Canadian dealers improve financing satisfaction

Services and relationship building are now more influential than product offerings in determining dealer satisfaction with lenders, according to J.D. Power and Associates’ 2011 Canadian Dealer Financing Satisfaction study, which ranks Scotiabank tops for floor-planning and BMW Financial Services highest for retail credit and leasing.

“Product offerings by various lenders have become increasingly similar and competitive in recent years,” says Lubo Li, senior director and financial services practice leader at J.D Power and Associates, Toronto. “As a result, it has become critical for financing providers to differentiate themselves by offering a seamless process and superior, value-added services.”

The study examines dealer satisfaction with finance lenders in four retail segments, prime, sub-prime, leasing, as well as floor planning.

Within the prime and sub-prime retail segments, three key factors contribute to satisfaction: provider offering, application/approval process, and sales representative relationship.

In the retail leasing segment, a fourth factor is added: vehicle return process.

Four factors are also measured in the floor planning segment: provider credit line offering, floor plan support, floor plan portfolio management, and sales representative relationship.

For the first time since the inception of the study in 1998, the importance of the application/approval process factor outweighs the importance of provider offerings in all three retail segments

“The increased importance of the application and approval process underscores the changing market environment and dealer needs,” says Li.

The increased focus on service coincides with improved satisfaction with finance lenders in all four segments. Compared with 2010, dealer satisfaction in 2011 has increased as follows:

“We have found that lenders who focus on providing dealerships with high levels of satisfaction are likely to benefit from enhanced future business,” says Paul A. Cuevas, director of global automotive finance at J.D. Power and Associates. “For example, in the prime retail credit segment, 67 percent of dealerships with the highest levels of satisfaction—averaging 901 or higher—indicate they definitely will increase the volume of business with their lender during the next 12 months. In comparison, only 8 percent of dealers with the lowest levels of satisfaction—with scores averaging 700 or less—say the same.”

The performance of individual lenders in each segment is summarized below. J.D. Power.com Power Circle Ratings are defined as follows:

5 – Among the best

4 – Better than most

3 – About average

2 – The rest

Prime Retail Credit Segment Rankings
BMW Financial Services ranks highest in dealer satisfaction with prime retail credit services for a second consecutive year with a score of 921 on a 1,000-point scale and performs particularly well in the application/approval process factor. Mercedes-Benz Financial Services follows in the ranking with a score of 919, and performs particularly well in the provider offering factor. Bank of Montreal ranks third in the segment with a score of 880.

Retail Leasing Segment Rankings
BMW Financial Services ranks highest in dealer satisfaction with retail leasing with a score of 899 and performs particularly well in two of four factors: application/approval process and sales representative relationship. Mercedes-Benz Financial Services follows BMW Financial Services closely in the rankings (898) and performs particularly well in the sales representative relationship factor. VW Credit Canada (835) ranks third in the segment.

Floor Planning Segment Rankings
Scotiabank ranks highest in dealer satisfaction with floor planning, achieving a score of 888 and performs particularly well in three of four factors: finance provider credit line offering, floor plan portfolio management and floor plan support. Following Scotiabank in the floor planning rankings are Ford Credit Canada (872) and Honda Financial Services (858). Ford Credit Canada performs particularly well in the sales representative relationship factor.

Included in the study but not ranked due to small sample size are: CIBC, Toyota Financial Services and VW Credit.

The 2011 Canadian Dealer Financing Satisfaction Study is based on responses from more than 1,700 new-vehicle dealers. The study was fielded between February and March 2011.