J.D. Power and Associates Reports: High Levels of Dealer Satisfaction Translates to Additional Business for Lenders

October 7, 2008 8:00 AM EDT

WESTLAKE VILLAGE, Calif., Oct. 7 /PRNewswire/ -- 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.

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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
    Volkwagen 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. 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 (NYSE: MHP) 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 2007 were $6.8 billion. Additional information is available at http://www.mcgraw-hill.com.

      J.D. Power and Associates Media Relations Contacts:
      John Tews                  Syvetril Perryman
      Troy, Mich.                Westlake Village, Calif.
      (248) 312-4119             (805) 418-8103
      john.tews@jdpa.com         syvetril.perryman@jdpa.com

No advertising or other promotional use can be made of the information in this release without the express prior written consent of J.D. Power and Associates. http://www.jdpower.com/corporate

SOURCE J.D. Power and Associates

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