Canadian Dealers Satisfied With Lender Relationships
Canadian dealer satisfaction with finance providers remains elevated, though rates have fallen from record levels seen last year.
That’s according to the results from the 2014 J.D Power 2014 Canadian Dealer Financing Satisfaction study — which takes a look at dealer satisfaction with finance providers in four segments: prime retail credit; retail leasing; floor planning; and subprime retail credit.
The study found that dealers are most satisfied with BMW Financial Services in the prime retail credit segment, while Volkswagen Credit Canada ranks highest in floor planning.
Despite declining satisfaction in two of the four finance segments tracked, overall satisfaction remains high, J.D. Power analysts shared.
Mike Buckingham, senior director of the automotive finance practice at J.D. Power, said the sustained levels of satisfaction are in large part due to the fact that auto lenders have remained focused on building strong relationships with dealers and providing a wide array of financing options for vehicle buyers.
Numbers Slightly Down from 2014
Here’s how the numbers break down:
In the floor planning segment, satisfaction is 924 (on a 1,000-point scale). This marks a 14-point improvement from 2013.
For retail leasing, satisfaction rates were up by 3 points, coming in at 861.
On the other hand, satisfaction in the prime retail credit segment fell by 10 points to 873.
The subprime retail credit segment saw the biggest drops in satisfaction, falling by 24 points to 822.
Here are the factors that went into the satisfaction indexes:
- Dealer satisfaction in the prime retail credit and sub-prime retail credit segments is measured in three factors: finance provider offering; application/approval process; and sales representative relationship.
- In the retail leasing segment, satisfaction is measured in four factors: finance provider offering; application/approval process; vehicle return process; and sales representative relationship.
- In the floor planning segment, satisfaction is measured in four factors: finance provider credit line offering; floor plan support; floor plan portfolio management; and sales representative relationship.
Key Study Findings
The study showed that indirect lending reigns supreme when it comes to consumer preference.
“Indirect lending through captives and banks continues to be the preferred method for consumers seeking affordable loans and leases,” said Buckingham. “The highest performing indirect lenders recognize that it is a relationship-based business model with the dealer community and that focusing on having a dealer-centric staff is a key to success.”
The results showed a variety of factors behind why indirect lending continues to be a favorite for consumers an dealers, such as flexibility.
J.D. Power pointed out “credit policy flexibility and predictability, speed of service (underwriting and funding) and relationship with the lender’s sales representatives are critical to dealer financing satisfaction.”
And dealer satisfaction increases when the lender’s sales rep makes it out the dealership at lease four times every year.
Moving over to highlight the leasing customer, the study found that auto dealers in retail leasing retain 49 percent of their prior leasing customers through retention programs and consumer guidance provided by their lender — perhaps a reason satisfaction for retail leasing lenders remained high this year.
And when it comes to floor plan inventory satisfaction, results shows rates were enhanced when lenders made sure to give their dealers tools and report to help manage their inventory of vehicles.
“Dealers also rely on sales representatives to conduct product training and performance reviews, which lead to more efficiency and cost control in dealership operations,” J.D. Power analysts pointed out.
The same is true for dealers active in the subprime market. According to the study, these dealers expect more product training and general communications from their lenders.
The study also ranked lenders when it comes to dealer satisfaction.
Leading the pack for the prime retail credit segment for the second year in a row is BMW Financial Services. This lender came in with a score of 954, up 6 points from last year.
Volkswagen Credit Canada wasn’t far behind, with a score of 938; a 30-point spike from 2013.
Mercedes-Benz Financial Services (930) came in third for prime retail credit satisfaction.
VW Credit Canada took the No.1 spot in floor planning segment, achieving a score of 971. This marks a significant 42-point improvement from last year’s rates. Scotiabank (936) ranks second and Ford Credit Canada (929) third.
There are no official awards presented in the retail leasing and subprime retail credit segments due to insufficient market representation, J.D. Power pointed out, but the company did highlight a few companies that perform particularly well in leasing.
BMW Financial Services, Mercedes-Benz Financial Services and Volkswagen Credit Canada perform particularly well in retail leasing, said company officials.