Maytag Corp. has formed a new business unit that will provide in-home service to any brand of appliance. The company now only services its own products.
"We are enthusiastic about the potential for this new business and the extension of the Maytag name and reputation for dependability to an area outside of manufacturing," Ralph Hake, Maytag chairman and chief executive officer, said in a press release issued Thursday.
But at least one industry watcher said Maytag is shooting itself in the foot and potentially hurting GE Consumer Products and other domestic appliance makers.
"I certainly think that Maytag will make it easier for Asian competitors that have until now worked at a disadvantage because they did not have their own nationwide service networks," said Laura Champine, an analyst with Morgan Keegan in Memphis.
GE, Maytag, Whirlpool and other domestic appliance producers have tried to cut costs in recent years to remain competitive with LG Electronics and other Asian appliance producers.
GE has tried to expand its lineup of high-end appliances and has moved much of its production out of the United States in response to competition. Maytag and Whirlpool have taken similar steps.
While the service expansion could boost Maytag's revenue in the short term, Champine said the company could lose sales on its own appliances as consumers turn to lower-cost competitors.
There is no direct comparison in the appliance industry, but Korean manufacturers have used service promises as a selling point in other businesses.
For its first several years in the U.S. market, the Korean auto industry was viewed as a source of poorly built, inexpensive cars.
Companies such as Hyundai and Kia countered that image in 2000 by offering 10-year warranties on their vehicles. In 1999, before it began offering the extended warranties, Hyundai sold about 150,000 vehicles in the United States. Last year, it sold nearly 400,000.
Champine said Asian appliance makers could expect similar results.
"This really speaks to Maytag's desperation and their need to find something to replace the void left by Hoover," Champine said, referring to large losses in Maytag's vacuum cleaner unit.
Maytag's new service company plans to support all major brands in select markets, including a new agreement with Samsung Electronics America. The agreement authorizes Maytag Services as a service center for warranty and out-of-warranty service on Samsung appliances.
Maytag spokesman Kevin Waetke said the company often contracts its service work out to independent appliance-repair shops that already repair other brands. The new company will operate in major cities, and it will not contract out service.
In Louisville, GE Consumer Products officials said giving low-cost competitors a maintenance network should not hurt sales of its home appliances.
"Consumers purchase GE products for their quality, innovative features and great appearance," GE spokeswoman Kim Freeman said. "While service is important to consumers, it is not the main reason for purchasing. Consumers would more likely buy based on brand loyalty, price or particular features a product offers."