Declining Warranty Costs
In general, we find this group to have relatively low warranty expenses, both on a total dollar basis and as a percentage of their sales revenue. And while there has been a downturn in both their sales and warranty expenses in recent years, we find it to have been much less substantial than the near-depression conditions experienced by many homebuilders since 2008.
In Figure 1, we’re totaling up the annual claims payments of the 118 suppliers that we’re tracking. Total claims were actually up by about $58 million last year, to $856 million. Growth was fastest in the fixtures segment, which was up by $30 million to $232 million, and was slowest in the building materials segment, which was up by $13 million to a $421 million total. Furniture makers, meanwhile, saw claims rise by about $15 million last year.