J.D. Power Reports: Automotive Finance Providers are Exploring Full-Spectrum and Direct Lending Initiatives
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BMW Financial Services Ranks Highest in Satisfying Dealers for Retail Leasing; Mercedes-Benz Financial Ranks Highest in Prime Retail Credit and Floor Planning Satisfaction
WESTLAKE VILLAGE, Calif., Aug. 24 -- As competition in the auto finance market intensifies, many lenders are deploying full-spectrum strategies, which consists of lenders servicing both prime and sub-prime customers, to increase volume and market share and to improve service to their dealers, according to the J.D. Power and Associates 2007 Dealer Financing Satisfaction Study(SM) released today.
The study finds that many prime finance providers are making the transition to the sub-prime market, with 57 percent of dealers utilizing traditionally prime lenders for sub-prime customers. Conversely, only 33 percent of dealers report using traditional sub-prime lender services for their prime customers.
"The challenges that sub-prime lenders are facing while breaking into the prime market are not surprising, given that captive finance providers dominate much of the prime new-vehicle financing market," said David Lo, director of automotive finance and investment services at J.D. Power and Associates. "It is important for these traditional sub-prime lenders moving into the prime space to consider both price and service within their full-spectrum program. While competitive pricing is an entry point for these lenders, service is the key to a successful long-term strategy."
In addition to the rise in full-spectrum lending efforts, non-captive finance providers appear to be engaging new-vehicle shoppers before they even enter the dealership, as one in five dealers report that the number of loans financed directly and without their assistance has increased during the past 12 months.
"While direct lending is a viable strategy to gain share, non-captive finance providers walk a fine line between capturing new business through direct lending and compromising their relationship with the dealer, as many dealers report that direct lending negatively impacts the amount of business they receive," said Lo.
With a score of 954 points on a 1,000-point scale, BMW Financial Services ranks highest in retail leasing satisfaction for a fourth consecutive year, performing particularly well in all drivers of dealer satisfaction: finance provider offering; termination policy/service; application/approval process; and credit personnel. Mercedes-Benz Financial (948) and GMAC (934) follow BMW Financial Services in the retail leasing segment.
With considerable improvements across all financing areas since the 2006 study, Mercedes-Benz Financial ranks highest in the prime retail credit segment in 2007 with a score of 948. BMW Financial Services closely follows with 947 points, and Toyota Financial Services ranks third in the segment with 941.
Mercedes-Benz also ranks highest in floor planning for a second consecutive year with 966 points, performing particularly well in each of the three floor plan satisfaction factors: finance provider offering; process and service; and floor plan support personnel. Chase Auto Finance (959) and Volkswagen Credit (954) follow in the segment.
The 2007 Dealer Finance Satisfaction Study is based on responses from 4,845 dealer principals who were surveyed between March and May 2007. To review the entire full-spectrum and direct lending management discussion, please click the following link: http://www.jdpower.com/corporate/library/download/?files=9927502
Retail Leasing Satisfaction Index Ranking (Based on a 1,000-point scale) BMW Financial Services 954 Mercedes-Benz Financial 948 GMAC 934 Audi Financial Services 931 Honda Financial Services 923 Toyota Financial Services 910 Nissan Motor Acceptance 904 Chrysler Financial 901 Volkswagen Credit 892 Retail Leasing Segment Average 892 Subaru Motors Finance 867 Huntington National Bank 865 Ford Credit 854 Mazda American Credit 852 Chase Auto Finance 830 Fifth Third Bank 811 Wells Fargo Auto Finance 807 US Bank 797 Hyundai Motor Finance Company 765 Included in the study but not ranked due to small sample size are: Bank of the West, Porsche Financial Services, Suzuki Financial Services and Volvo Car Finance. Retail Credit Satisfaction Index Ranking (Based on a 1,000-point scale) Mercedes-Benz Financial 948 BMW Financial Services 947 Toyota Financial Services 941 GMAC 935 Audi Financial Services 926 Nuvell Credit 923 Volkswagen Credit 918 Chrysler Financial 914 Honda Financial Services 909 Branch Banking and Trust 898 Regions/AMSouth 896 Subaru Motors Finance 895 SunTrust Bank 890 Nissan Motor Acceptance 889 First Citizens Bank 887 Prime Retail Credit Segment Average 886 Compass Bank 885 M&I Bank 885 Wachovia Dealer Services/WFS Financial 885 Sovereign Bank 880 Huntington National Bank 879 TD Banknorth 878 Chase Auto Finance 873 CitiFinancial Auto 869 Harris Bank 869 Bank of America 868 Fifth Third Bank 866 Ford Credit 857 M&T Bank 851 Citizens/Charter One Auto Finance 849 Wells Fargo Auto Finance 849 Capital One Auto Finance 848 Citizens Bank 846 Mazda American Credit 843 US Bank 829 AmeriCredit 801 Hyundai Motor Finance Company 798 Bank of the West 780 Included in the study but not ranked due to small sample size are: First National, HSBC Auto Finance, Infiniti Financial Services, PNC Bank, Suzuki Financial Services, Trustmark National Bank and Volvo Car Finance. Floor Planning Satisfaction Index Ranking (Based on a 1,000-point scale) Mercedes-Benz Financial 966 Chase Auto Finance 959 Volkswagen Credit 954 Toyota Financial Services 951 GMAC 941 Nissan Motor Acceptance 938 Bank of America 935 Floor Planning Segment Average 929 Chrysler Financial 914 Ford Credit 884 Included in the study but not ranked due to small sample size are: Audi Financial Services, BMW Financial Services, Comerica Bank, Fifth Third Bank, Honda Financial Services, Wachovia Dealer Services/WFS Financial and Wells Fargo Auto Finance. About J.D. Power and Associates
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, performance improvement, training and customer satisfaction. The firm's quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.
About The McGraw-Hill Companies
Founded in 1888, The McGraw-Hill Companies is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor's, McGraw-Hill Education, BusinessWeek and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2006 were $6.3 billion. Additional information is available at http://www.mcgraw-hill.com/.