Honda is the brand with fewest warranty claims, study says

Article by Christian Andrei, on June 20, 2011

UK warranty specialist MB&G states that the companies that filed the fewest number of claims for the past year are those from Japan and Korea. Honda has received the top spot in this study.

MB&G noted that as drivers have decided to keep the cars until they’re in their fourth years or even up to six years, there are some drivers who will be surprised with the type of maintenance costs that they’d have to incur.

Kevin Pearce, a director of MB&G, said that modern day cars are “reliable” but that errors are more common in the fourth or fifth years and if “the mileage reaches 70-100,000 miles.” He explained further that the cars feature plenty of electronic equipment that controls the engine management automatic gearbox and a small software error can often create issues.

Of course, there’s wear and tear that have to be considered. MB&G says that the average age and mileage of cars being is increasing, but generally, the corporate/SME market doesn’t like to go beyond the warranties.

Pearce said that each year, tens of thousands of warranties are being processed. The average age of those cars are also increasing quite significantly. Pearce added that for now, there are more drivers who would drive around, thinking about purchasing a warranty for “extra peace of mind.”

The survey is focused solely on the frequency of claims rather than the claim’s average value since it can differ from one manufacturer to the next, Pearce said. The average claim value is dependent on the price of the parts as well as the labor rates, which can differ by region, he added. Currently, the cars being managed by MB&G have their mileage and average age increasing. However, a number of corporate or SME market have a tendency not to extend the warranties offered by the manufacturer.

Pearce continued by stating that the company continues to manage tens of thousands of warranties on an annual basis. The company remains to see that the average age of these vehicles is indeed increasing which reflects the extended ownership cycle. He added that the company is starting to see a number of drivers that plan to buy warranty in order to have that peace of mind, with some of them even doing so for the first time.

The corporate sector though has still to manage the various risks linked to a number of older cars. He continued by stating that most companies keep their cars up to four years and some even go as long as five years. If any issues come up or any failures are experience, everything is funded using the company’s annual maintenance budget.

By deciding to cover the older and higher mileage cars, even high-value cars, with warranty, he said further, the fleets would be able to manage the risks efficiently. This will then allow a budget of a more finite cost. The list shown is based on MB&G’s experience of a wide range of cover levels, mileages, and ages, with different types and quantities of vehicle for each cover. It makes use, as a percentage, of a number of vehicles at risk versus the frequency of claims versus those vehicles. It does not however, consider the type of claim of the account average claim. It is possible that average claim costs may display a different order.

Press Release

MB&G REVEALS TOP TEN CAR BRANDS THAT GENERATE THE FEWEST WARRANTY CLAIMS

Warranty specialist, MB&G has drawn on its comprehensive database of warranty claims, to compile an informed list of car brands that have generated the fewest claims over the past year, giving an indication of car brand reliability.

Japanese and Korean brands dominated the list, with Honda taking top spot. The top ten brands on MB&G’s list with the least warranty claims were as follows:

1 Honda

2 Lexus

3 Mitsubishi

4 Toyota

5 Suzuki

6 Kia

7 Hyundai

8 Subaru

9 Mazda

10 Nissan

It is no coincidence that the top ten most reliable cars are Japanese and Korean manufactured, with many cars including Toyota, Honda and Nissan manufactured in the UK, as they have had a reputation for reliability for many years, which is demonstrated by these results.

With more and more car owners, including companies, extending their cars’ life into their fourth, fifth and sixth years, many drivers are for the first time coming to terms with the costs associated with running an older car.

“Modern day cars are reliable, but if something starts to go wrong, it’s more likely to be in the fourth or fifth years, or when the mileage reaches 70-100,000 miles,” explained Kevin Pearce, a director of MB&G.

“Cars are packed full of electronic equipment that control everything from the engine management system to the automatic gearbox and a small software glitch can often create issues, in addition to the other components that can fail simply through wear and tear,” he added. “Many components are now not repaired as they used to be, but simply replaced, this resulting in the average claim value starting to increase.

“Our survey is only looking at frequency of claims and not the average value of the claim, which can vary from manufacturer to manufacturer. The average claim value is affected by labour rates and parts prices and can also vary by region.”

The average age and mileage of cars being handled by MB&G is increasing, but the corporate/SME market generally resists extending warranties beyond the one provided by the manufacturer.

“We administer tens of thousands of warranties each year and generally we are seeing the average age of those cars increasing quite dramatically, mirroring the extended ownership cycle. Currently we are seeing more drivers considering buying a warranty for extra peace of mind, some for the very first time, but the sector which is still to manage the risks associated with many older cars, is the corporate sector.

“Many company cars are being kept for a fourth and fifth year, and any component issues or failures are simply being funded through their annual maintenance budget. By covering their higher mileage, older cars or higher value cars with a warranty, fleets could really manage their risk more efficiently and it enables them to budget a finite cost,” added Pearce.

...Ends...

*The above list is based on the experience of MB&G over a wide range of ages, mileages and cover levels, with varying quantities of vehicles under each cover. It is based on numbers of vehicles at risk and the frequency of claims against those vehicles, as a percentage. It does not take into account average claim costs or type of claim. Average claims costs may show a different order.

Topics: honda, study

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