Study: Better Collaboration May Reduce Auto Industry Warranty Costs

ByJohn S. McClenahen Improved collaboration among automobile manufacturers, tier-one suppliers and their suppliers could significantly reduce warranty costs this year, suggest initial findings from a BearingPoint Inc. survey. BearingPoint is the new name for KPMG Consulting. The survey, done in conjunction with Automotive News and the Original Equipment Suppliers Association, involved more than 60 suppliers. Among the findings: Some 66% of suppliers believe warranty charge-backs have become a significant cost-shifting strategy for car makers, and 69% of suppliers say they don't get enough information on warranty charge-backs. To achieve more effective warranty management, BearingPoint recommends tier-one, tier-two, and tier-three suppliers obtain better access to data on failed parts and systems, seek clear direction on design responsibility for OEM-generated engineering changes and get involved early in design issues.