Banks gain more of the lending market: Study


By Liam Orlita

Banks and credit unions are playing a larger role in automotive dealer financing sector thanks to the diminished presence of captives and strength in sales, says the latest J.D. Power and Associates study.

Released late last week, the Canadian Dealer Financing Satisfaction Study shows that
94 per cent of the more than 1,300 dealer participants reported using a bank or credit union. That tally is up from 92 per cent from the previous year.

“Banks and credit unions are increasing their footprint in the auto financing market to fill in the void left by the exit or reduced presence of some traditional lenders,” stated Lubo Li, of J.D. Power and Associates, Toronto.

Li said the shift increases competition amongst the lending institutions and captive lenders, which may even result in “better levels of service for dealerships.”

BMW Financial Services ranked highest in dealer satisfaction with prime retail credit scoring an 893 out of a possible 1,000. The company says BMW ranked very well in application/approval process and sales representative relationship. Mercedes-Benz Financial took second place and VW Credit Canada came in third place.

Mercedes-Benz Financial took top honours for retail leasing with a score of 885. BMW Financial Services and VW Credit Canada finished in second and third place, respectively.

Ford Credit Canada came in first place in dealer satisfaction with floor planning. The Blue Oval achieved a score of 814 and performed well in floor plan support, floor plan portfolio management and sales representative relationship factors. After Ford Credit Canada, Honda Financial Services and Scotiabank tied for second place.

The study also showed how the importance of retail leasing to dealership business has been declined since 2008. Two years ago, 42 per cent of dealers said retail leasing was the most important part of business, this year that number has been cut by more than half with only 20 per cent of respondents putting retail leasing as most important.

Lending institutions were judged on offerings, application/approval process, sales relationship and overall satisfaction.