Auto Extended Warranty Market

Rising need for automotive production drives market growth

Growing demand for vehicle production is predicted to drive the market CAGR for the auto extended warranty. Automotive refers to the design, development, manufacture, and maintenance of motor vehicles such as cars, trucks, motorbikes, and others. Auto extended warranties improve automobile production by boosting consumer confidence in purchasing vehicles, creating brand loyalty, and encouraging higher-quality manufacturing standards as manufacturers strive to reduce warranty claims and maintain long-term customer happiness.

For instance, the European Automobile Manufacturers Association (ACEA), a Germany-based automobile manufacturers association, reported that 85.4 million motor vehicles were produced worldwide in 2022, a 5.7% increase over 2021. As a result, rising demand for vehicle production is fueling the expansion of the auto extended warranty industry.

Moreover, Flexible pricing schemes are significantly driving the auto extended warranty market's growth. The pricing strategy for auto extended warranties differs significantly from that of standard auto insurance. The auto extended warranty is based on historical data such as vehicle type, use, past claims, liability limits, and deductibles. Discounts on premiums in the auto extended warranty are supplied by combining various characteristics such as prior vehicle insurance providers, multi-carrier insurance, and automobile worth. Such policies make auto-extended warranties a highly flexible cost that can be assessed and paid annually, semiannually, or quarterly.

The auto-extended warranty allows for the transfer of fixed expenditures to variable costs. It permits premiums to be calculated based on mileage and other rating parameters. It is a variable pricing model that allows for cost variations based on driving behavior, which can be observed via telematics. This pricing structure makes vehicle extended warranties more personalized and precise, which is projected to drive the Auto Extended Warranty Market throughout the forecast period.

The auto extended warranty industry is predicted to increase rapidly in the next years since it provides coverage for pricey parts and components of automobiles that are prone to damage. Nowadays, cars are outfitted with cutting-edge features that are rather pricey. As a result, when they fail, the repairs become fairly expensive in terms of mechanical breakdown, bumper blast, oil change, component repair or replacement, and other costs. According to AAA's 2019 poll, 60 billion Americans did not have enough savings to afford a large car repair expenditure of $600 or more.

In addition, another AAA poll revealed that over 30 billion consumers delayed or neglected basic car maintenance, potentially leading to costly breakdowns and repairs. For instance, while the typical car repair bill is around $600, a fuel pump repair can cost between $900 and $2,000, and a gearbox repair can cost between $3,000 and $5,000. Repairs to the engine control unit might also cost thousands of dollars. As a result, rising repair costs fuel the expansion of the auto extended warranty market. Thus, driving the Auto Extended Warranty Market revenue.

The Global Auto Extended Warranty Market Industry is also propelled by the escalating costs associated with vehicle repairs. As vehicles age, the likelihood of mechanical failures and the associated repair expenses tend to rise. This situation creates a favorable environment for extended warranties, as consumers look for financial protection against unexpected repair bills. With the market expected to reach 70.7 USD Billion by 2035, it indicates a growing recognition among consumers of the value of extended warranties. The increasing complexity of vehicle systems further contributes to rising repair costs, making extended warranties an attractive option for many vehicle owners.

The Global Auto Extended Warranty Market Industry is poised for substantial growth in the coming years. Projections indicate that the market will expand from 38.7 USD Billion in 2024 to an impressive 70.7 USD Billion by 2035. This growth trajectory suggests a robust demand for extended warranties, driven by factors such as increasing vehicle ownership, rising repair costs, and heightened consumer awareness. The anticipated CAGR of 5.63% from 2025 to 2035 further underscores the market's potential. As the automotive landscape evolves, warranty providers will need to innovate and adapt their offerings to meet the changing needs of consumers.

The Global Auto Extended Warranty Market Industry experiences growth driven by the rising number of vehicles on the road. As more consumers invest in automobiles, the demand for extended warranties increases. In 2024, the market is valued at approximately 38.7 USD Billion, reflecting the growing consumer awareness regarding vehicle maintenance costs. This trend is expected to continue, as vehicle ownership rates rise globally, particularly in emerging markets. The increasing complexity of modern vehicles, with advanced technology and electronics, further propels the need for extended warranties, as consumers seek protection against potential repair costs.

The Global Auto Extended Warranty Market Industry is influenced by the evolving regulatory landscape surrounding automotive warranties. Governments worldwide are implementing regulations to protect consumers, ensuring transparency and fairness in warranty offerings. These regulations may encourage consumers to consider extended warranties as a viable option, knowing that their rights are safeguarded. As the regulatory environment continues to evolve, warranty providers must adapt their policies to comply with new standards, potentially leading to increased consumer confidence in extended warranties. This shift may contribute to the overall growth of the market as consumers seek reliable protection for their vehicles.

Consumer awareness regarding the benefits of extended warranties plays a crucial role in the growth of the Global Auto Extended Warranty Market Industry. As more individuals become informed about the potential savings and peace of mind that extended warranties provide, demand is likely to increase. Educational initiatives by warranty providers and automotive associations contribute to this trend, highlighting the importance of financial protection against unforeseen repair costs. This heightened awareness is expected to drive market growth, as consumers increasingly view extended warranties as a necessary investment rather than an optional expense.

Technological innovations in the automotive sector significantly influence the Global Auto Extended Warranty Market Industry. As vehicles become more sophisticated, incorporating features such as advanced driver-assistance systems and electric powertrains, the potential for costly repairs increases. Consumers are likely to seek extended warranties to mitigate these risks. The market is projected to grow at a CAGR of 5.63% from 2025 to 2035, reflecting the increasing reliance on technology in vehicles. This trend suggests that manufacturers and warranty providers must adapt their offerings to cover new technologies, ensuring that consumers feel secure in their investments.

By region, the study provides the market insights into North America, Europe, Asia-Pacific and the Rest of the World. North America dominated the market, with a 45.80% revenue share in 2023. This is due to the emergence of complicated and sophisticated consumer products, as well as increased consumer awareness of the durability and dependability of their high-value purchases. Furthermore, the strong presence of government authorities and regulatory organizations working to improve consumer protection services is helping to drive market expansion in the region.

Further, the major countries studied in the market report are the US, Canada, Germany, France, the UK, Italy, Spain, China, Japan, India, Australia, and South Korea.

Figure 2: Auto Extended Warranty Market Share By Region 2023 (USD Billion)

Source: Secondary Research, Primary Research, Market Research Future Database and Analyst Review

Europe Auto Extended Warranty Market accounts for the second-largest market share. This is because consumers in the region obtain extended auto warranties and service contracts (EWSCs) from various parties like manufacturers, marketers of goods, and third-party insurance. Further, the German Auto Extended Warranty Market held the largest market share, and the UK Auto Extended Warranty Market was the fastest-growing market in the European region.

The Asia-Pacific Auto Extended Warranty Market is expected to grow at the fastest CAGR from 2024 to 2032. This is due to its rising economies, high cost of repairs, numerous offers and perks, and superior customer experience provided by auto extended warranties. Moreover, China’s Auto Extended Warranty Market held the largest market share, and the Indian Auto Extended Warranty Market was the fastest-growing market in the Asia-Pacific region.

Leading market players are investing heavily in research and development in order to expand their product lines, which will help the Auto Extended Warranty Market grow even more. Market participants are also undertaking a variety of strategic activities to expand their global footprint, with important market developments including new product launches, contractual agreements, mergers and acquisitions, higher investments, and collaboration with other organizations. To expand and survive in a more competitive and rising market climate, the Auto Extended Warranty industry must offer cost-effective items.

Manufacturing locally to minimize operational costs is one of the key business tactics used by manufacturers in the global Auto Extended Warranty industry to benefit clients and increase the market sector. In recent years, the Auto Extended Warranty industry has offered some of the most significant advantages to medicine. Major players in the Auto Extended Warranty Market, including OLIVE, AAA WARRANTY SERVICES, TATA MOTORS LIMITED, ASSURANT, and others, are attempting to increase market demand by investing in research and development operations.

Hyundai Motor Company is a South Korean multinational car manufacturer based in Seoul, South Korea, that was formed in 1967. Currently, the firm controls 33.88 percent of Kia Corporation and entirely owns two brands: Genesis, its luxury automotive subsidiary, and Ioniq, its electric vehicle brand. The Hyundai Motor Group consists of three brands. In July 2022, Hyundai India launched a 6-/7-year extended warranty package for all Hyundai vehicles. This extended warranty will also apply to cars that are already on the market.

CARCHEX is a Baltimore, Maryland-based company that offers extended auto warranties and mobile vehicle inspections. CARCHEX was established in 1999 as a provider of pre-purchase automobile examinations. Jason Goldsmith, a Baltimore-based entrepreneur and TheLoanPage.com founder, purchased the company in 2003. Shortly after, CARCHEX expanded its car inspection service to all 50 states by forming a national network of ASE-certified mechanics. In 2019, CARCHEX announced a relationship with Mothers Against Drunk Driving (MADD). As part of the cooperation, CARCHEX provided $20,000 to the group to assist in reducing underage drinking and drunk driving.