Canadian auto lenders are focusing on highly tailored solutions to maintain business growth in an increasingly tough market, according to research from J. D. Power.
It reveals that a combination of fierce competition, thin yields and concerns over slowing car sales means lenders are having to fight to secure customers with better services and more focused offers.
The consultancy’s 2017 Canadian Dealer Financing Satisfaction Study finds that dealers are most satisfied with their lenders when they are assigned a dedicated primary buyer or buying team.
Tasked with everything from making a credit decision to restructuring a deal, these frontline lending personnel play an increasingly critical role in shaping the dealer/lender relationship.
Jim Houston, senior director of automotive finance at J.D. Power, said: “In the current marketplace, the difference between closing a deal and losing a customer to the dealership down the street will frequently be determined by the finance department’s ability to secure the right loan at the right price.
“The more adept these financial professionals are at helping dealers address specific challenges along the way, the more business they will ultimately do with that dealer.”
The study, now in its 19th year, has been redesigned to evaluate the experiences auto lenders have with both captive and non-captive lenders.
It is based on 3,750 finance provider evaluations across the two segments from new vehicle dealerships in Canada.
The research measures dealer satisfaction with captive finance providers across four areas: application/approval process; relationship; provider offerings; and lease return. The measurement criteria for non-captive lenders are the same, with the exception of lease returns.
The latest findings suggest performance in both segments is comparable. Dealer satisfaction in the retail captive segment is 868 (on a 1,000-point scale), and in the retail non-captive segment, satisfaction stands at 866.
According to the survey rankings, BMW Financial Services leads in the captive lender segment with a score of 972.
Mercedes-Benz Financial Services (930) ranks second; Ford Credit Canada (899) ranks third; and Honda Financial Services (877) ranks fourth.
Among non-captive lenders, Bank of Montreal (897) ranks highest, followed by Scotia Dealer Advantage (896); TD Auto Finance (875); and Scotiabank (868).
The most satisfied dealers have a primary buyer or buying team assigned specifically to their dealerships, the research showed and are more likely to prioritise that lender.
J. D. Power says that among captive lenders, the dealer relationship with the lender credit desk is a more significant driver of dealer satisfaction than the relationship with sales representatives. Among non-captive lenders, that ratio is flipped, with sales representative relationships driving higher overall satisfaction than credit desk relationships.
For both captive and non-captive lenders, dealers overwhelmingly turn to the credit desk as the first point of contact when there is a problem.
The most common reasons for contacting the credit desk are credit decision; funding questions; held contracts; stipulations; deal restructuring; program changes/updates; and dealer reserve questions.
Finally, the study suggests timing is everything. When it comes to on-site visits by lender sales representatives, dealer satisfaction is highest when lenders visit at the beginning or middle of the month; in the morning; never on a Monday; and for no longer than 30 minutes.