Warranty Situation in the Automotive Industry

With the exception of a short era during the economic crisis in 2009/2010, the number of recalls in the automotive industry is continuously increasing. As reported by Warranty Week magazine the 2010 warranty costs of the US-based automotive industry reached nearly USD 12 billion. Worldwide automotive warranties can be estimated as USD 40 billion per year which correlates to a loss in sales of 3 – 5 % in the OEM business.

Possible reasons for recalls

The lack of technical interface definition as well as insufficient communication between OEMs and subcontractors are two of the major reasons for failures. This results in the usage of incompatible materials and chemicals as well as hard and software problems.

Furthermore, the increasing number of electronic components in modern high class vehicles leads to more complex environments especially when used in the engine compartment with high temperatures as well as mechanical and chemical loads.

Higher cost and market pressure, shorter time to market, as well as low priced production leads to decreased product quality. The usage of identical components in several applications, trading off against lower development costs, carries the risk of having the same failure in different products. Outsourcing of qualified employees results in a lack of technical expertise and also a loss of knowledge concerning processes and techniques.

Stringent legal demands abet faster recalls as new product laws come into force. Not to be neglected is also the presence of world wide web, bringing together car owners and lawyers from all over the world. Therefore, the reasons for recalls are various and their number is increasing.

The traditional failure formation in automotive industry

The image above illustrates the traditional way of failure formation in the automotive industry.

With regard to the different phases of product life time most failures are introduced in the production phase. Within afterwards failure detection and its correction, usually a life span of 12 months can be expected, where products having the same failure are delivered to customer resulting in high recall costs, as weak points are identified late in the whole process. To prevent such a scenario it is important to have early failure analysis by means of R&D support in the start-up phase.

Get the best support available

SGS has introduced a three-step model to support automotive customers in recall prevention. Based on our 20 years experience in failure analysis, in a first step a technological failure mode and effects analysis (FMEA) of processes, materials and products is carried out to discuss potential weak points in a component from a theoretical point of view.

Against the background of the FMEA risk prioritization the qualification procedure of the automotive part is discussed together with the customer in the next step. As an alternative to the traditional QA approach, new innovative aspects such as robust validation can be incorporated to identify the real operational limits.

As the last step, a detailed evaluation of the component and its essentials is carried out using various modern analytical techniques in failure analysis. This is done on pre-qualified parts as well as on new samples. For more info on how SGS can support, take a look at our Failure and Damage Analysis portfolio.

Dr. Olaf Guennewig
SGS Institut Fresenius GmbH

t: +49 231 9742-7303


SGS is the world’s leading inspection, verification, testing and certification company. SGS is recognized as the global benchmark for quality and integrity. With more than 70,000 employees, SGS operates a network of over 1,350 offices and laboratories around the world.