As much as technology has enhanced the way Canadian dealers can find inventory that turns quickly while securing financing for their customers, personal relationships still matter, especially when it comes to store management and its F&I activities.

For the second consecutive year, dealers in Canada continue to stress the importance of the dealer-finance company relationship and are more satisfied with providers that not only understand their needs, but also consistently exceed their expectations. Those findings surfaced this week as a part of the J.D. Power 2018 Canadian Dealer Financing Satisfaction Study.

As the auto retail financing industry becomes more commoditized, the J.D. Power survey showed dealers cite “people relationships” and “ease of doing business” as the top two reasons for their selection of a financing provider. The importance of these two reasons are echoed both by captive and non-captive finance companies.

The survey revealed factors such as dealer compensation and competitive rates are also relevant in the provider selection decision, but are of secondary importance to customer service-related reasons.

“The marketplace in Canada continues to be strong, yet highly competitive, so relationships are what make the difference,” said Jim Houston, senior director of automotive finance at J.D. Power.

“Lenders can adjust their credit policy, interest rate or dealer compensation plans, but it’s how they interact with dealers and resolve issues when they arise that have the greatest effect on satisfaction,” Houston said. “When overall satisfaction increases, dealers are more willing and able to deepen the business relationship with lenders.”

The study, now in its 20th year, found that problem resolution and the speed with which an issue is rectified significantly affect dealer satisfaction levels. Moreover, it’s the credit department that bears the load and acts as the first port of call when things go sour.

Six in 10 dealers (60 percent) indicate that credit desk personnel are the first point of contact for any problems or concerns. Additionally, 76 percent of dealers said they were able to engage with credit staff when needed.

“While both captive and non-captive lenders’ credit departments perform well in making themselves available, lenders should not rest on their laurels,” Houston said. “Instead, they should maintain a sense of urgency when responding to dealers, as satisfaction levels plummet when the credit department is not readily available.

“Leveraging various communication channels and technology coupled with adequate credit department staffing are some measures in which lenders can demonstrate their commitment and differentiate themselves to increase satisfaction,” Houston went on to say.

Two other additional findings from the latest survey included:

• Finance company selection influenced by more than just relationships: Beyond the relationship influence, dealers have different views of satisfaction depending on the type of finance company with which they are doing business. Dealers who work with captives place higher importance on the provider’s customer loyalty rebates (27 percent) than those who work with non-captive finance companies (4 percent).

In contrast, dealers that choose to do business with non-captive finance companies place a greater importance on dealer compensation (13 percent), compared with those that choose to work with captives (4 percent).

• Sales performance requires improvement: In a highly competitive and fragmented market, J.D. Power learned that exceeding expectations becomes a paramount differentiator. The study found that dealers hold their finance company sales representatives to a higher set of standards, yet sales representatives exceed expectations less than half of the time.

Finance company rankings

Overall dealer satisfaction in the captive segment is 875 (on a 1,000-point scale), a 7-point increase from 2017. Overall satisfaction in the non-captive segment is 862, a 4-point decrease from 2017.

Mercedes-Benz Financial Services ranked highest in the captive segment with a score of 948. Ford Credit (903) ranked second, while Honda Financial Services (883) came in third. Toyota Financial Services (878) ranked fourth.

Among non-captive finance companies, TD Auto Finance ranked highest with a score of 884. Bank of Montreal (881) came in second, and RBC Royal Bank (868) placed third.

The 2018 Canadian Dealer Financing Satisfaction Study captured 4,861 finance provider evaluations across the two segments from new-vehicle dealerships in Canada. The study was fielded in February and March.