Can a company use warranty to help drive sales? It sure can. Just ask Hyundai Motors. It saw its market share jump from 1.1% to 4% after it extended its powertrain warranty in 1999. You might also want to put the question to Volkswagen, which saw its sales drop 30% in the three years after it shortened its powertrain warranty in 2002. Continue reading
Tag Archives: Hyundai
Warranties are withering, claims an Arizona State marketing professor. This, he says, bodes well for service contract industry profits, but not for consumers.
But in many product sectors warranty is expanding and recent studies show that consumers believe that service contracts deliver value. Continue reading
It is quickly moving beyond dispute that federal consumer protection law favors binding arbitration over litigation. A North Carolina federal trial court recently joined two federal appellate courts in ruling that the federal warranty law, the Magnuson-Moss Warranty Act, does not ban binding arbitration provisions in consumer product warranties. This is good news for consumer product manufacturers, and better news for consumers if more companies turn to binding arbitration.
In a recent post, we commented on Hyundai’s decision to abandon the arbitration clause in its new vehicle limited warranty. A reader pointed out that, generally, in consumer-dispute arbitration only the warrantor is bound by the award. The reader is correct that where a consumer protection statute or lemon law includes a state-run mandatory arbitration procedure, it generally permits a consumer dissatisfied with an award to reject it and proceed to litigation.
A recent “victory” for the New York Times strikes a blow to consumers. By bullying Hyundai into abandoning arbitration to resolve warranty disputes, it robbed consumers of a fair and efficient alternative to costly, time-consuming, and economically inefficient litigation. Continue reading