Dealer satisfaction with lenders remains high


Although down from the record levels attained in 2013, Canadian automotive dealer satisfaction with finance providers remains high, according to the J.D. Power 2014 Canadian Dealer Financing Satisfaction study.

The study, now in its 16th year, examines dealer satisfaction with finance providers in four segments: prime retail credit; retail leasing; floor planning; and sub-prime retail credit.

Despite declining satisfaction in two of the four segments, overall satisfaction remains high. In the floor planning segment, satisfaction is 924 (on a 1,000-point scale), a 14-point improvement from 2013, while satisfaction in retail leasing improves by 3 points to 861.

Satisfaction in the prime retail credit segment drops 10 points to 873 in 2014, while sub-prime retail credit satisfaction declines by 24 points to 822.

“Indirect lending through captives and banks continues to be the preferred method for consumers seeking affordable loans and leases,” said Mike Buckingham, senior director of the automotive finance practice at J.D. Power.

“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.”

Buckingham noted 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.

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.

BMW Financial Services ranked highest in the prime retail credit segment for a second consecutive year, with a score of 954, up 6 points from 2013, and performs particularly well across all factors. Volkswagen Credit Canada came in  second in the segment with a score of 938, a 30-point improvement from 2013. Mercedes-Benz Financial Services (930) rounded out the top three.

Volkswagen Credit Canada took top honours in the floor planning segment, achieving a score of 971, a significant 42-point improvement from 2013. Volkswagen Credit Canada performed well across all factors in the study. Scotiabank (936) ranks second and Ford Credit Canada (929) third.

J.D. Power also said it identified some key findings while surveying dealers including:

-    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.

-    A strength of indirect lending – utilizing the dealer’s F&I department to secure financing rather than the vehicle buyer obtaining financing on their own – is the number of options available to customers. Dealers are able to look across a myriad of lenders to find financing most suitable for their customers.

-    Satisfaction increases when the lender’s sales representative visits the dealership at least four times per year.

-    The study also found that auto dealers in retail leasing retain 49 per cent of their prior leasing customers through retention programs and consumer guidance provided by their lender.

-    Dealer floor plan inventory satisfaction is enhanced when lenders provide their dealers with robust tools and reports to 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.

-    Dealers active in the sub-prime market need more product training and general communications from their lenders, as this product is more niched-based than prime retail. Similar to prime retail, dealers in sub-prime also seek the same speed of service in underwriting and funding.

Prime Retail Credit

BMW Financial Services                          954

VW Credit Canada                                   938

Mercedes-Benz Financial Services          930

Bank of Montreal                                      909

Ford Credit Canada                                  909

Honda Financial Services                        898

Scotiabank                                               895

Industry Average                                      873

Nissan Canada Finance                          859

RBC Royal Bank                                      858

TD Auto Finance (prime)                         849

Desjardins/Caisse Populaire                   833

Toyota Financial Services                       773

* Included in the study but not ranked due to small sample size is National Bank.             

Floor Planning

VW Credit Canada              971

Scotiabank                          936

Ford Credit Canada            929

Industry Average              924

Bank of Montreal                900

RBC Royal Bank                872