J.D. Power and Associates Reports: Dealer Satisfaction with Lenders Increases from 2010, Led by Improvement by Banks

WESTLAKE VILLAGE, Calif., July 28, 2011 /PRNewswire/ -- Dealer satisfaction with automotive financing lenders has increased notably in 2011, with improvement by certain banks outpacing gains by captive lenders, particularly in the prime retail credit space, according to the J.D. Power and Associates 2011 U.S. Dealer Financing Satisfaction Study(SM) released today.

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The study finds that dealer satisfaction with automotive lenders has increased from 2010 in the prime retail credit, retail leasing and floor planning areas. Satisfaction has improved in 2011 in each of these areas (on a 1,000-point scale) by 15 points, 13 points and 35 points, respectively.

While captive finance providers are the highest performers in each area, year-over-year improvement by non-captive lenders has outpaced improvement by captives. Particularly within the prime retail credit segment, several banks—including Ally Financial, Bank of America, Citizens Auto Finance and SunTrust Bank—have improved from 2011 at a considerably higher rate than the industry average. Dealerships cite several reasons for their high satisfaction with these non-captive lenders, including ease of conducting business, quick decisions and flexibility of programs and purchasing.

"The ongoing recovery of the automotive industry will continue to bring shifts in the lenders operating in this space, intensifying competition as lenders vie for new business," said Paul A. Cuevas, director of automotive finance at J.D. Power and Associates. "Lenders that provide a satisfying experience for dealers—whether captive or non-captive—are likely to benefit from a greater share of dealer business."

The continuation of historically low interest rates has caused a shift in the importance of various aspects of the dealer experience. The importance of price has decreased and, offsetting that, the people and processes dealers encounter during their lender dealings have become more influential in satisfaction with the lending experience.

According to Cuevas, providing a highly satisfying experience to dealers benefits lenders not only in terms of gaining greater volumes of dealer business, but also in commanding premium pricing. The study finds that 56 percent of dealers say they would pay a higher buy rate to send business to a lender that provides them with a more satisfying experience. In addition, approximately 21 percent of dealers say they would pay as much as 100 basis points more to work with a lender that provides a satisfying experience.

"Conventional wisdom says that a 'show me the money' attitude among dealers causes them to focus primarily on the best rate when selecting a lender," said Cuevas. "However, our study clearly shows that lenders can get more loan volume and better pricing by differentiating themselves through more seamless processes and better relationships with their dealers. As a result, better-performing lenders have the opportunity to enjoy higher levels of revenue growth and profitability as the health of the market continues to improve."

There are specific key areas where lenders can take action to raise dealer satisfaction—streamlining the approval and funding process; providing consistent contacts and messaging; and communicating with dealers through their preferred channels.

• Lenders should streamline the approval and funding process to be as efficient as possible, while still allowing ample time to efficiently manage risk. Establish clear thresholds for customers with favorable credit profiles, which could qualify for more automatic approvals.
• Ensure dealers are able to interact with the same credit buyer as frequently as possible, particularly when putting together complex deals. When the usual credit buyer is unavailable, ensure that others on the credit team provide consistent messages.
• Communicate program offering and rate sheet changes to dealers through preferred channels, which for many dealers are the Web, email, phone and visits by sales representatives. Consistently using multiple communication channels increases the likelihood that dealers will receive important information.

The study examines dealer satisfaction with finance lenders in four segments: prime retail credit; subprime retail credit(1); retail leasing; and floor planning. It examines three key factors that contribute to satisfaction within the prime retail credit and subprime retail credit segments: provider offering; application/approval process; and sales representative relationship. Four factors are measured in the retail leasing segment: 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; floor plan support; and floor plan portfolio management.

Prime Retail Credit

BMW Financial Services and Mercedes-Benz Financial Services each rank highest in the prime retail credit segment, in a tie (959 each). BMW Financial Services performs particularly well in the application/approval process factor, while Mercedes-Benz Financial Services performs particularly well in the provider offering factor. Following in the rankings is Ford Credit (920). Ally Financial improves more than any other lender in the segment in 2011, increasing by 113 points from 2010.

Retail Leasing

Mercedes-Benz Financial Services ranks highest in the retail leasing segment with a score of 960 and performs particularly well in the sales representative relationship factor. BMW Financial Services follows closely in the rankings with a score of 957. Ford Credit ranks third with a score of 914. Ally Financial improves more than any other lender in the retail leasing segment in 2011, increasing by 104 points from 2010.

Floor Planning

Mercedes-Benz Financial Services ranks highest in the floor planning segment with a score of 970, followed by BMW Financial Services (966) and Toyota Financial Services (943).

The 2011 U.S. Dealer Financing Satisfaction Study is based on responses from 2,763 dealer principals who were surveyed between March and April 2011.

(1) No awards were presented in the subprime retail credit segment due to insufficient market representation.

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company providing forecasting, performance improvement, social media and customer satisfaction insights and solutions. 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 is a leading global financial information and education company that helps professionals and students succeed in the Knowledge Economy. With leading brands including Standard & Poor's, McGraw-Hill Education, Platts energy information services and J.D. Power and Associates, the Corporation has approximately 21,000 employees with more than 280 offices in 40 countries. Sales in 2010 were $6.2 billion. Additional information is available at http://www.mcgraw-hill.com.

J.D. Power and Associates Media Relations Contacts:

John Tews; Troy, Mich.; (248) 312-4119; [email protected]

Syvetril Perryman; Westlake Village, Calif.; (805) 418-8103; [email protected]

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. www.jdpower.com/corporate

SOURCE J.D. Power and Associates