Dealers Looking for Great Finance Service — Not Low Price
With financing being one of the biggest pain-points for shoppers, it seems dealers don’t mind shelling out a bit more for better service from their financing companies and captives.
According to J.D. Power’s 2015 Canadian Dealer Financing Satisfaction Study, good service and fast contract funding for consumer-facing products come before low pricing in Canada’s auto lending marketplace.
The study measured dealer satisfaction with finance providers in four segments: prime retail credit, retail leasing, floor planning and non-prime retail credit.
“High-performing lenders are characterized as collaborative consultants rather than loan processors,” said Mike Buckingham, senior director of the automotive finance practice at J.D. Power. “What separates the highest-performing lenders from the rest is the broad range of support they provide dealers to help sell vehicles. This includes helping dealers understand the variety of lending options available, how to maximize profits, how to reduce expenses and how to effectively retain customers. Dealers, in many instances, are willing to pay a premium price to receive these services from the high-performing lenders.”
Breaking down this year’s results, dealer satisfaction with auto finance companies for the prime retail credit segment came in at 850 on a 1,000-point scale,
For the prime retail market, BMW Financial Services ranked the highest in franchised dealer satisfaction with a score of 936 on a 1,000 point scale. Mercedes-Benz Financial Services came in No. 2 with a score of 920, followed by Honda Financial Services at 895.
J.D. Power analysts also pointed out a few factors behind increased satisfaction among dealers working primarily in the prime credit space.
It seems dealer customers in the prime market value flexibility with the buying policy as the most important auto finance provider offering, with 17 percent of respondents citing this as a key deciding factor.
Competitiveness of rates with new vehicles (14 percent) and for used vehicles (11 percent) trailed, providing evidence for a dealer population that values convenience over cost.
For floor planning services, satisfaction was quite a bit higher with an overall score of 934.
VW Credit Canada came out on top in this respect with a score of 958, trumping the average dealer satisfaction rate.
Scotiabank came in at No. 2 with a score of 956, followed by Ford Credit Canada with a score of 950.
Retail Leasing & Non-Prime Retail Segments
Moving on to highlight the retail leasing and non-prime retail segments, non-prime dealer satisfaction was just a bit lower than prime this year, coming in at 848.
Dealer satisfaction in the retail leasing segment is 853.
And though there are no ranking provided in these segments, J.D. Power reported BMW Financial Services, Honda Financial Services, and VW Credit Canada perform particularly well in the retail leasing segment; and Ford Credit Canada and Scotia Dealer Advantage perform above the non-prime retail segment average.
The study also showed the dealers appreciate visits from lenders’ sales representatives, most noticeably in the non-prime retail credit spectrum, where there can often be more gray area and questions regarding credit availability.
When the lenders’ sales rep visits the dealership a minimum of five times per year, satisfaction increases in prime retail credit (+90 points), in non-prime retail credit (+94) and in floor planning (+45).
In retail leasing, satisfaction increases by 89 points with just four visits per year.
Another key point of discovery in the study for retail leasing is when finance providers work with customer through the lease return process, satisfaction is dramtically improved — by 126 points, to be exact.
Lease return paperwork can be confusing and burdensome for dealers, as J.D. Power pointed out 68 percent or leases are returned to the dealership.
Relationships Increase Satisfaction
Overall, the study — which took a look at 6,300 finance provider evaluations provided by roughly 1,300 new-vehicle dealerships in Canada — found that dealer-focused sales rep service plays a huge role in overall dealer satisfaction.
When a high level of customer service is provided, dealer satisfaction goes up to 943, versus 744 when there is no focused support.
“Dealers are interested in building a collaborative relationship with their lenders,” J.D. Power analysts reported.
So much so, that when lenders provide primary buyer/underwriter personnel to facilitate credit approvals and speedy contract funding in the application and approval process, satisfaction increases by 81 points in the prime market and is up by 76 in the non-prime retail credit segment.
Below are the full rankings for the J.D. Power 2015 Canadian Dealer Financing Satisfaction study:
Prime Retail Credit Segment
BMW Financial Services: 936
Mercedes-Benz Financial Services: 920
Honda Financial Services: 895
BMO Bank of Montreal: 891
Ford Credit Canada: 889
VW Credit Canada: 884
TD Auto Finance: 851
Prime Retail Credit Average: 850
RBC Royal Bank: 832
Toyota Financial Services: 795
Nissan Canada Finance: 772
GM Financial: 729
NOTE: BMW Financial Services and Mercedes-Benz Financial Services are award-eligible based on equivalent sample size calculations; Included in the study but not ranked due to small sample size are Acura Financial Services and National Bank of Canada.
Floor Planning Segment
VW Credit Canada: 958
Ford Credit Canada: 950
Floor Planning Average: 934
RBC Royal Bank: 901
NOTE: Included in the study but not ranked due to small sample size are BMO Bank of Montreal and Mercedes-Benz Financial Services.