Extended Warranty Market is Estimated to Witness High Growth Owing to Opportunity in After-Sales Services

Extended Warranty Market


Extended warranty, also referred to as extended service contract, provides coverage for repairing or replacing consumer electronics and home appliances if they fail or stop working due to normal usage. It extends the original manufacturer warranty by covering the product for an additional period of time ranging from 1 to 3 years after the purchase. Extended warranty provides customers peace of mind by protecting them from unforeseen repair costs during the additional coverage period.

The global extended warranty market is estimated to be valued at US$ 123.04 Mn in 2023 and is expected to exhibit a CAGR of 8.9% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market Opportunity:

The opportunity in the after-sales services segment offers high growth potential for the extended warranty market. After-sales services refers to various support services like repairs, maintenance and technical support provided to customers after the purchase of a product. Extended warranty covers the cost of repairs and replacements needed during the additional coverage period post the expiry of the original warranty. With rising costs of repairs and technological advancements resulting in complex products, extended warranty provides a cost-effective solution to customers against unforeseen breakdowns and technical issues. It also ensures seamless after-sales service support through authorized service centers. The growing demand for protection against post-purchase costs will drive the adoption of extended warranty plans, particularly in consumer electronics and home appliances segment.

Porter's Analysis
Threat of new entrants: The extended warranty market has moderate threat of new entrants as it requires significant capital investments and technological expertise. However, the established players have economies of scale advantages that make it challenging for new players.

Bargaining power of buyers: The bargaining power of buyers is moderate to high in this market. Buyers can easily switch between warranty providers if they offer better services and pricing. This forces companies to innovate and provide value added services.

Bargaining power of suppliers: The bargaining power of suppliers is low as there are many equipment and component manufacturers in this market.

Threat of new substitutes: The threat of new substitutes is low as extended warranties provide crucial coverage over the original warranty period.

Competitive rivalry: The competitive rivalry in the extended warranty market is high due to the presence of many global and regional players competing on the basis of pricing, claims settlement ratios and service quality.

SWOT Analysis
Strengths: Extended warranty provides additional coverage and peace of mind to customers. established players have robust customer service facilities across regions.

Weaknesses: Lower profit margins compared to other insurance products. Increased claims due to supply chain disruptions and rising repairs costs affect underwriting margins negatively.

Opportunities: Growth in sales of durable goods and technologies like IoT and AI create demand for complementary extended warranty programs. Increasing consumer awareness about benefits of warranties is another growth driver.

Threats: Intense price wars among players may reduce margins. Growing electronics repair industries may decrease dependence on warranties over time.

Key Takeaways
Global Extended Warranty Market Size is expected to witness high growth over the forecast period driven by technology adoption across industries and growth in sales of durable consumer goods. Extended warranties provide customers protection against rising repair costs and supply chain disruptions.

Regional analysis: The North American region currently dominates the extended warranty market owing to high adoption of consumer electronics and presence of major players. However, Asia Pacific is expected to grow at a higher pace during the forecast period supported by increasing disposable incomes, urbanization and sales of smart home appliances in countries like China and India.

Key players: Key players operating in the extended warranty market are Xilinx Inc. (AMD Corporation), Intel Corporation, Quicklogic Corporation, GOWIN Semiconductor Corporation, Microchip Technology Incorporated, Lattice Semiconductor Corporation, Efinix Inc. and Achronix Semiconductor Corporation. These players are focusing on developing innovative after-sales services and strengthening distribution networks globally. 

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