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-   -   2023-24: Tata Motors has very high warranty costs | Higher than marketing expenses! (https://www.team-bhp.com/forum/indian-car-scene/287713-2023-24-tata-motors-has-very-high-warranty-costs-higher-than-marketing-expenses.html)

2023-24: Tata Motors has very high warranty costs | Higher than marketing expenses!



Globally, Jaguar Land Rover is not quite well regarded for quality and reliability, as is Tata Motors in India. And this reflects heavily on their financials as well in terms of warranty costs.



For reference, Maruti’s warranty expense is just 0.14% of its total revenue.

And this tells you why the horror stories about Tata Motors have not stopped despite them being the top three car makers of the country. Despite them being the first homegrown company to put emphasis on the safety aspect of the cars. Despite them bringing out newer cars in major segments, they are still crippled with warranty issues and recalls and this has been their Achilles heel since time immemorial. The past ghosts refuse to leave them and they continue to bleed. It’s not funny anymore when your warranty related expenses surpass your marketing expenses. I hope someone fixes this now at least !

You would think someone at Tata would have realised by now that it’s cheaper to just put some proper quality checks at the factory level instead of having to blow money on warranty replacements and publicists to cover up all the angry customers reviews.

The more important comparison from that chart; their warranty expenses seem to be 2x their engineering expenses?!

Tata need a serious rethink of their entire material-to-product operational cycle. Best NOT done in-house, process owners are rarely objective about redoing them.

Mahindra's estimated revenue in 2023-2024 was ₹1,00,000 crore according to MoneyControl. Warranty costs for Mahindra were ~₹658 crore. So Mahindra's warranty expense is ~0.65% of it's revenue if i'm not wrong.

Related reading: https://asq.org/quality-resources/co...nal%20failures.

I think TML's issue is not being consistent in giving quality output, rather than not being able to achieve quality output at all. We have many happy TML customers on this forum itself, and am sure many of us know people outside the forum that have had a niggle free ownership. So it's not as if they don't know how to make quality products at all :). Challenge is actually doing it day in & day out all the time, and not once in a while. Of course, that's easier said than done.

About the data shown above, would be interesting to see (if available) the split of warranty costs between the commercial and personal vehicle divisions.

I am not alarmed by increase in warranty expenses if it just provision and not actual spending over and above provisions.
As they have increased sales, they will have to increase provisions to ensure that they match cost of sales.

The actual figures look very different from what's portrayed here.
Tata Motors warranty expenses globally ( CV+PV+JLR) FY2024 :
13K CR, Total revenue: 4.3L CR rupees ~3.1% of total revenue.



Suzuki warranty expenses globally :
9K CR, Total revenue: 2.8L CR rupees~3% of total revenue.


Comments on TML PV domestic segment warranty expenses, reduced from 0.7 to 0.3% due to quality improvements.



Tata Motors report

Suzuki report

Nothing surprising considering the amount of niggles and problems the cars face. TATA invariably has to pull up their socks else either they lose sales or money through warranty replacements.

It would be interesting to see the warranty costs of the other manufacturers.

Going by JLR (global)/Tata Motors (desi) and Suzuki(global)/Maruti (desi) data, this is probably an industry-wide phenomenon

Conclusion (irrespective of brand):

- If a global customer asks for a warranty replacement, they do it with a smile. If an Indian customer asks for a warranty replacement, they show the fineprint.
- If a global customer gets a lemon, they replace all the problematic parts under warranty. If an Indian customer gets a lemon, lol, tough luck.
- In the global market, if there is a risk of a small nut falling off, they will issue an immediate recall. In the Indian market, if there is a risk of airbags not opening or brakes failing, they just hope that nobody finds out.

Both the posts quoted here are misleading!

This is an apples-to-oranges comparison. You are using Tata Motor's consolidated statements, wherein the PV division forms less than 12% revenue and JLR is the major contributor with 69% share.


So, when you compare MSIL and TML, you are essentiallly comparing Land Rover and Maruti. An ultra luxury brand operating primarily in the developed world with stringent consumer protection laws, being compared to an econo-box maker operating in a developing economy with questionable consumer protection while making it appear like a typical Tata and maruti comparison. Highly unfair!

The figure you refer to for Suzuki does not even have the same meaning as the Tata figure! This refers to the total provisions in their balance sheet (not the income statement) which is a forecast of the warranty expenses they expect to incur in the coming years for the products they have sold to date (not the warranty expense incurred this year!). Unafair again!

Here is the provisions computation in the TML report: (21k Cr not 13k Cr):


Provisions/Sales for Suzuki are 3.5% whereas for Tata Motors are 4.8% - 27% higher!

But once again, these numbers don't mean much. We're still comparing mostly JLR with Suzuki Global (~58% sales from Non-India entities) so not a Tata vs Maruti comparison.

Not to forget that Provisions are essentially forecasts and if based on different assumptions then hard to compare (would compare Suzuki Global expenses but can't find that figure)

The only figure worth referring to. The warranty expenses for Tata Motors PV division are 0.3% of revenue whereas that for Maruti Suzuki is 0.14% meaning Tata spends more than double of what Maruti does, which is indeed significant!

It is already mentioned in the very first post

JLR FY23 3.9% FY24 3.6%
TML COMM FY23 1.5% FY24 2.0%
TML PSGR FY23 0.7% FY24 0.3%
Over all group FY23 1.2% FY24 1.4%

Only commercial vehicles is up. Rest all group is improving. Thought JLR has slightly improved on percentage but revenue figures are up.

Maruti 0.14%
Mahindra 0.65%
Tata 0.3%

Without doubt, Marutis are reliable and Tatas are full of niggles. But we also have to consider that generally, Tata does offer the latest technology (turbo-petrols, BS6 turbo-diesels, dual-clutch ATs, Electric Cars, loads of features), while Maruti is generally offering yesterday's technology (1.5L NA engine, 1.2L NA engine, torque-converter ATs or AMTs). Sole exception being the Hybrid which is from Toyota and a low volume turbo-petrol.

If your products are more technologically advanced, the warranty costs will naturally be higher. Of course, it's not down to just that. Even though it was almost 3 years after launch, I faced 4 niggles in my Tata Safari Facelift test-drive!

In my little home, I keep telling my family = take 1 hour more to do the task properly, and it will save you 10 hours in corrective efforts later. Exact same thing at a larger level for Tata Motors. Just build your cars right & get rid of the damn (careless) niggles already.

P.S. Would love to see VW & Skoda's warranty repair costs :D.

There is a reason why provisions are recorded as liabilities in the Balance Sheet !!

I would like to see how the Germans compare to the Koreans and Japanese.

These numbers are encouraging.