Sunday, Aug. 13, 2006, 08:00 PM UPDATED 11:59 AMBy Nick Zulovich
WESTLAKE VILLAGE, Calif. -- Dealers who are happy with their financial providers will send more business to those providers in the future, according to the J.D. Power and Associates 2006 Dealer Financing Satisfaction Study. However, the study also found that dealer satisfaction takes more than just low interest rates and balanced risk.
Convenience -- including minimal paperwork, quick application processing and terms that allow customers to afford the monthly payments -- is key for dealers, and providers that offer that in addition to low interest rates and an appropriate spread between high- and low-risk customers, will continue to get dealers' business.
"A common misconception is that the only way to satisfy dealers is to buy 'deep and cheap,' but rates and spread of risk are not the only considerations that entice dealerships to send more business your way," said David Lo, senior manager of automotive finance research at J.D. Power and Associates. "Dealerships still want low rates and risk diversity, but they also want a seamless experience with the provider's credit desk, quick funding and a strong business relationship. When this is effectively packaged, dealerships tend to reward the provider with more business."
According to the study, 42 percent of dealers who are "very satisfied" and 21 percent who are "somewhat satisfied" with a finance provider indicate that they plan to do additional prime retail credit business with that provider over the next year. Conversely, only 10 percent of dealerships that have "neutral" feelings about a financial provider plan to send additional business to that provider.
BMW, Mercedes-Benz Tops in Satisfaction
The study measured dealer satisfaction with finance providers in five product segments: prime retail credit, retail leasing, floor planning, subprime retail and account management.
From a segment perspective, captive finance providers improved in satisfaction in both prime retail credit and leasing. In contrast, banks and independents declined in both prime retail credit and leasing satisfaction. Interestingly, banks enjoyed the most dramatic improvement in subprime retail credit satisfaction, likely a reflection of the "full spectrum" and "near prime" initiatives that many banks are pursuing.
BMW Financial Services ranked highest in the prime retail credit segment, leading the industry in each of the dimensions of dealer satisfaction: finance provider offering, termination policy/service, application/approval process and credit personnel. BMW Financial Services also ranked highest in retail leasing.
Mercedes-Benz Financial ranked highest in floor planning, with segment-leading ratings in each of the three floor plan satisfaction factors: finance provider offering, process and service, and floor plan support personnel.
Chrysler Financial, Ford Credit, GMAC and Wells Fargo Auto Finance performed particularly well in subprime retail credit. Mercedes-Benz Financial Services and Toyota Financial Services performed well in account management.
The 2006 Dealer Finance Satisfaction Study is based on responses from 4,670 dealer principals who were surveyed between March and May 2006.