A modeling framework for assessing the impact of new time/mileage warranty limits on the number and cost of automotive warranty claims

In this paper, we present a simple method to assess the impact of new time/mileage warranty limits on the number and cost of warranty claims for components/sub-systems of a new product. We highlight the use of mileage accumulation rates of a population of vehicles to arrive at claims per thousand vehicles, sold with new time/mileage warranty limits. We also discuss the bias in warranty cost estimates that may result in using cumulative cost per repair information. We recommend the use of incremental cost per repair especially when populations with different mileage accumulation rates are under consideration. Application examples are included to illustrate the use of the proposed methodology.