Growing Extended Car Warranty Market
Extended car warranties have never been so popular. Yet, the industry has a long history of being disliked and certainly misunderstood. Which had always left a large portion of the population without mechanical coverage. Some people having to deal with the mistrust they felt in the product and others simply not understanding the purpose of an extended car warranty has also alienated a significant portion of the registered cars in the US.
Now that the average age of registered vehicles is going up, more and more people are turning to extended auto protection that is sold through the manufacturer, dealership, or other third-party providers. Older vehicles are at a higher risk of some sort of mechanical failure. Plus, auto repair bills are on the rise as the cost of both parts and labor are going up. Leading to a growing extended car warranty market.
How has the Extended Car Warranty Market Changed in Recent Years?
Allied Market Research recently released a paper on the auto extended warranty market. It explored how the industry has adjusted in recent years and what we could possibly expect the market to look like in a few years’ time.
The global market for auto warranties in 2020 was valued at $34.19 billion. Along with a compounded annual growth rate of 5.9% it is predicted that the market value will increase to $60.82 billion by 2030. The US market accounts for two fifths of that global market share. Sitting at a value of $18.5 billion in 2022. We are talking about significant growth in the market. Increasing the amount of dealerships being opened. Yet we still find mistrust and drivers with older vehicles avoiding coverage and even getting much-needed repairs done. A survey done by AAA in 2019 found that approximately 60 million Americans were not able to pay for car repairs $600 and up with the money they had available to them. That accompanied with the mistrust mentioned and the misinformation has distanced a large portion of the US population from getting affordable coverage. Coverage that could have the potential of changing the way they go about car repairs.
Major players in the industry have had to regroup and find more advanced or adapted promotional strategies to connect with car owners. Other tactics such as expansion, collaboration, partnerships, and joint ventures have all been used to adapt the industry to fit the demand of the customer.
There is also an increase in awareness of extended car warranties where more people are searching for these services. Coupled with a huge increase in demand for digital services, we have people looking for services but opting for the digital offerings as they are convenient and are much less invasive than a phone call or in-person meeting. Unfortunately, as the demand for both extended warranties and digital offerings have not quite found their way to work together for a better, affordable, and transparent service to reignite trust and spread useful information.
So the market is growing and is expected to continue on this upward trend. Especially as more people are driving older vehicles. It is just a shame that, until now, we find that the industry has not quite adopted a digital approach. Ultimately leaving a fair amount of car owners without coverage or access to knowledge about extended auto protection.
Are Extended Car Warranties Worth It?
Coverage for mechanical failures is worth it and has the potential to lessen the challenges of car ownership. There is the option of getting an extended car warranty which is offered by the vehicle manufacturer or you can opt for a vehicle service contract offered by third-party providers.
An extended warranty or a vehicle service contract is beneficial in the event of a mechanical breakdown. Both offer coverage for the most critical components of your vehicle. Certain plans come with perks or additional benefits in the form of towing services, flat tire services, and trip interruption services should you find yourself stranded 100 miles or more away from home. With a plan in place you could enjoy the financial benefits of extended auto protection.
Here at Chaiz, we offer you the chance to comfortably search for extended vehicle protection that is perfect for your model car and mileage usage. Plus, you will be able to save up to 60% on your quote compared to call centers and dealerships. Start searching and comparing today.