That Mack truck barreling toward you on the highway has been built to last. Behind that big, shiny grill — reflecting off the rearview mirror of your modest SUV or sedan — is an engine that has a 250,000-mile warranty and a half-million-mile major component warranty.
That's a standard service contract for the Mack, owned by Volvo Trucks, says Ken Culver, North American director of warranty, quality, and reliability. In addition, the Volvo Truck cabs have a 1-million-mile corrosion warranty. That's a lot of miles of wear and tear. "So it's always been one of our top priorities to identify warranty risk," Culver says.
However, until about three years ago, the Volvo Trucks North America group, like many manufacturers, could only wait to react to warranty claims. Taking corrective action after the fact is a costly proposition, both financially and in terms of customer loyalty. So Volvo, the parent company, invested in analytical software that could be used globally on top of existing warranty data to identify emerging trends, develop internal key performance indicators, and even identify new revenue streams that could result from expanding the breadth of extended warranty coverage on parts.
Now, Volvo considers warranty management a unique opportunity that can transform aftermarket service into its own profitable business. "We've grown from selling less than 10% of our trucks with some sort of extended [warranty] coverage to over 50%," Culver says.