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WESTLAKE VILLAGE, Calif. — While a luxury European brand's
captive finance company took several honors, the J.D. Power and Associates 2012
U.S. Dealer Financing Satisfaction Study determined satisfaction with auto
finance providers is significantly higher among dealers who have a preferred
relationship with their lender.

What's driving this trend? J.D. Power said it's the higher
number of automated approvals, faster funding, more interactions with their
sales representative and a perceived increase in the flexibility of the
lender's buying policy.

Analysts explained preferred relationships are instituted by
lenders that want to capture a larger percentage and/or a certain mix of a
dealership's business and are often targeted to the lender's best dealerships.
They noted preferred dealers who complete a certain volume or mix of their
business with their lender are often rewarded under the terms of preferred
relationships with rate discounts, better access to special programs and an
improved service experience, compared with traditional relationships.

Among preferred dealers, J.D. Power found overall
satisfaction with their prime retail credit lender is 919 (on a 1,000-point
scale), compared with 845 among dealers without a preferred arrangement.

The firm's survey noted the largest gaps in satisfaction
scores between preferred and traditional relationships are in the usefulness of
dealership visits (9.3 vs. 8.1, on a 10-point scale, respectively), and
flexibility of the buying policy attributes (9.1 vs. 7.9, respectively).

"The usefulness of dealership visits and the flexibility of
the buying policy are among the most important attributes of the overall
relationship, so the gap in scores is extremely significant," said Lisa
Chubliski, client services director of auto finance at J.D. Power.

Nearly two-thirds of dealers in a preferred relationship —
63 percent to be exact —  indicate they receive
funding in less than 24 hours versus 46 percent of dealers in a traditional
relationship.

The report showed there is an even larger difference in the
frequency of sales representative visits, with 58 percent of dealers in a
preferred relationship receiving sales representative visits 12 times per year
versus 33 percent of dealers in a traditional relationship.

"While not new to the industry, preferred relationships are
increasing and are becoming an intriguing alternative to traditional
relationships for both parties involved," Chlubiski said.

"Once the preferred relationship is established, dealerships
are finding it easier to complete deals, service their customers quickly and
optimize the relationship with their lender," she added.

J.D. Power's study also revealed that preferred
relationships are not exclusive to the captive lenders. 

"While captive lenders, by nature, offer a large percentage
of preferred relationships, a notable 56 percent of banks and 30 percent of
independents also offer preferred relationships," Chlubiski highlighted.

"While preferred relationships may lead to more business and
better service for the dealership, they are not necessarily the right fit for
all relationships," she went on to say. "The fear of restrictions or the
potential of damaging other relationships may push dealerships to remain in
traditional relationships with lenders." 

Analysts insisted preferred relationships are designed to
have a considerable impact on the percentage of dealership business sent to lenders.

Among lenders that account for between 26 percent and 50
percent of a dealer's total prime business, the report pointed out 79 percent
are lenders who are defined as "preferred." That percentage increases to 90
percent among lenders that account for more than 50 percent of a dealer's total
prime business.

Prime Retail Credit

BMW Financial Services ranked highest among prime retail
credit lenders with a score of 963. Following in the rankings are Alphera
Financial Services (959) and Mercedes-Benz Financial Services (948).

Retail Leasing

BMW Financial Services took the highest spot among lessors
in the retail leasing area with a score of 959. Mercedes-Benz Financial
Services followed closely in the rankings with a score of 958. Ford Credit
ranked third with a score of 911.

Floor Planning

Mercedes-Benz Financial Services ranked highest among floor
planning lenders with a score of 964, followed by BMW Financial Services (960)
and Ford Credit (935).

BMW Reacts to Accolades

BMW Financial Services Americas Region chief executive officer
Ed Robinson shared comments when J.D. Power released the study.

"This year's J.D. Power and Associates Dealer Financing
Satisfaction rating is especially significant to us in a year where we extended
our regional services center's scope and capabilities," Robinson stressed.

"We challenged our organization to proactively drive for
this top ranking in all aspects of our business, to raise the bar on the
services, programs and products that we deliver to our dealers," he continued.

"We have an extraordinary partnership with our dealers, we
are proud to share this success with them, and thank them for their continued
faith in our ability to deliver first class service," Robinson went on to say.

Dealer Financing Satisfaction Findings

The study examined dealer satisfaction with lenders in four
finance areas: prime retail credit; subprime retail credit, retail leasing and
floor planning.

Satisfaction is measured across three factors in the prime
retail credit and subprime retail credit areas: finance provider offering;
application/approval process; and sales representative relationship.

Four factors are measured in the retail leasing area:
finance provider offering; application/approval process; sales representative
relationship; and vehicle return process. Three factors are measured in the
floor planning area: finance provider credit line offering; floor plan support;
and floor plan portfolio management.

Dealer satisfaction with automotive lenders has increased
across all areas. Overall dealer satisfaction with prime retail credit lenders
averages 885, an increase of 23 index points from 2011. Retail leasing
satisfaction is 891, up 14 points from 2011, and floor planning satisfaction is
913, up 10 points.

The 2012 U.S. Dealer Financing Satisfaction Study is based
on responses from 3,064 dealers who were surveyed between March and April.