The relationships auto finance providers develop with dealerships are critical to dealer satisfaction and to remaining competitive in the market, especially as the new-vehicle sales market tightens, according to the J.D. Power 2016 U.S. Dealer Financing Satisfaction Study.
A combination of slowing new-vehicle sales and an uncertain used-car market is contributing to an already contested auto-lending environment. Technology has eliminated disparity of speed in financing, leaving lenders to differentiate themselves by the relationship they are able to form with the dealership.
"Speed has been king and the area lenders have traditionally focused on, but as the market gets tougher, lenders need to center their attention on their relationships with dealers, or they are going to lose business," said Jim Houston, senior director of the automotive finance practice at J.D. Power. "Lenders need to move beyond a transactional relationship with dealers to a richer consultative partnership. Lenders with a dealer-centric culture across their organization—not just in various pockets of the business—are the ones that are most likely to excel."
Houston noted that in building a dealer-centric culture, lenders must understand their dealers' businesses and goals, which helps establish them in the eyes of dealers as their business partner and problem solver. That starts with communication with the dealer. The study finds that fewer than half of dealers receive consistent sales rep calls or visits, both of which can boost overall satisfaction by as much as 68 points and 75 points, respectively, on a 1,000-point scale. But it's more than just the frequency of the contact, it's the nature of those touch points that adds value to the relationship.
"Dealers value a lender that can help them handle the tough issues and solve those 'outside-the-box' situations," said Houston. "This is where having the right people focused on their dealers and helping them execute their strategic plan is essential."
Opportunities to Excel and Grow Business
The study identifies three areas of opportunity for lenders that will help them enhance their dealer relationships: 1) Consistent performance among their dealer relationship managers; 2) Identification of their best dealers and a prioritization of those relationships; and 3) Efforts that focus on areas most important to dealers.
"These are the things dealers say they want from their lenders, but are not necessarily getting on a consistent basis," said Houston. "When the market gets tough, lenders that meet dealer expectations are going to get a greater share of the business."
Findings of the study show that high satisfaction with lenders leads dealers to increase the amount business they send to those respective lenders over the next year. Falloff is swift when satisfaction declines: When satisfaction scores are 900 points or higher, 62% of dealers say they are likely to increase the amount of business they send to the lender over the next year. When satisfaction falls to between 800 and 889, only 37% of dealers indicate they intend to send more business to that lender. When satisfaction dips to 700-799, only 22% of dealers intend to increase business with that lender.
Other key findings of the study include:
Speed Still Matters: Speed still plays a significant role when dealers are choosing lending partners. When lenders fund error-free contracts on the same day as they are submitted, dealer satisfaction increases by as much as 64 points. When lenders notify dealers of contract issues or errors within four hours after they are submitted, satisfaction increases by as much as 60 points.
Exceptions to the Rule: Dealers want their lending partners to value the total relationship. In some cases, this means providing exceptions when warranted. A well-managed exception process can increase overall satisfaction by up to 79 points.
Dealer Financing Satisfaction Rankings
Prime Retail Credit
Mercedes-Benz Financial Services ranks highest among lenders in the prime retail credit segment for a second consecutive year, with a score of 961. Following in the rankings are BMW Financial Services (959); Alphera Financial Services (941); Lincoln Automotive Financial Services (936); and Infiniti Financial Services (930).
Retail Leasing
Mercedes-Benz Financial Services ranks highest among lenders in the retail leasing segment for a second consecutive year, with a score of 982. Following in the rankings are BMW Financial Services (958); Ford Credit (913); Volvo Car Financial Services (912); and Subaru Motors Finance (911).
Floor Planning
Mercedes-Benz Financial Services ranks highest among floor planning lenders for a sixth consecutive year, with a score of 986. Following in the rankings are BMW Financial Services (975); Huntington National Bank (969); Hyundai Motor Finance (945); and Kia Motors Finance (945).
Satisfaction is measured across three factors in the prime and non-prime retail credit segments: finance provider offerings; application and approval process; and sales representative relationship. Four factors are measured in the retail leasing segment: finance provider offerings; application and approval process; sales representative relationship; and vehicle return process. Four factors are measured in the floor planning segment: finance provider credit line; floor plan support; sales representative relationship; and floor plan portfolio management.
The 2016 U.S. Dealer Financing Satisfaction Study captures more than 20,000 finance provider evaluations across the four segments. These evaluations were provided by 3,100 new -vehicle dealerships in the United States.
Prime Retail Credit
Overall Customer Satisfaction Index Scores
(Based on a 1,000-point scale)
Mercedes-Benz Financial Services
961
BMW Financial Services
959
Alphera Financial Services
941
Lincoln Automotive Financial Services
936
Infiniti Financial Services
930
Subaru Motors Finance
908
Jaguar Financial Group
902
Chase Automotive Finance
895
Land Rover Financial Group
891
Huntington National Bank
890
Volvo Car Financial Services
890
Ford Credit
888
NMAC
884
BB&T
881
Citizens One
875
TD Auto Finance
874
Ally Financial
873
Mazda Capital Services
873
Volkswagen Credit
873
Industry Average
868
Capital One Auto Finance
867
Fifth Third Bank
867
Bank of America
866
SunTrust Bank
864
Toyota Financial Services
860
Kia Motors Finance
859
Wells Fargo Dealer Services
853
PNC Bank
851
BMO Harris Bank
844
US Bank
835
Bank of The West
822
Hyundai Motor Finance
821
GM Financial
815
Credit Union Direct Lending
813
Honda Financial Services
813
Chrysler Capital
798
Note: Included in the study but not ranked due to small sample size are Acura Financial Services; Alaska USA Federal Credit Union; Fidelity Bank; First Niagara Bank; Gateway One Lending & Finance; MINI Financial Services; Santander Auto Finance; and Security Service Federal CU.
Retail Leasing
Overall Customer Satisfaction Index Scores
(Based on a 1,000-point scale)
Mercedes-Benz Financial Services
982
BMW Financial Services
958
Ford Credit
913
Volvo Car Financial Services
912
Subaru Motors Finance
911
Land Rover Financial Group
891
NMAC
891
Jaguar Financial Group
890
Mazda Capital Services
886
Industry Average
885
Toyota Financial Services
869
Kia Motors Finance
868
Honda Financial Services
866
US Bank
863
Ally Financial
851
GM Financial
843
Hyundai Motor Finance
835
Chrysler Capital
828
Note: Included in the study but not ranked due to small sample size are Infiniti Financial Services; Lincoln Automotive Financial Services; MINI Financial Services; and Volkswagen Credit.
Floor Planning
Overall Customer Satisfaction Index Scores
(Based on a 1,000-point scale)
Mercedes-Benz Financial Services
986
BMW Financial Services
975
Huntington National Bank
969
Hyundai Motor Finance
945
Kia Motors Finance
945
Ford Credit
944
Chase Automotive Finance
941
Industry Average
938
Ally Financial
935
NMAC
931
Bank of America
927
GM Financial
926
Toyota Financial Services
899
Chrysler Capital
897