Success for auto lenders depends on dealer relationship

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 research by consultancy J.D. Power.

Its 2016 US Dealer Financing Satisfaction Study shows that high satisfaction with lenders leads dealers to increase the amount business they send to those respective lenders over the next year, but 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, while when satisfaction dips to 700-799, only 22% of dealers intend to increase business with that lender.

The research also found that speed continues to play 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.

In addition, a well-managed exception process can increase overall satisfaction by up to 79 points.

The study ranks Mercedes-Benz Financial Services highest among lenders in the retail leasing segment for a second consecutive year, with a score of 982, followed by BMW Financial Services (958); Ford Credit (913); Volvo Car Financial Services (912); and Subaru Motors Finance (911).

Mercedes-Benz Financial Services also ranks highest among floor planning lenders for a sixth consecutive year, with a score of 986, followed by BMW Financial Services (975); Huntington National Bank (969); Hyundai Motor Finance (945); and Kia Motors Finance (945).

Jim Houston, senior director of the automotive finance practice at J.D. Power, said: “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.”

The 2016 U.S. Dealer Financing Satisfaction Study captures more than 20,000 finance provider evaluations provided by 3,100 new -vehicle dealerships across the US.