Performance Enhancement and its Effect on Warranty

Derive Systems is an American corporation specializing in specialized performance technology software for cars, trucks, sports vehicles, and big rigs. The company’s products include efficiency products that can customize the speed, fuel consumption, safety, and torque of the vehicle according to the driver’s needs and the application. Derive also specializes in the implementation of efficiency and safety solutions for commercial and industrial vehicle fleets including speed limiters, active fuel management systems, powertrain calibration, and bespoke efficiency enhancements. Derive Systems optimizes and tweaks the functions of the engine control unit and transmission control unit in order to deliver a wide range of performance changes. The company has its presence in 78 countries and has operated in the UAE and the GCC for 15 years.

Justin Olts is the Vice President of Derive Efficiency, the company’s flagship program for performance and efficiency enhancement for fleets in several vehicle segments. The focus of his session at the Spare Parts Conference that was held as part of Automechanika 2016 was the impact of performance optimization on warranty from the perspective of the United States.

Automotive Warranty Defined

Automotive warranty is insurance on a vehicle that it will serve for a stipulated period of time, covering component and manufacturing defects. Basic warranty is sometimes referred to as “bumper-to-bumper” warranty because of the nearly complete coverage of the vehicle and its parts. Some companies offer a powertrain warranty that covers engine, transmission, transaxle, drive axles, and related parts, especially internal lubricated parts. Rust-through warranties usually cover body rust with the exception of surface rust.

Given the scope of coverage, the focus in the automotive market is on what components are not subject to coverage and the situations or circumstances that warrant a claim denial. Usually, consumables and accessories that are designed to wear out such as brake pads, wiper blades, tires, and floor mats are covered by the part manufacturer and not by the vehicle manufacturer.

The modification of the vehicle with non-factory parts or parts that fall outside the specifications of the car may be denied warranty. Examples cited included larger aftermarket wheels and non-standard audio equipment that may cause standard equipment to wear out faster than usual.

History and Development of Warranty

Automotive warranty has undergone significant changes since its introduction, with the value and cost of insurance increasing proportionately with the quality of newer vehicles. Warranty is also a significant selling point and part of the marketing package for vehicles. For example, Hyundai’s powertrain coverage is now 10 years or 100,000 miles—and is marketed as “America’s Best Warranty”—considering that other manufacturers offer 3-year or 36,000-mile warranties.

Due to the closure of dealerships during the 2008 Great Recession, state insurance departments began the stringent regulation of auto warranties. Today, most states in the U.S. have laws and regulations pertaining to the form and language of warranties as well as the insurance agreements behind such warranties. Major laws covering auto warranty such as the Magnusson Moss Warranty Act (MMWA) that regulates the voiding of a warranty without sufficient proof and governs the use of aftermarket parts on the vehicle.

Official Compliance Requirements

Vehicular emissions were identified as the key area of compliance in the United States. The use of alternative technologies such as natural gas (CNG and LNG) as well as battery power is a key step in ensuring this form of compliance. From the aftermarket parts perspective, being emissions compliant means that improving fuel efficiency or performance places the onus of proving that any use of systems such as Derive Efficiency does not cause the vehicle to violate any emission norms. The regulations covering vehicular emissions were presented. Collaboration with specific automakers requires certification in order to modify or calibrate a vehicle in terms of engineering, manufacturing, quality control, and adherence to guidelines.

Value of the Aftermarket Today

The aftermarket industry in the United States is a $350-Billion industry and roughly $700 Billion globally. Consumers may choose the “do-it-yourself” (DYI) option or a “do-it-for-me” (DIFM) option through professional repair or servicing providers. As more consumers move towards a DIFM model, aftermarket offers consumers the choice of the location of repair, servicing, maintenance, and customization.

Future Outlook

The proliferation of autonomous and self-driving vehicles has resulted in a focus on aftermarket vehicle control software systems. One of the key questions raised in the US market is that of ownership of such systems that has been ruled in favor of the consumer. Smartphone use and customization of car software through personal devices is governed by specific laws. At a state level, these laws are also evolving to prevent manufacturers from voiding vehicle warranties because of the installation of aftermarket parts or non-company servicing. Mobility has empowered inpiduals and businesses to be able to customize performance parameters such as speed limitation and fuel consumption by themselves, an option that companies such as Derive Systems offer.

The key to the future of such technologies is the institution of rules, regulations, and laws that allow customers to enjoy a safe and personalized driving experience. Mr. Olts described the measures taken by Derive Systems to ease the use of automotive aftermarket technologies installed in cars. The session concluded with a Q&A session.