Auto Dealers Will Pay a Premium for Good Service from Lenders


money

WESTLAKE VILLAGE, CA -- July 28, 2014: New-vehicle dealerships place such a value on the relationship they have with their prime retail credit finance providers that two-thirds are willing to pay a premium for good service, according to the J.D. Power 2014 U.S. Dealer Financing Satisfaction StudySM released today.

The study examines dealer satisfaction with lenders in four finance segments: prime retail credit; non-prime retail credit1; retail leasing; and floor planning. Satisfaction is measured across three factors in the prime and non-prime retail credit segments: finance provider offering; application/approval process; and sales representative relationship. Four factors are measured in the retail leasing segment: finance provider offering; application/approval process; sales representative relationship; and vehicle return process. Three factors are measured in the floor planning segment: finance provider credit line offering; floor plan support; and floor plan portfolio management.

The service and relationship dealers have with their finance providers matter enough that 66 percent of dealerships are willing to pay as much as an additional 0.50 to 0.60 basis points on their loan terms to receive good service from their lenders.

"Auto lending is a relationship business, and the key to success for lenders is to provide dealers with the best support and quickest response times possible," said Michael Buckingham, senior director of the auto finance practice at J.D Power. "Dealerships want lenders that focus on building strong relationships and that provide a wide array of financing options for vehicle buyers. These fundamentals hold true for all auto financing products."

Buckingham noted that dealers financing the three consumer-facing products—prime loan, leasing and non-prime—covet lenders that offer a dedicated credit underwriter and sales representative in order to maintain a level of familiarity, which they believe provides them better and faster service. Even if a credit underwriter team supports a dealership, providing a primary contact for the dealership solidifies the relationship. In the floor planning segment, dealers seek a responsive and knowledgeable servicing team along with a proactive sales team to help them manage their inventory and expense.

KEY FINDINGS

eContracting—a computer-based system used by captive and non-captive finance companies for the credit application, review and approval process—increases dealer satisfaction. When lenders use eContracting, overall satisfaction averages 892 (on a 1,000-point scale), compared with 858 when lenders do not use that service. Additionally, because of the ease and speed it provides, dealers are more likely to increase their business with lenders that offer eContracting (35%). The study finds that auto dealers in retail leasing keep 62 percent of their prior leasing customers through retention programs and consumer guidance provided by their lender. More than two-thirds (68%) of dealers indicate they increased retail business with their provider because of their floor planning relationship. In the non-prime credit segment, the competitiveness of vehicle advance is the most important component of provider offerings. Dealer Financing Satisfaction Rankings In the floor planning segment, satisfaction is 937, while satisfaction in retail leasing averages 899. Satisfaction in the prime retail credit segment is 866, while non-prime retail credit satisfaction is 827.

Prime Retail Credit MINI Financial Services ranks highest among lenders in the prime retail credit segment with a score of 968. Following in the rankings are BMW Financial Services (961) and Alphera Financial Services (952).

Retail Leasing BMW Financial Services ranks highest among lenders in the retail leasing segment for a third consecutive year, with a score of 975. Following in the rankings are MINI Financial Services (970) and Mercedes-Benz Financial (965).

Floor Planning Mercedes-Benz Financial ranks highest among floor planning lenders for a fourth consecutive year, with a score of 972. Following in the rankings are BMW Financial Services (964) and Hyundai Motor Finance (961).

The 2014 U.S. Dealer Financing Satisfaction Study is based on responses from 3,037 dealers who were surveyed between March and April 2014.

Overall Customer Satisfaction Index Scores (Based on a 1,000-point scale)

Overall Customer Satisfaction Index Scores 
(Based on a 1,000-point scale)                                                                  

Prime Retail Credit




MINI Financial Services                              

968

BMW Financial Services                             

961

Alphera Financial Services                        

952

Mercedes-Benz Financial                           

948

Ally Financial                                                   

914

Ford Credit                                                       

909

Infiniti Financial Services                          

903

Volvo Car Financial Services                    

900

Toyota Financial Services                          

890

Bank of the West                                            

884

SunTrust Bank                                                

884

NMAC                                                                  

883

Hyundai Motor Finance                              

878

Fifth Third Bank                                             

876

BMO Harris Bank                                           

874

BB&T                                                                   

870

Huntington National Bank                         

869

Kia Motors Finance                                       

869

Prime Retail Credit Average                      

866

Volkswagen Credit                                        

865

Capital One Auto Finance                           

864

Wells Fargo Dealer Services                     

858

RBS Citizens                                                     

848

US Bank                                                              

847

PNC Bank                                                          

846

Bank of America                                             

844

TD Auto Finance                                            

830

Chase Automotive Finance                        

828

Honda Financial Services                           

824

GM Financial                                                    

803

Chrysler Capital                                              

784



Retail Leasing




BMW Financial Services                             

975

MINI Financial Services                              

970

Mercedes-Benz Financial                           

965

Ford Credit                                                       

936

Ally Financial                                                   

931

Volvo Car Financial Services                    

918

Toyota Financial Services                          

913

Retail Leasing Average                                

899

Hyundai Motor Finance                              

898

Kia Motors Finance                                       

896

NMAC                                                                  

879

Honda Financial Services                           

863

GM Financial                                                    

831

Chrysler Capital                                              

791

US Bank                                                              

763



Floor Planning




Mercedes-Benz Financial                           

972

BMW Financial Services                             

964

Hyundai Motor Finance                              

961

Toyota Financial Services                          

945

Ford Credit                                                       

944

Ally Financial                                                   

942

Floor Planning Average                              

937

Chase Automotive Finance                        

914

NMAC                                                                  

885

Bank of America                                             

879

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