GarantiPlus - Company Report

Manager | GarantiPLUS Colombia

Data Approach

Offers Broad Portfolio of Warranty Options

Q: With the second-hand market growing in relevance, how has GarantiPLUS Colombia adapted to take advantage of this trend?

A: We first opened our doors in the used-vehicle market but the demand in the retail and aftersales markets allowed us to expand into these two areas. About 20 percent of our contracts are now made through distributors and we handle preventive maintenance and warranty services through their workshops.

Our operations in the areas of used vehicles, workshops and new vehicles are entirely different from each other, so it has been critical for us to understand the opportunities related to each. For example, we work with 5 percent of the total vehicles sold by distributors, ensuring between 30 and 40 vehicles per month.

Q: What are the differentiating characteristics of GarantiPLUS Colombia when compared to other businesses in the sector?

A: We have four competitive advantages that no other company in Colombia has: unlimited mileage warranties, unlimited claims during the duration of the contract, no deductibles on any type of vehicle and coverage of every type of vehicle.

We play a key role for those who want an extended warranty after the original expires. Our offer is attractive because we are the only company in the country that gives clients the option of renewing their contract for up to four years.

Q: How does the company use data to offer customers better service and deals?

A: We are part of a business group with 10 companies, all of them in the automotive industry. This partnership allows us to collect valuable information to make the best decisions and create the best strategies for our clients.

Besides this, we have created an alliance with all our distributors to provide constant support and training to commercial agents. This alliance has given us an advantage over the competition, which usually does not have a physical presence at dealerships.

Q: How have GarantiPLUS Colombia’s services adapted to the growing demand for electric and hybrid vehicles?

A: Colombia has bet on renewable energy, especially Medellin and Bogota. These cities have implemented different programs to support electromobility through public initiatives that seek to boost the acquisition of electric and hybrid vehicles. These programs are also gradually building the necessary infrastructure so the country can have a smooth electromobility transition.

We have warranties for all types of vehicles, including ICE vehicles and cars with converted engines that use natural gas, thanks to our broad service portfolio.

Gustavo Cano

General

Q: What are the main differences between the business model in Mexico when compared to other Latin American markets like Colombia?

A: In Colombia, the license plate of a vehicle remains the same during all the years that it is in circulation, making the process to buy and sell vehicles clearer. Moreover, every person in Colombia has access to the centralized database that tracks all the activities related to vehicles, allowing companies in this line of business to have certainty of the vehicle’s history and giving clients the certainty that they will receive a high-quality product. For that reason, e-commerce marketplaces like Kavak and OLXAutos are shifting their business model and becoming more like traditional retailers.

Q: What are GarantiPLUS Colombia's objectives for next year?

A: We forecast to have between 500 and 600 monthly warranty contracts and are working to open a new business channel with the three most import importers in the country, which will allow us to be the official warranty of these brands. This would help us have direct contact with the most important automotive companies in the country, which we already have in Mexico thanks to the five-year warranty GarantiPLUS offers with Mitsubishi.

Adaptation the Critical Factor in Mexico's Car Insurance Market

Q: How is GarantiPLUS adapting to the growing trend of second-hand vehicles in Mexico?

A: GarantiPLUS is adapting to this new business model, especially because the pandemic changed the way we do business. This has also had both a positive and negative affect on both the distribution and manufacturing sectors. There has been a reevaluation of the segment because production for new cars has decreased and, as a result, values in the second-hand vehicle market have risen. This has also led to a financial cost for distributors. At GarantiPLUS, we are looking at that market to provide clients with full non-deductible coverage that has been lost due to the car’s age or mileage.

Q: What differentiates GarantiPLUS from other businesses in the sector?

A: In Mexico there are only a few companies like ours that offer these types of services. GarantiPLUS has been operating for the past 12 years worldwide and in Mexico since 2017. Our staff has many years of experience working in the automotive sector. One of our advantages is that our pricing model is very simple, and our prices are very affordable. This is possible, because all the data based experience of Garantiplus, We also have a business model that allows our distributors to generate additional revenue, especially through products that have an added value, such as ours.

Q: What is the latest news on semiconductors?

A: The industry still have issues, although to a lesser extent. Today, most assembly plants that are having these issues are located in North America. Chinese assembly plants are the major vehicle suppliers for Latin America, especially in Mexico, where their participation is increasing significantly. Despite the lack of semiconductors, the industry is expected to experience positive growth compared to last year. In addition, the distribution network will have inventory from all OEMs in some brands.

Q: How is the company working with distributors to provide a better after-sales service for its clients?

A: We are not only working with automakers’ dealerships; we have also created our own repair service centers network that allows the provision of maintenance for vehicles that are older than 10 years. For clients who have newer cars but have lost their original warranty, we always encourage them to return to their dealership and they can recover the bumper to bumper warranty.

Q: Consumer demand has changed in the last few years. How is GarantiPLUS adapting its service to meet these requests from customers?

A: In Mexico we apply the big data concept; therefore, we have client information that has been collected over a period of years and we use it to cater to customers’ needs as well as to identify which makes and models are more competitive in the market. This has allowed us to establish a better pricing for our clients and a better portfolio for our Latin American market. For instance, today we have operations in Chile and Colombia. This year, we will initiate operations in Peru. Our goal is for GarantiPLUS to have a market share across all of Latin America. At GarantiPLUS, not

Jaime Pedraza

Country Manager | GarantiPLUS México

only do we provide extended warranty services but we also offer additional insurance coverage. For instance, we have a remote appraisal company that provides these services via an app.

Q: How does GarantiPLUS help insure car fleets in Mexico, especially when considering the poor state of roads, deficient highway infrastructure, thefts and other problems?

A: GarantiPLUS provides mechanical insurance in case the vehicle has a manufacturing defect. For fleets and rentals, we offer mechanical insurance coverage. For example, car fleets lose their insurance very rapidly due to their mileage. At GarantiPLUS, we provide them with insurance that provides coverage tailored to their specific requirements, such as extended warranties, insurance services and road-track assistance.

Q: You became Mexico Country Manager in July of last year. What has GarantiPLUS’ growth been like in Mexico and Latin America since then?

A: We have been growing steadily. As a company, we maintain the essence of a startup but we have grown in an orderly and structured fashion. We have a very resilient team that is always one step ahead. Another element that has helped us a great deal is that we are always innovating, setting the foundation for expansion into other countries.

Q: Electromobility is being implemented in Mexico. How is GarantiPLUS adapting to that demand?

A: Our services guarantee the vehicle’s metallic components as well as their electric system, including batteries. The hybrid industry in Mexico has developed quite rapidly. Today, GarantiPLUS’ insurance services cover all types of vehicles, from combustion engine gasoline to diesel, hybrids, mild hybrids, electric and plug-in. We are getting ready for electric technology to be adopted in Mexico.

Q: What are GarantiPLUS’ objectives for next year?

A: We have quite ambitious plans for next year. We would like to grow 20% in comparison to 2022. We have many opportunities coming our way in terms of numbers, infrastructure and market share in Mexico and Latin America. We expect 2023 to be a challenging year; nevertheless, we anticipate it will be a positive year for us since the industry is expected to grow between 3.5% and 3.7% in comparison to last year.

Mutually Beneficial Partnership Add Service Value:

Q: What factors are contributing to the growth of the automobile extended warranty market in Chile?

A: Factors such as the rise in vehicle prices, decreased reliability on automobiles post-pandemic (52% more average failures, according to JD POWER), and enhanced consumer awareness are driving growth in the warranty market. In Chile, this has resulted in an increased demand for our services, ensuring protection against unforeseen repairs.

Q: Young consumers are more attracted to caras-a- service or leasing instead of buying a new vehicle. Has this shift impacted your business?

A: The trend toward car-leasing and car-as-a-service has influenced our business but our flexible extended warranty plans cater to all types of car ownership, including these emerging trends in Chile, where warranties are offered by companies to protect against manufacturing problems. In addition, the market in Chile, in comparison to other Latin American markets, is progressive and customer-oriented. Technological inclusion in the country leads to more informed customers. In addition, we aim to create mutually beneficial partnerships with fleet managers and mobility platforms, offering tailored warranty solutions that provide added value to their services.

Q: A MarketWatch report indicated that pricing for extended warranties is trending upward. What is behind this increment in costs?

A: Rising extended warranty prices stem from increased repair costs due to three factors: The increased value of spare parts due to logistics problems originated in the pandemic and that continue to be a struggle for the supply chain. The increase in labor costs, as Chile's IPC (inflation index) has grown by 31% from January 2019 to today, which is reflected at the same rate, at least, for salaries and by default for workshop labor costs. The first factor is greater demand for mechanical services leading to an inorganic price rise.

Q: As vehicle technology evolves with the adoption of EV and autonomous technologies, how will warranties change and who will be in charge of responding to claims?

A: For EVs and autonomous vehicles, both OEMs and tech companies will need to cooperate in handling claims. We have tailor-made products for this type of vehicle depending on the OEM coverage for each brand. In addition, the growing popularity of used cars has increased demand for our services in Chile, demonstrating the consumer's desire for reassurance on vehicle longevity. GarantiPLUS has maintained its Chilean market position through consistent service quality, proactive customer engagement, and adapting to local market trends. In comparison to other Latin American markets, Chile's business models are more techdriven and customer-centric, factors we have integrated into our operations. Moreover, we are preparing a press conference in the next few months to announce our new strategy for the next five years.

Fabrizio Leandro

Country Manager | GarantiPLUS Chile

Q: What differentiates GarantiPLUS from other businesses in the sector and how is the company working with distributors?

A: GarantiPLUS differentiates itself through high-quality service, transparency and tailored warranty solutions that cater to individual customer needs. We are the only ones that cover manufacturing problems at vehicle price and our products are free of mileage. In addition, we use data analysis to understand market trends, customer preferences and performance metrics. This information helps us adapt our business to better serve customers and streamline operations. We have huge amounts of data from the Latin American market that shares most of the same product lineup. Regarding distributors, we incorporate their feedback into our warranty services for a seamless customer experience. We are creating a network of authorized workshops to support our customers across the country.

Q: What are GarantiPLUS’ objectives for next year for Chile and Latin America?

A: Our objectives for next year include expanding our customer base, launching new warranty products tailored to the Chilean market and strengthening our presence in Latin America, working with Mexico, Colombia and Chile as hubs for the nearest markets. In addition, we are working closely with distributors to improve after-sales service, incorporating their feedback into our warranty services for a seamless customer experience. By the end of 2023, GarantiPLUS aims to be the leading provider of extended automotive warranties in Chile, ensuring customer satisfaction and strong market growth. As Country Manager, I ensure smooth operations, strategic planning and market development. My vision is to make GarantiPLUS a trusted brand in Chile for automotive warranties.