A warrantee of that length is only valuable if the manufacturer is a stable business with multiple income streams (say GE) or the warrantee is backed by stable insurance (say Lloyds). Liabilities are supposed to be on the balance sheet, so they are not free to mint.
If there were a long term issue where consumers needed to claim on the warrantee, I would guess most manufacturers would just get liquidated, but the executives and owners will have already cashed out. The same business model gets used for lots of other businesses with long term warrantees - limited liability is very handy.
No comments yet.
