Determining warranty benefits for automobile design changes

Abstract

Automobile manufacturers continually modify product designs to reduce costs and improve customer satisfaction through better field performance. Managers prioritize and approve proposed changes using a variety of methods that generally include some type of cost benefit analysis. An implied assumption of the cost justification process is that reliability bench tests provide an accurate prediction of product field performance. This research suggests that manufacturers use historical data to verify that a correlation exists between the bench test and actual field (warranty) performance. Further, manufacturers should analyze design changes using post hoc tests on observed field failure (warranty claim) data. This analysis can assist the manufacturer in determining the actual financial consequences of the design change. We demonstrate the recommended analysis techniques using manufacturer provided automobile warranty data.