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Dealers More Satisfied with Independent Service Contract Providers: J.D. Power Study

March 13, 2003

According to the inaugural J.D. Power and Associates 2003 Dealer Service Contract

Satisfaction Study (DSCS) released March 13, in the highly profitable area of extended warranty

programs, automotive dealerships are significantly more satisfied with independent service contract providers than OEM providers.

According to the company, the study measures dealer experience with the service, products and

financial administration and fees of their primary service contract provider and is based on more than 5,000 responses from more than 3,300 auto dealers.

The company says the study finds that independent providers score significantly higher than OEM providers in all measures of satisfaction, and do so with more competitive rates than traditional service contract products offered by manufacturers. Independent providers receive an overall satisfaction index

score of 791-72 points higher than the overall OEM provider score.

"Independent providers offer dealers more product choice and flexibility than OEM providers, and the representatives of independent providers are rated far superior to their OEM counterparts," said Scott Weitzman, senior director at J.D. Power and Associates. "OEM providers must be aggressive in

combating their more nimble independent competitors if they are to hold onto the large share of the market they currently control."

The study also finds that high-volume dealers are more satisfied with their service contract provider than low-volume dealers. This gap in satisfaction is particularly evident among dealers using OEM providers.

According to the company, one factor driving the greater satisfaction among high-volume dealers is the increased use of "participation" programs, where dealers have higher earning

potential by sharing in the risks of underwriting the contracts. Dealers

using OEM providers overwhelmingly use direct programs, where administration and underwriting is handled by the manufacturer. Dealers using independent providers use all types of programs in nearly equal proportion, including self-insured, direct and participation programs.

"Participation programs are one of the key factors driving higher satisfaction among dealers using independent providers as these programs yield greater profits," said Weitzman.

CNA National ranks highest in dealer satisfaction with service contract

providers, followed by First Extended Services Corp. and Toyota Extra Care, respectively.

DSCS analysis allows OEM and independent service contract providers to clearly understand the relationship between the service,

products and financial and administrative fees that service contract providers offer, according to the company.

Headquartered in Westlake Village, Calif., J.D. Power and Associates is an ISO 9001-registered global marketing information services firm operating in key business sectors including market research, forecasting, consulting,

training and customer satisfaction. The firm's quality and satisfaction measurements are based on responses from millions of consumers annually.

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