VEHICLE PROTECTION SERVICE MARKET ANALYSIS

The Global Vehicle Protection Service Market size is estimated to be valued at US$ 146.01 Bn in 2023 and is expected to reach US$ 288.3 Bn by 2030, grow at a compound annual growth rate (CAGR) of 10.2% from 2023 to 2030.

The vehicle protection service market is a growing industry that offers various services aimed at protecting vehicles from damage, theft, and other risks. This market has witnessed steady growth due to several factors. Firstly, the increasing number of vehicles on the road has led to a higher demand for vehicle protection services as owners seek to safeguard their valuable assets. With rising vehicle complexity and the cost of repairs, vehicle protection services have become essential for mitigating unexpected expenses and providing financial security.

Extended warranty programs have gained popularity among vehicle owners. These programs offer coverage beyond the manufacturer's warranty, providing protection against costly repairs and component failures. Vehicle protection services also encompass maintenance and repair plans that cover regular service intervals and unexpected repairs. With the rising cost of vehicle maintenance, these plans offer a cost-effective solution for owners to ensure their vehicles remain in good condition.

Roadside assistance services play a crucial role in the vehicle protection service market, providing emergency assistance such as towing, jump-starts, and lockout services. Vehicle theft protection systems, including GPS tracking and immobilization devices, have become increasingly important to combat the risk of vehicle theft. Insurance coverage options, such as comprehensive and collision insurance, are also offered as part of vehicle protection services, providing financial protection against damage, accidents, and theft.

Vehicle Protection Service Market Regional Insights

• North America: North America is a significant market for vehicle protection services. The region has a high vehicle ownership rate and a strong culture of vehicle maintenance and protection. The market is driven by factors such as the need for extended warranty coverage, roadside assistance services, and insurance options. In North America, there is also a growing trend of vehicle protection plans being offered by automobile manufacturers and dealerships.
• Europe: Europe is another prominent market for vehicle protection services. The region has a significant number of vehicles on the road, and vehicle owners prioritize protecting their investments. Extended warranty programs, maintenance plans, and insurance coverage are popular in this market. European consumers also show a preference for comprehensive vehicle protection services that cover multiple aspects, including maintenance, repairs, and roadside assistance.
• Asia Pacific: The Asia Pacific region is witnessing rapid growth in the vehicle protection service market. The increasing middle-class population, rising vehicle sales, and improving disposable incomes contribute to the market expansion. In this region, there is a growing awareness among vehicle owners regarding the benefits of extended warranty programs, maintenance plans, and theft protection systems. Roadside assistance services are also gaining traction as more consumers prioritize safety and convenience.

Figure 1. Global Vehicle Protection Service Market Share (%), by Region, 2023

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Analyst’s Viewpoint:

The vehicle protection service market is poised to grow steadily over the next five years. Penetration of new automotive technologies and increasing average vehicle age are expected to drive the demand for extended warranty and maintenance plans. The rising complexity of vehicle systems also increases the risk of expensive repairs, making protection services more appealing to car owners. However, tight competition across the market may restrain pricing power, squeezing margins for providers. Original equipment manufacturers have an opportunity to gain share by bundling protection plans with vehicle purchases.

Vehicle Protection Service Market Drivers:

• Increasing Vehicle Ownership: The rising number of vehicles on the road is a significant driver for the vehicle protection service market. As more individuals own vehicles, there is a greater need for services that protect and maintain their investments. Vehicle owners seek solutions to mitigate risks, safeguard against unexpected expenses, and ensure the longevity of their vehicles.

For instance, according to the CIA World Factbook, in 2020, the U.S. had a registered total of more than 273 million passenger vehicles. As people are keeping their cars for longer periods, the average age of vehicles on American roads has increased to over 12 years. This extended vehicle lifespan also creates a larger potential market for protection plans that cater to vehicles that are no longer under warranty.

• Growing Vehicle Complexity: Modern vehicles are equipped with advanced technology and complex components. This complexity leads to higher repair costs and a need for specialized expertise. Vehicle protection services offer coverage and plans that address these complexities, providing peace of mind to owners and minimizing the financial burden associated with repairs.

For instance, according to data from the World Bank, there was a 3.6% year-on-year increase in the average global price of new motor vehicles in 2021. As list prices of vehicles continue to climb, protection plans have become essential for consumers as a safeguard against the growing risk of expensive repairs that modern vehicles are increasingly prone to.

Vehicle Protection Service Market Opportunities:

• Technological Advancements: Advancements in technology create opportunities for innovation in the vehicle protection service market. Integrating advanced technologies such as telematics, Internet of Things (IoT), and artificial intelligence (AI) can enhance the efficiency and effectiveness of vehicle protection services. This includes improved diagnostics, real-time monitoring, and predictive maintenance capabilities.

For instance, according to the U.S. Department of Transportation's projections, by 2030, more than half of new car sales are expected to consist of level 3-5 autonomous vehicles. Vehicle protection services providing cyber security monitoring, remote diagnostics, and readily available repair teams could experience heightened demand from both concerned consumers and commercial fleet operators.

• Customization and Personalization: Offering customizable and personalized vehicle protection plans can cater to individual customer preferences and needs. Providing flexible coverage options, add-on services, and tailored plans allows consumers to select services that align with their specific requirements. This customization enhances customer satisfaction and expands market reach.

For instance, according to data from the World Bank, the count of passenger vehicles in low and middle-income countries increased significantly, surging from under 50 million in 1990 to surpassing 250 million in 2020. With the expanding vehicle fleet and the trend towards customized vehicles, the market exhibits substantial potential for expansion by offering personalized products and pricing strategies tailored to various customer groups.

Vehicle Protection Service Market Trends:

• Digitalization and Mobile Apps: The increasing digitization of services has impacted the vehicle protection service market. Providers are developing mobile applications that offer convenience and accessibility to customers. These apps allow users to purchase plans, schedule maintenance services, request roadside assistance, and track their vehicle protection coverage.

For instance, according to the 2021-22 annual report from the Department of Transport UK, there was a notable increase in the percentage of drivers adopting digital aftermarket services, rising from 28% in 2020 to exceed 35% in 2022.

• Telematics and Connected Cars: Telematics technology, which enables the collection and transmission of vehicle data, is being utilized in vehicle protection services. Connected cars provide real-time information on vehicle performance, maintenance needs, and potential issues. Service providers can leverage this data to offer proactive maintenance recommendations, optimize coverage plans, and improve overall customer experience.

For instance, according to a survey conducted by the U.S. Department of Transportation, an overwhelming 75% of participants expressed their interest in enrolling in predictive vehicle health monitoring and maintenance packages, which leverage the analysis of telematics data. This highlights a growing desire for protection services of this kind.

Vehicle Protection Service Market Restraints:

• Price Sensitivity: Vehicle owners can be price-sensitive when it comes to purchasing additional protection services. The cost of vehicle protection plans, extended warranties, and maintenance packages can sometimes be perceived as high, leading to hesitation or reluctance among price-conscious consumers.

Counterbalance: Value Perception: If customers perceive the value of the vehicle protection service to be high, they may be willing to pay a premium for it. This can be achieved by highlighting the benefits of the service, such as peace of mind, potential cost savings in the event of vehicle damage, and convenience.

• Limited Awareness and Education: Lack of awareness and understanding about the benefits and value of vehicle protection services can hinder the market growth. Many vehicle owners may not be fully aware of the available options or may underestimate the potential risks associated with vehicle ownership. Educating consumers about the importance of vehicle protection and the advantages of comprehensive coverage is essential to overcome this restraint.

Counterbalance: Companies can create and distribute educational content to inform potential customers about the benefits of vehicle protection services. This could include blog posts, articles, videos, webinars, and info graphics that explain what vehicle protection services are, why they are important, and how they work.

Recent Developments

New product launches

• Assurant – insurance company, launched a new extended warranty product called "Assurant Vehicle Protection" in 2022. This product offers coverage for mechanical breakdown, electrical breakdown, and comprehensive protection.
• CarShield – auto protection company, launched a new extended warranty product called "CarShield MAX" in 2022. This product offers coverage for mechanical breakdown, electrical breakdown, and comprehensive protection, as well as roadside assistance and rental car reimbursement.
• WarrantyDirect - insurance company, launched a new extended warranty product called "WarrantyDirect Platinum" in 2022. This product offers coverage for mechanical breakdown, electrical breakdown, and comprehensive protection, as well as roadside assistance, rental car reimbursement, and trip interruption insurance.

Acquisition and partnerships

• Assurant - insurance company, acquired National Auto Protection (NAP) in 2022. NAP is a leading provider of extended warranties in the U.S This acquisition will help Assurant to expand its market share and product offerings.
• In June, 2023 Assurant, Inc., a prominent global business services firm specializing in the support, protection, and connectivity of significant consumer purchases such as automobiles, has recently unveiled a partnership with Altelium, a provider of real-time data-driven battery solutions. This collaboration empowers Assurant to harness the power of Altelium's artificial intelligence (AI)-based battery data and insights into electric vehicles (EVs).
• CarShield - auto protection company, partnered with Progressive - insurance company, in 2022. This partnership will allow CarShield to offer its extended warranty products through Progressive's network of agents. This will help CarShield to reach a wider audience and grow its business.
• American Automobile Association (AAA) - Not-for-profit organization, partnered with Carvana - Used car dealers company, in 2022. This partnership will allow AAA to offer its extended warranty products through Carvana's website and app. This will help AAA to reach a wider audience and grow its business.

Figure 2. Global Vehicle Protection Service Market Share (%), By Vehicle Type, 2023

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Top Companies in the Vehicle Protection Service Market

• Endurance Warranty Services LLC
• CarShield
• Protect My Car
• Ally Financial Inc.
• CARCHEX
• Toco Warranty
• American Auto Shield
• Warranty Direct
• Royal Administration Services, Inc.
• EasyCare (Automotive Development Group, Inc.)
• Autopom!
• AA Auto Protection
• CarSure

Definition: Vehicle protection service refers to a range of services and coverage options designed to safeguard vehicles and provide financial protection to owners against damage, theft, and unexpected expenses. These services typically include extended warranty programs, maintenance plans, roadside assistance, theft protection systems, and insurance coverage. Vehicle protection service aims to enhance the ownership experience by minimizing risks, providing peace of mind, and ensuring the longevity and value retention of vehicles.