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Do extended warranties make sense for your operation?

Jan. 5, 2021
While on the surface an extended warranty may seem expensive, when compared to the cost of a component failure and subsequent breakdown, the extended warranty may end up saving you money in the long run.

When was the last time you compared your existing equipment specs to all of the safety, performance and regulatory changes that have been introduced to the trucking industry? If you have to think about it for more than a few seconds, it has probably been too long.

I suggest that you review specs every time you order new vehicles to make sure you are getting the best vehicle for your application and your budget and availing yourself to best warranty program that compliments your duty cycle.

However, your work shouldn’t stop there. Once the vehicle is operating in your fleet you need to collect and analyze data to determine if you are maximizing the useful life of your equipment based on the way you spec’d it. In other words, are you getting the best total cost of ownership out of your assets? This involves looking at maintenance and repair records not only for the asset as a whole, but on a component-by-component basis. You need to have a thorough understanding on how each component is performing in each of the duty cycles in which you operate.

That can help you determine if you should continue to spec a particular component in the future or if you need to switch to another brand, but it can also help you make decisions about whether you should purchase an extended warranty on a particular component.

One component or system that immediately comes to mind are the new components that are part of the aftertreatment system that are mandatory on today’s vehicles to meet emissions requirements. We continue to hear stories about failure issues with these system components.

You need to analyze the maintenance programs for these components and look at what you are spending on both maintenance and repair. Make sure your analysis includes not just the hard costs of labor and parts but also the soft cost like inconvenience to the driver, loss of customer goodwill, etc.

Then compare those costs to the cost of any available extended warranty programs for that component. Extended warranties can then insulate you from some of the potential significant costs incurred from component failure. While on the surface an extended warranty may seem expensive, when compared to the cost of a component failure and subsequent breakdown, the extended warranty may end up saving you money in the long run. In most cases, this warranty, if still applicable, is transferrable at the time of sale.

Today’s trucks are technological wonders. However, the cost to maintain and repair high-tech components can be quite high. An extended warranty could be just what you need to protect yourself. Explore your options, based on both time and mileage, to your specific duty cycle and determine what might be right for you. 

About the Author

Joseph Evangelist

Joseph is a seasoned transportation executive with domestic and international experience in sales, operations, mergers and acquisition with heavy emphasis on post-acquisition assimilation planning to maximize new growth and business combination opportunities.

He joined Transervice in 2007 and currently serves as executive vice president with sales, operations and staff responsibilities. He is also heavily involved in new business development and account management.

Previously he was president of LLT International, Inc., an international transportation consulting firm with operations in the U.S. and the Far East. He oversaw the maintenance and fleet management of a 2,000-vehicle cement distribution fleet in Indonesia.

Joseph was also president and CEO of Lend Lease Trucks Inc., a truck rental, leasing and dedicated carriage firm with operations throughout the U.S.

He also was vice president/general manager of The Hertz Corporation – Truck Division, a subsidiary of The Hertz Corp. While there he participated in the acquisition and successful integration of the Canadian licensee operations.

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