The percentage of consumers signing up for service contracts when they purchase a new vehicle is at a 10-year high, according to the J.D. Power and Associates 2000 New Vehicle Service Contract Report.

Increased consumer disposable income has contributed to 27 percent of new-vehicle buyers purchasing service contracts in 2000, compared to 25 percent in 1999. Further, the average service contract price in 2000 is approximately $1,100, an increase of about 5 percent from 1999, according to the report. The price is slightly higher for customers who purchase their vehicle and lower -- by about $750 -- for those who lease their vehicle.

Plymouth leads the way among nameplates included in the report, with its dealers selling service contracts to 40 percent of new-vehicle customers. This is probably related to consumer awareness of the planned demise of the Plymouth brand at the end of the 2002 model-year.

Chrysler and Kia are close behind at 39 percent.

"The increase in service contract sales is also due in part to programs that are customized to complement the manufacturer’s original warranty or tailored to a vehicle’s long-term service needs," said Pamela Hill, research manager

at J.D. Power and Associates. "In addition, a decline in the number of new vehicles being leased contributed to the increased percentage of service contract sales in 2000, since customers who purchase their vehicles are more

likely to purchase a contract."

Much of the increase in service contract sales this year came in the van and sporty car segments, according to the report. These segments increased six percentage points from 1999.

The report shows that service contract buyers are likely to be young, have lower income than average and are single. In addition, they are less prepared than others when they enter the new-vehicle buying process.

"In general, these customers don’t gather as much information beforehand regarding vehicle pricing or trade-in values," Hill said. "They are also less certain about what vehicle they want to purchase and make up their minds

about more during their dealer visit."

"Consumers who purchase service contracts for new vehicles make more service visits and spend more money on service than those who don’t have service contracts," Hill said.