DR. Oscar Odiboh, Managing Director Newsletters Limited writes on warranty in Nigeria’s automobile industry. What is warranty, why is there warranty, for who, what is the connection between warranty and guarantee? The renown marketing communication expert answers all the questions.
What is warranty and guarantee and what’s the connection between them? Warranty is a formal promise of action in case of the malfunctioning of a particular product. Warranty begins from the moment a product relocates from the manufacturer’s end into the hands of a consumer. It voids once it changes its name, content and composition. Its value is consistent and only the consumer can use it. In simple terms, warranty is the mixture of human and product elements.
On the other hand, guarantee is an official promise or assurance by an organization that certain conditions will be fulfilled with respect to certain anomalies found in service delivery. Guarantee rests on the individuals involved and it means that someone, a person, assumes responsibility in the face of the development. The management of the organization may change by name, content and composition a guarantee remains as promised.
In many cases, warranty and guarantee are used interchangeably. This is understandable because obligation is involved in both of them. But there are differences between the two. For instance, warranty is what a consumer gets for buying while guarantee is what the manufacturer gives for selling.
Another example of the difference between the two is that guarantee works in banking with reference to a service offering, whilst warranty functions in automobile manufacturing with reference to the parts of a vehicle.
However, for warranty to work in automobile distribution, marketing and marketing communication, it needs the guarantee of personalized service delivery of the company. The guarantee for warranty is the availability of after-sales service and personnel in addition to the auto parts in question. In other words, warranty without guarantee in the automobile industry is no warranty.
Philosophy of warranty and the Nigerian condition
New vehicles should come with a warranty, which is an agreement between the vehicle manufacturer and the customer that: in case anything breaks or malfunctions, or goes wrong with specific parts of or the whole vehicle within a stipulated period of time, then the manufacturer will repair or replace the component at no cost to the customer. A new car factory warranty starts from one year, more common 3 years and extends 5 – 10 years.
Some companies also offer extended warranties or used car warranties for vehicles up to 12 years old.
This shows that warranty is the desire of a manufacturer to offer the peace of mind as an added value to his or her product. It is the logically proven admission that no work of man is perfect since man himself or herself is not perfect. Warranty is premised on the proposition and admonition that we must continue to strive towards perfection.
The internet is replete with websites showing the functionality, types and benefits of warranties on offer. Through the same medium, manufacturers of vehicles often announce the recall of their vehicles which are confirmed to be defective and their top executives have had to apologize for such developments. Automobile recall is the most clinical expression of warranty and the executive admission of error is the best expression of guarantee.
The case in Nigeria is different. Research has shown that 50% of the new vehicles sold in Nigeria do not have genuine warranty. Also, the warranty of 75% of new vehicles in the country cannot be guaranteed. When it comes to recall in the automobile industry in Nigeria, we have failed by 100%. By the same percentage, we have failed with regards to admission of error by automobile managers for numerous blunders of the past (e.g. non-tropicalisation of some new imported cars brands).
The estimated average value of the warranty parts of a new vehicle is 9.5% of the sales price; whilst that of a used vehicle is said to be 17.5%. An average of 80,000 units of new vehicles and 200,000 used vehicles are reported to be imported into the country annually and that gulps N400 billion.