BLOG FOR SPECIAL FINANCE CAR DEALERS
Newest Survey from J.D. Power Ranks Dealer Satisfaction with Lenders
In its latest survey, J.D. Power and Associates found that there was a direct correlation between how car dealers felt they were treated by lenders and the share of business a lender received from those same dealers.
Survey Covered 4 Lending Segments
It certainly isn’t a revelation that the results of the latest J.D. Power survey find that auto dealers steered more business to lenders they were satisfied with. It also comes as no surprise to anyone here at Auto Credit Express that nine of the top ten prime retail lenders were captive finance companies that have a vested interest, along with the dealer, in moving product off dealer lots.
The 4 lending segments covered by the survey include prime retail credit, retail leasing, subprime retail credit and floor planning. Keep in mind that the survey was conducted between March and July of this year, and the lending landscape has changed dramatically since then – especially the leasing and floor planning segments of the survey.
Here is the complete press release containing the survey results:
WESTLAKE VILLAGE, Calif., Oct. 7 — Automotive finance providers that achieve high levels of satisfaction among dealers receive a larger share of business from those dealerships, according to the J.D. Power and Associates 2008 Dealer Financing Satisfaction Study(SM) released today.
The study investigates automotive dealer satisfaction with finance providers in four segments: prime retail credit; retail leasing; subprime retail credit; and floor planning. It examines five key factors that contribute to satisfaction within the prime retail credit, retail leasing and subprime retail credit segments: provider offering; credit personnel; application/approval process; termination policy/service; and sales representative relationship. Four factors are measured in the floor planning segment: provider offering; floor plan support personnel; inventory process; and process/service.
The study finds that as dealers become more satisfied with a lender, they allocate a larger volume of their business to that lender. Some aspects of financing service that are particularly important to maximizing dealer satisfaction are the ability to interact with a single credit buyer, short application approval times and expedient funding. Within the prime retail credit segment, dealers who are “delighted” with their lender provide the lender with 53 percent of the loan originations generated at the dealership, on average, while dealers who report being merely “satisfied” provide lenders with 40 percent. In contrast, however, dealers who are “dissatisfied” with their lender give their lender only 26 percent of their business, on average.
“Dealer satisfaction with automotive lenders clearly impacts the volume of retail business a lender receives,” said Rich Howse, senior director of the automotive finance practice at J.D. Power and Associates. “With more than 20,000 dealerships in the U.S., the potential revenue linked to increasing satisfaction can translate to billions of dollars. For instance, in the prime retail credit segment, the difference between just one dealer who indicates they are ‘delighted’ and one who indicates they are ‘dissatisfied’ can mean an average of more than $3 million in additional loan originations in one year.”
The study also finds that developing the dealer-lender relationship becomes particularly important given the current economic struggles and market turmoil. Within the floor planning segment, 44 percent of dealers report that the relationship with a lender is their primary reason for selecting a provider. Similarly, the dealer-lender relationship is cited most often as the primary reason for choosing a finance provider in the subprime retail credit segment.
“In today’s tough times, automotive lending priorities may be focused on the issues of liquidity and risk rather than dealer satisfaction, but lenders cannot afford to miss the growth opportunity tied to dealer satisfaction,” said Howse. “Dealers recognize those lenders that make the effort to partner with them for the long haul, so building and maintaining strong relationships with dealers will be the foundation of future revenue growth as the industry rebounds.”
BMW Financial Services ranks highest in all four segments examined in the study: prime retail credit; retail leasing; subprime retail credit; and floor planning.
Rankings by segment are as follows:
Prime Retail Credit
BMW Financial Services ranks highest in prime retail credit satisfaction with an index score of 946 on a 1,000-point scale, performing particularly well in four factors driving dealer satisfaction: credit personnel; application/approval process; termination policy/service; and sales representative relationship. Alphera Financial Services (940) and Volkswagen Credit (938) follow BMW Financial Services in the rankings.
Retail Leasing
With a score of 942, BMW Financial Services ranks highest in retail leasing satisfaction for a fifth consecutive year, performing particularly well in credit personnel; termination policy/service; and application/approval process. Volkswagen Credit (934) and Mercedes-Benz Financial (924) follow in the segment.
Subprime Retail Credit
In the subprime retail credit segment, which is new to the 2008 study, BMW Financial Services ranks highest with a score of 966, performing well across all factors driving satisfaction. Volkswagen Credit follows with 943, and GMAC ranks third in the segment with 922.
Floor Planning
BMW Financial Services ranks highest in floor planning with a score of 963, performing well in all four of the factors that drive satisfaction. Volkswagen Credit follows closely in the rankings with 960 and Audi Financial Services ranks third in the segment with 940.
The 2008 Dealer Financing Satisfaction Study is based on responses from 4,770 dealer principals who were surveyed March through July 2008.
Dealer Satisfaction Index Ranking
Prime Retail Credit
(Based on a 1,000-point scale)
Lender Index Score
BMW Financial Services 946
Alphera Financial Services 940
Volkswagen Credit 938
Mercedes-Benz Financial 928
Audi Financial Services 921
GMAC 909
Toyota Financial Services 881
Honda Financial Services 878
Chrysler Financial 862
Compass Bank 858
Regions 855
First Citizens Bank 846
M&I Bank 843
Branch Banking and Trust 842
SunTrust Bank 836
Prime Retail Credit Segment Average 835
Ford Credit 831
Wachovia Dealer Services 831
Bank of America 825
TD Banknorth 818
Chase Auto Finance 812
Huntington National Bank 802
US Bank 792
Citizens Bank 791
Citizens/Charter One Auto Finance 791
Harris Bank 787
Fifth Third Bank 781
Nissan Motor Acceptance 781
Capital One Auto Finance 776
Wells Fargo Auto Finance 761
Hyundai Motor Finance Co. 700
Included in the study but not ranked due to small sample size are: Bank of the West, CitiFinancial Auto, Kia Motors Finance, M&T Bank, Mazda American Credit, Sovereign Bank, Subaru Motors Finance and Valley National Bank.
Retail Leasing
(Based on a 1,000-point scale)
Lender Index Score
BMW Financial Services 942
Volkswagen Credit 934
Mercedes-Benz Financial 924
Audi Financial Services 921
Toyota Financial Services 900
GMAC 895
Honda Financial Services 868
Retail Leasing Segment Average 853
Chrysler Financial 851
Ford Credit 821
Chase Auto Finance 788
Nissan Motor Acceptance 772
Bank of America 762
US Bank 743
Wells Fargo Auto Finance 742
Fifth Third Bank 734
Hyundai Motor Finance Co. 688
Included in the study but not ranked due to small sample size are: Huntington National Bank, Kia Motors Finance, Mazda American Credit and Subaru Motors Finance.
Subprime Retail Credit
(Based on a 1,000-point scale)
Lender Index Score
BMW Financial Services 966
Volkswagen Credit 943
GMAC 922
Toyota Financial Services 869
Ford Credit 855
Chrysler Financial 845
Wachovia Dealer Services 798
Subprime Retail Credit Segment 793
Average
Nuvell Credit 782
Chase Auto Finance 771
National Auto Finance Co. 762
Wells Fargo Auto Finance 750
HSBC Auto Finance 748
CitiFinancial Auto 744
Fifth Third Bank 721
AmeriCredit/Bay View 705
Capital One Auto Finance 704
Regional Acceptance Corp. 671
Drive Financial 583
Included in the study but not ranked due to small sample size are: Bank of America, Consumer Portfolio Services, Credit Acceptance Corp., Fireside Bank,
Honda Financial Services, Hyundai Motor Finance Co. and Mercedes-Benz
Financial.
Floor Planning
(Based on a 1,000-point scale)
Lender Index Score
BMW Financial Services 963
Volkswagen Credit 960
Audi Financial Services 940
Mercedes-Benz Financial 938
GMAC 913
Toyota Financial Services 902
Floor Planning Segment Average 892
Chrysler Financial 868
Nissan Motor Acceptance 856
Ford Credit 854
Included in the study but not ranked due to small sample size are: Bank of America, Chase Auto Finance, Comerica Bank and Wells Fargo Auto Finance.
About J.D. Power and Associates
Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, training and customer satisfaction. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually.
Comments (1)
April 13th, 2010 at 2:35 am
1 comment, i have a mercedes and i love this car!!! i happy with this car and not change for other.