The Basics of Fleet Warranty
A fleet warranty program must accomplish three things;
collect monies to offset repair costs for unexpected failures,
hold OEMs accountable for quality and collect data for quality reviews with OEMs.
Fleets pay for warranty protection (in either standard or extended programs) in the purchase price of their vehicles. Not requesting reimbursement for low mileage failures, increases operating costs and accepts OEM's poor quality.
Although the prime purpose of warranty is to recover repair dollars, it also needs to be looked at as a way of holding OEMs accountable for the quality of their products. Without the penalty of reimbursement, OEMs are not motivated to address quality issues. In addition, by not requesting reimbursement the fleet is paying for warranty coverage twice, once in the purchase price and again for the cost of repairs that are covered.
A warranty program can also be used to collect failure data to discuss during quality reviews. The data can also be used to identify quality trends to support future warranty claims during periodic quality reviews or at the time of negotiations for new vehicles.
Although warranty programs can be cumbersome and take some effort, they are essential for any fleet to control its costs and monitor product quality.