New OESA Warranty Analysis Advocates Increased Dialogue Needed to Address $10 Billion Issue

TROY, Mich., Aug. 20, 2003 -- A new report from the Original Equipment Suppliers Association (OESA) concludes that the North American automotive industry should increase the dialogue of how to eliminate warranty concerns rather than shift responsibility, cost and blame. OESA Comparative Analysis of OEM Warranty Programs in N.A is a comparative analysis of OEM warranty management programs and is now available to the industry.

The analysis is the result of nearly a year's worth of examination by an OESA Study Team of 44 executives from 24 OESA member companies. The Team prepared the analysis that examines the North American warranty management programs at BMW, DaimlerChrysler, Ford, General Motors, Nissan, and Toyota.

"This member-driven OESA effort represents the first time a comprehensive analysis of the North American warranty management provisions is available," said Neil De Koker, president of OESA. "The publication enables suppliers to gain a clear understanding of the warranty provisions at six OEMs," he added. "The strongest takeaway is that the industry needs to continue to move the dialogue toward a discussion of eliminating warranty concerns, and away from shifting responsibility, cost, and blame."

The Warranty Study Team observed two different strategies the OEMs employ to manage warranty costs: (1) zero-based warranty management seeking to avoid warranty costs, and (2) traditional warranty management to effectively manage warranty costs. OESA determined that no single OEM of those studied uses an optimal warranty system that meets both objectives. As N.A. warranty costs are $10 billion per year, the Warranty Study Team focused on enabling suppliers to effectively manage warranty costs.

The publication is divided into two sections: the "Warranty Analysis Matrix" section features a comparative analysis of the OEM warranty management programs, and suggests a preferred approach to dealing with individual issues. The "Principles for Warranty Analysis and Management" is a narrative section discussing the philosophy behind the warranty management direction the OESA Warranty Study Team developed.

A hard copy and cd-ROM version of the analysis is available at the publications section of www.oesa.org .

The Original Equipment Suppliers Association (OESA) provides a strategic forum for the automotive industry's original equipment suppliers. Membership encompasses suppliers of components, modules, systems, materials, and equipment used by the original equipment automotive industry.

Formed in August of 1998, OESA provides a forum for automotive suppliers by addressing issues of common concern through peer group councils; serving as a reliable source of information and analysis; and providing an industry voice, when appropriate, on issues of interest.

With 329 members having global automotive sales exceeding $280 billion, OESA represents over 60% of North America's automotive supplier sales.

OESA is a market segment association of the Motor & Equipment Manufacturers Association (MEMA).