J.D. Power: GMAC, BMW Financial Canada Tops in Satisfaction
TORONTO (June 19, 2006) — GMAC recently took first place in dealer satisfaction in retail leasing and floor planning, while BMW Financial Services grabbed the top rank in retail credit for the second consecutive year, according to J.D. Power and Associates 2006 Canadian Dealer Financing Satisfaction Study.
To compile the study, J.D. Power executives looked at satisfaction rankings under retail credit, retail leasing and floor planning. As for the two highest ranked companies, BMW Financial Services Canada captured 912 index points, out of 1,000, to take top marks in the retail credit category. Meanwhile, GMAC walked away with a score of 889 in leasing and 932 in floor planning, earning the top place in both categories.
While captives have maintained their dominance in the dealer financing satisfaction rankings, J.D. Power discovered that banks made “considerable” improvements to narrow the gap. However, independents performed less favorably within the area of retail leasing.
Throughout all providers, J.D. Power said the focus on improving the people and process areas of their businesses has become a higher priority. For instance, in the area of retail credit, six out of 12 providers displayed significant improvements within the personnel and procedure areas, as compared to no significant improvements found in terms of offerings, company executives explained.
“This phenomenon demonstrates that good people and execution of process make the difference when meeting and exceeding dealer expectations,” pointed out Rohan Lobo, manager of syndicated automotive research products at J.D. Power. “It takes more than just favorable rates and terms to achieve satisfaction.”
Continuing on, the study found that the overall relationship of providers with their dealers has dropped slightly, particularly for captives and independents. On the other hand, perceived satisfaction with the relationship banks have with their clients has increased, driven by improvements in the sales and service/support areas. Company executives said the erosion is driven by the area of general relationship rather than by performance of the sales staff.
Canadian dealers told J.D. Power that retail credit remains the most important area of dealer finance. However, due to softer vehicle sales and rising interest rates, the importance of retail leasing has climbed significantly compared to last year, executives noted.
The study reported that 40 percent of dealers cite retail leasing as the most importance finance area, up from 32 percent in 2005. In contrast, the importance of retail credit has fallen, with 44 percent of dealers citing it as the most important area, down from 50 percent in the prior year.
“Rising interest rates have pushed the cost of vehicle ownership up, and dealers have turned to leasing as a more affordable way to get consumers into new vehicles,” Lobo said. “For example, in the price-sensitive province of Quebec, the importance of leasing is the highest it has been since the inception of the study in 1999. While the resurgence of leasing is seen across all franchises, it is particularly true for some of the entry-level franchises, such as the Korean brands.
“The proportion of these dealers for whom leasing is the most important area for financing new vehicles doubled to 26 percent in 2006,” he continued. “This is a complete reversal of the trend we saw in 2005 when aggressive financing programs and low interest rates fueled the attractiveness of retail credit.”
In other findings, the study reported that the Internet portal business has expanded with the addition of RouteOne. In the past, this arena was dominated by two companies — Curomax and DealerAccess.
“Currently used by only a few franchises, RouteOne has made important inroads in dealer usage, and it will be interesting to watch how this changes the dynamic of the industry,” Lobo concluded.
J.D. Power said its study was based on responses from 1,380 new vehicle dealers.