J.D. Power: Independent Automotive Service Contract Providers Receive Higher Satisfaction Ratings From Dealers Than OEM Providers
CNA National Ranks Highest in Customer Service Among Service Contract Providers
WESTLAKE VILLAGE, Calif., March 13 -- In the highly profitable area of extended warranty programs, automotive dealerships are significantly more satisfied with independent service contract providers than OEM(1) providers, according to the inaugural J.D. Power and Associates 2003 Dealer Service Contract Satisfaction Study(SM) (DSCS) released today.
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 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.
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 are 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 Corporation and Toyota Extra Care, respectively.
The 2003 Dealer Service Contract Satisfaction Study is the industry's most comprehensive assessment of the dealer-service contract provider relationship. 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.
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. Media e-mail contact: michael.greywitt@jdpa.com or john.tews@jdpa.com
No advertising or other promotional use can be made of the information in this release without the express prior written consent of J.D. Power and Associates. www.jdpa.com
(1) Original equipment manufacturers (i.e. Ford, GM, etc.)
Note: Please see chart at
http://www.newscom.com/cgi-bin/prnh/20030313/LATH061
For further information please contact: West Coast, Michael Greywitt, +1-805-418-8000, or East Coast, John Tews, +1-248-267-6800, both of J.D. Power and Associates.
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