Newly developed IBM search technologies help automakers cut warranty expenses, which cost the industry over $14 billion annually. IBM’s solution goes beyond "keyword" searches to collect and analyze data from a variety of information sources such as repair records and blogs.

Automotive companies across the world today face a very competitive and difficult marketplace. In an effort to stimulate growth, many automakers, particularly in the United States, have resorted to steep discounts to compete. These price cuts, in addition to rising operating costs, have taken their toll on the profit margins in the industry. To counterbalance the downward trend of profit margins, all automakers are looking at creative ways to control costs.

Warranty coverage is one of the fastest growing areas of operating costs in the automobile industry. In 2004, experts estimate warranty costs exceeded $45 billion worldwide. In the United States, auto warranties account for nearly 41 percent of all auto warranties industrywide. And, for the first time, in 2004 the number of recalled vehicles exceeded the total number of manufactured vehicles.

One of the causes behind the rising warranty costs and claims is the increasing complexity of vehicles. Today, nearly 40 percent of the value in an average vehicle is tied up in its software and recalled vehicles  A single car may have as many as 70 different processors, controlling everything from anti-lock brakes and automatic transmissions to cruise control and fuel injection. Failures to those embedded systems account for a third of all warranty claims.

Controlling the costs of warranties has big benefits. Currently, warranty costs drag down profits of automobile industry by 3 percent. If automakers could reduce their warranty costs in half, they would see their profits soar as much as 300 percent.