According to a recent report published by Allied Market Research, titled, “Auto Extended Warranty Market By Coverage, Distribution Channel, Vehicle Age, and Application: Global Opportunity Analysis and Industry Forecast, 2021–2030”, the global auto extended warranty market size was valued at $34.19 billion in 2020, and is projected to reach $60.82 billion by 2030, growing at a CAGR of 5.9% from 2021 to 2030.
An auto extended warranty helps to keep the vehicle running smooth and hassle-free after the manufacturers or retailers warranty has expired. This, therefore, is one of the major trends for the market growth as it has been witnessed that incidence of traffic collision, accidents, injuries, with respect to cars is on a rise nowadays. This increases the chances of an unexpected failure of various components and systems on the cars such as the engine, gearbox, electrics, steering, and suspension. All these increase the repair bills on a vehicle, which is not covered by manufacturer’s warranty. Thus, to reduce the operational expenses and other expenses end users are adopting auto extended warranty services that drive the growth of the market.
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Factors such as increased awareness for extended warranty, rise in costly repairs bills are expected to fuel the market growth. However, decline in sale of cars is expected to negatively impact the growth of the market. On the contrary, innovative services offered by major auto extended warranty players, and rise in demand for extended warranty coverage in automobiles are expected to provide lucrative opportunities for the market growth in the coming years.
On the basis of distribution channel, the auto dealers/manufacturers channel segment dominated the market in 2020, and is projected to maintain its dominance during the forecast period. This channel helps in expanding coverages beyond OEMs warranty and provide cost of replacement and other such defects caused from a manufacturing defect or poor workmanship.
Region wise, the auto extended warranty market size was dominated by North America in 2020, and is expected to retain its position during the forecast period. The major factor that drives the growth of the market in this region includes rise in demand for advanced features in cars and increase in competition for telematics in automotive vertical. However, Asia-Pacific is expected to witness significant auto extended warranty market growth rate during the forecast period, owing to the increase in automotive warranty companies and rise in adoption of extended warranty services.
The auto extended warranty industry has been severely affected, due to unprecedented transport restrictions, resulting in decline of new vehicle purchases. Moreover, handling large number of claims at a time has become a challenging factor for the global auto warranty industry. As a result, these major factors affected the growth of the market during the pandemic situation.
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Key Findings of the Study
- By distribution channel, the auto dealers/manufacturers segment led the auto extended warranty industry, in terms of revenue in 2020.
- By application, the personal application segment accounted for the highest auto extended warranty market share in 2020.
- By region, North America generated the highest revenue in 2020.
The key players profiled in the market include AAA Warranty Services, AmTrust Financial, ASSURANT, INC., AXA, CARCHEX, CarShield, LLC, Concord Auto Protect, Endurance Warranty Services, LLC, Olive, and TATA Motors Limited. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry. This study includes auto extended warranty market trends, auto extended warranty market analysis, and future estimations to determine the imminent investment pockets.
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