, OnPoint Warranty Solutions will supplement sales and marketing efforts of AIG with its direct-to-consumer warranty products in the U.S.
Europe is Expected to Show a Steady Growth in the Global Extended Warranty Market
Europe is expected to show a steady growth in the extended market, owing to factors such as a rise in awareness of the extended warranty among consumers and the availability of various products from leading market players tailored to specific customer needs. As extended warranty providers are constantly launching new products at competitive price points and promoting them across the region, consumers are becoming more aware of the benefits of such warranties. Thus, consumers are adopting extended warranties to sustain their vehicles for a prolonged period.
Consumer demand for protection against repair & replacement costs and the added assurance with extended coverage are the driving forces behind the global market in Europe. Customers value the sense of security that comes with knowing they are financially protected and can prevent unforeseen expenses associated with repairs or replacements. This desire for peace of mind drives their preference for solutions that offer reliable financial coverage and help them avoid unexpected costs. Many consumers purchase extended warranty plans to protect their investments in expensive products such as high-end mobile devices or luxury cars. In addition, the growth of e-commerce and online sales of products is expected to drive the extended warranty market growth in Europe.
Competitive Landscape
Several market players operating in the extended warranty industry include American International Group, Inc., Assurant, Inc., Allstate Corporation, HDFC Ergo, AXA XL, Asurion, Amtrust Financial Services, Allianz Partners SAS., Endurance Warranty Services, and Zurich Insurance Group. These market players are adopting strategies such as product launches and partnerships across various regions to maintain their dominance in the global market.
For instance, in February 2023, Assurant, Inc. partnered with electric scooter brand Okinawa Autotech to introduce an extended warranty initiative in India. The warranty scheme will cover the warranty for key powertrain components, such as traction motors, controllers, DC-DC converters, and chargers.
Moreover, in December 2022, Allianz announced that the company aims to launch its digital platform, Allianz Direct, in France by the end of 2023. Allianz Direct is a digital platform that provides insurance products directly to consumers online. The platform aims to simplify the insurance process and make it more accessible to customers.
Extended Warranty Market Key Segments
By Distribution Channel
-
Manufacturers
-
Retailers
-
Others
By Coverage Type
-
Standard Protection Plan
-
Accidental Protection Plan
By Application
-
Automobiles
-
Consumer Electronics
-
Home Appliances
-
Mobile Devices and PCs
-
Others
By End user
-
Individuals
-
Business
By Geography
-
North America
-
U.S
-
Canada
-
Mexico
-
-
Europe
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UK
-
Germany
-
France
-
Spain
-
Italy
-
Netherlands
-
Denmark
-
Finland
-
Norway
-
Sweden
-
Russia
-
Rest of Europe
-
-
Asia-Pacific
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China
-
Japan
-
India
-
Australia
-
South Korea
-
Thailand
-
Singapore
-
Rest of Asia-Pacific
-
-
RoW
-
Latin America
-
Middle East
-
Africa
-
Key Players:
-
American International Group Inc.
-
Assurant Inc.
-
Allstate Corporation
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HDFC Ergo
-
AXA XL
-
Asurion
-
Amtrust Financial Services
-
Allianz Partners SAS.
-
Endurance Warranty Services
-
Zurich Insurance Group
Report Scope and Segmentation
|
Parameters |
Details |
|
Market Size in 2022 |
USD 130.9 Billion |
|
Revenue Forecast in 2030 |
USD 252.4 Billion |
|
Growth Rate |
CAGR of 8.8% from 2023 to 2030 |
|
Analysis Period |
2022–2030 |
|
Base Year Considered |
2022 |
|
Forecast Period |
2023–2030 |
|
Market Size Estimation |
Billion (USD) |
|
Growth Factors |
Increasing repair costs of electronics Growth of the e-commerce sector |
|
Countries Covered |
26 |
|
Companies Profiled |
10 |
|
Market Share |
Available for 10 companies |
|
Customization Scope |
Free customization (equivalent to up to 80 working hours of analysts) after purchase. Addition or alteration to country, regional, and segment scope. |
|
Pricing and Purchase Options |
Avail customized purchase options to meet your exact research needs. |
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