The Dilemma between Quality Reputation and Risk Prevention: Warranty Provisions of Car Manufacturers

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Car manufacturers are playing a major role beneath the most promising industries for investors. But the changing environment of political decisions and moving values of customers influence the strategies of the OEMs. The quality strategy of the car brand plays an enormous role. The increasing trend of major recall initiatives of vehicles is part of the daily press and harms the quality reputation of the car makers. But how can the analyst give a statement about the quality performance with the public information provided by the OEMs? One possibility is the evaluation of the provision for warranty which is part of the liabilities in the annual report. This book compares the applicable requirements like laws and reporting standards which have to be followed. It shows calculation methods to make the impact of laws and reporting standards visible. In respect to the estimation of the failure probability statistic methods are explained. Finally the annual reports of the biggest car manufacturers are compared with each other in regards to the available information about warranty provisions and key figures are analyzed.