Extended warranty

[Erwin P]

Just came across this post:


What do you guys think?
I'm not sure i will take it. It's a significant amount of money, but on the other hand it's 1/3rd of an MX battery or powertrain for 2 years extra.

For Stark i think it's quite smart.
- Revenue with minimal costs to them.
- Showing trust in your product.

For me as a owner who is thinking about selling (to get an EX) maybe that little extra confidence a buyer might want.

 

[Theo]

Happy to see this possibility!

IMO, the fact that it's convenient or not is partially objective and partially subjective:

Subjectively:
- Is the owner going to keep that Varg? If not, will it be sold before or after the original warranty expires?
- Are there any modifications or damages that could void the warranty?
- What would the owner do with that money otherwise? If invested, 1,000 $ can become 1,200 in two years, for example.
- How does the financial situation of the owner look like?
- Will the owner feel annoied more by not having extended and paying an expensive repair or vice versa?

Objectively:
-In general, using a high school approach, if the warranty extension costs an amount that we call WE (for example, WE=599$ for one year), then, without knowing anything else, the extension is convenient for the owner if the overall cost of the repairs, each multiplied by their probabilities, exceeds, WE.
For example:
conditions:
- WE = 999 $ for 2 years
- for semplicity, let's pretend that the battery and the motor are the only parts thats can fail in those two years and that they can only be replaced and not repaired.
- a battery replacement costs 3,000 $
- the probability that the battery will fail in those two years is estimated to be 1/6 (just because it's an easy number to compute here)
- a motor replacement costs 3,500 $
- the probability that the motor will fail in those two years is estimated to be 1/14 (just because it's an easy number to compute here)
execution: (3,000 $ • 1/6) + (3,500 $ • 1/14) = 500 $ + 250 $ = 750 $
750 $ < 999 $, so this should discourage the user from extending the warranty
- We still need to see whether Stark Future will repair or replace batteries and motors after warranty and for how much money.
- We still need to see how they will behave in case it's not clear which component needs replacement; I guess they could tell you to go to a dealer who will try to swap parts, but probably you would pay the labour.
-Funding Stark Future will help it and I think that everybody here wants them to succeed.

 

[Erwin P]

Yeah i think they figured the calculus will fall into their favour. So that will be in that €750 vs €999 range and will help them.
It also does buy some piece of mind.

I would expect them to keep the same level of tech support, except that all parts (and dealership work) are paid for. I would expect to see prices in the range of what you see on their webshop.

I think this a good way for Stark to create revenue. Their bikes are a bit ''too good'' compared to ICE's. Even an ICE that extends it maintenance work 2x needs way more parts (let alone labour) than a Stark. My 2 stroke ''needed'' an engine rebuild at least every year (before the Stark took most hours). That was €1500 - €1800 and i did the work myself (exluiding the new big-end pressing and nicasealing of cylinder). When i have to work done by the the dealer that will exceed €3000. But in raw parts that's allready some serious revenue for the OEM.
Stark doesn't have that so they need the cash flow from somewhere else. Hence the subscription and extended warranty.
If it was up to me i would offer a combined one as Stark. Who knows what happens in 2 years in bike ownership, but it is very tempting to have it in warranty as long as you own it. Let's say €49 a month for all the premium features AND warranty might be what pulls some owners over into investing that after 2 years.

For me it's also a piece of mind that i have warranty. If it was 100% on me i wouldn't have gone into as deep water as i have. Now they claim a 2m deep water resistant so as long as i believe it is shallower than i'm tall i just go for it.

 

[OpaTsupa]

First thing would be to carefully read what the extended warranty covers.

I think there are certain situations where this arrangement may be welcomed by some.

Maybe investing 1K into extended warranty raises the re-sale value by that much or more.
It will certainly sell easier than an out of warranty bike.

 

[Chaconne]

Yeah i think they figured the calculus will fall into their favour. So that will be in that €750 vs €999 range and will help them.
It also does buy some piece of mind.

I would expect them to keep the same level of tech support, except that all parts (and dealership work) are paid for. I would expect to see prices in the range of what you see on their webshop.

I think this a good way for Stark to create revenue. Their bikes are a bit ''too good'' compared to ICE's. Even an ICE that extends it maintenance work 2x needs way more parts (let alone labour) than a Stark. My 2 stroke ''needed'' an engine rebuild at least every year (before the Stark took most hours). That was €1500 - €1800 and i did the work myself (exluiding the new big-end pressing and nicasealing of cylinder). When i have to work done by the the dealer that will exceed €3000. But in raw parts that's allready some serious revenue for the OEM.
Stark doesn't have that so they need the cash flow from somewhere else. Hence the subscription and extended warranty.
If it was up to me i would offer a combined one as Stark. Who knows what happens in 2 years in bike ownership, but it is very tempting to have it in warranty as long as you own it. Let's say €49 a month for all the premium features AND warranty might be what pulls some owners over into investing that after 2 years.

For me it's also a piece of mind that i have warranty. If it was 100% on me i wouldn't have gone into as deep water as i have. Now they claim a 2m deep water resistant so as long as i believe it is shallower than i'm tall i just go for it.

Insurance policies always favor the insurer. If the risk of utilization of the warranty protection were high, and say, the product was susceptible to defects it would not be profitable to offer an extended warranty. Yes there is a percentage of folks who do benefit from these types of extensions but the vast majority don't or they wouldn't be profitable.

When I was in college I worked as an electronics tech and the shop was connected to the retail store. One day I asked one of the sales guys in retail why he was always pressuring folks to buy extended warranties as most of the time the warranty work I did was manufacturer's warranty, I rarely saw an extended warranty service. He said:

1. I make the best commission on extended warranty sometimes more than the product
2. Extended warranties are always in stock
3. Customers never return extended warranties
4. And customer mostly rarely use them

In some ways it indicates that Stark probably has pretty good confidence this won't cause losses. Or the policy is underwritten by a larger entity that is willing to risk losses for the profits on the warranties.

Oh and also my experience with extended warranty insurance is in the US it might be different in other areas.

 

[Theo]

Insurance policies always favor the insurer. If the risk of utilization of the warranty protection were high, and say, the product was susceptible to defects it would not be profitable to offer an extended warranty. Yes there is a percentage of folks who do benefit from these types of extensions but the vast majority don't or they wouldn't be profitable.

I agree about the fact that this is the main principle to be kept in mind when discussing this topic and I really like your logical approach! (which is the typical answer that I get by AIs when I ask them something )
On the other hand, I still think that there is a subjective component that can make it sensible to buy the warranty extension.
Let's make an example with a house: probably my house won't be destroied by a fire or a flood, but in case it happens I will be in deep shit! I can afford to pay an insurance against those and other hazards but I can't afford to rebuild my house. Paying the insurance will affect my life little anyways, so I do it, altough the insurer will gain from me.
You know, a dear friend of mine from Massachussetts recently took advantage from an insurance on his motorcycle! Like you've written, some customer will benefit.
Talking about the extended warranty, especially if they won't repair batteries and motors and also depending on how they will behave when it's not clear which component will need a replacement, a person could all of a sudden need to spend a lot of money to keep riding, while spending 1K in two years will probably be affordable and less stressful.
I think that there isn't a rule which holds good for everybody, but for some people it can make sense to extend the warranty. The general advice -not rule- could be not to buy the extension because of what I've quoted above.

 

[Osika]

Any indication it will be available in the US?

 

[Marshall G]

I wonder why its not available in the US.

 

[Osika]

Just got a message they are working to get it available soon in the USA.

 

[Chaconne]

I agree about the fact that this is the main principle to be kept in mind when discussing this topic and I really like your logical approach! (which is the typical answer that I get by AIs when I ask them something )
On the other hand, I still think that there is a subjective component that can make it sensible to buy the warranty extension.
Let's make an example with a house: probably my house won't be destroied by a fire or a flood, but in case it happens I will be in deep shit! I can afford to pay an insurance against those and other hazards but I can't afford to rebuild my house. Paying the insurance will affect my life little anyways, so I do it, altough the insurer will gain from me.
You know, a dear friend of mine from Massachussetts recently took advantage from an insurance on his motorcycle! Like you've written, some customer will benefit.
Talking about the extended warranty, especially if they won't repair batteries and motors and also depending on how they will behave when it's not clear which component will need a replacement, a person could all of a sudden need to spend a lot of money to keep riding, while spending 1K in two years will probably be affordable and less stressful.
I think that there isn't a rule which holds good for everybody, but for some people it can make sense to extend the warranty. The general advice -not rule- could be not to buy the extension because of what I've quoted above.

Yes agreed. No I am not a bot just an engineer, I think my ex accused me of being a bot though...

Somethings we can't even have without insurance here. For example for most mortgages you need homeowner's insurance and in Massachusetts you have to buy auto insurance or you can't register your vehicle. And it is difficult to beat peace of mind especially with a cutting edge product like our bikes.

And yes I was happy I had homeowners insurance for my loss.

 

[Theo]

Yes agreed. No I am not a bot just an engineer, I think my ex accused me of being a bot though...

Oh wait sorry for that, I didn't mean that you are a bot; actually I was jocking about my own compliment that I gave you about the logical approach. You see, when I ask AIs to check my reasoning, they always tell me things like "oh, what a smart thought you've had" or "you are hitting a key point about..." and I realized that I sounded like a bot when I told you that I like your logic. I thought it was common to be complimented that way by AIs. Hey maybe it's not common, maybe my AI really likes me

in Massachusetts you have to buy auto insurance or you can't register your vehicle

Mandatory auto insurance here, too and it is compulsory that the insurance includes third party liability.

 

[Chaconne]

Oh wait sorry for that, I didn't mean that you are a bot; actually I was jocking about my own compliment that I gave you about the logical approach. You see, when I ask AIs to check my reasoning, they always tell me things like "oh, what a smart thought you've had" or "you are hitting a key point about..." and I realized that I sounded like a bot when I told you that I like your logic. I thought it was common to be complimented that way by AIs. Hey maybe it's not common, maybe my AI really likes me



Mandatory auto insurance here, too and it is compulsory that the insurance includes third party liability.

Here all our AI guys like Altman are like used car salespeople so I am always skeptical of their compliments. I prefer hot flim flam like Elizabeth Holmes or Charlie Javice that I can fall for...

 

[OpaTsupa]

Here all our AI guys like Altman are like used car salespeople so I am always skeptical of their compliments. I prefer hot flim flam like Elizabeth Holmes or Charlie Javice that I can fall for...

I stopped using ChatGPT because half the time I was instructing it not to sound like a desperate car salesman.
It's interesting that it didn't take.