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Direct marketing of service plans is here to stay …

Jim Henry is a special correspondent for Automotive News
Earlier this year, it looked like direct marketers using high-pressure tactics to sell extended service contracts would take market share away from dealers. Then the best-known direct marketer, US Fidelis, went bankrupt, and several states cracked down on shady extended service contact companies.

But dealerships can't assume direct marketers aren't a competitive threat any more. There are legitimate companies -- and even some dealer brethren -- out there pitching extended service contracts.

And in an ongoing federal case in Illinois, the charges are aimed more at the sales tactics, and not so much whether the extended service contracts themselves were any good. The question of quality wasn't really tested.

Those factors make me think the direct-marketing concept is here to stay, even if it had a rough 2010.

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