September 21, 2007

One in seven new car buyers purchases extended warranty, says J.D. Power

Toronto, Ontario – About one out of every seven new-vehicle sales in Canada in the first eight months of 2008 included the sale of an extended service contract, according to a report by J.D. Power and Associates. That number is down slightly from the sales rate during the same time period in 2007.

Sales of contracts in the large utility segment have exceeded industry average, with about one in every five buyers purchasing a contract; at the other end, seven of the eight segments with the lowest service contract penetration are in the luxury segments. Luxury vehicles frequently come with longer basic warranties than non-luxury vehicles, and are also more likely to be leased, with lessees turning in their vehicles while the original warranty is still in effect.

The report says that dealers have been able to maintain a steady rate of service contract penetration in the compact conventional car segment, which has a dominant position in the Canadian marketplace.

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