2010 Canadian Dealer Financing Satisfaction Study

Canadian auto dealers are weathering the global economic storm that has put a severe damper on new-car sales—and profits. As automaker captive finance arms tighten their lending standards—or withdraw from certain types of lending altogether—car dealers have been forced to find new sources of credit for many of their customers. Fortunately for dealers and car buyers alike, banks and credit unions have stepped up their lending efforts to fill the void. So far, their efforts are paying off, as new-car sales are finally trending upward after a disappointing 2009.

A recent study conducted by J.D. Power and Associates finds that, overall, 94 percent of dealerships report having used a bank or credit union in 2010—up 2 percent from 2009. Market penetration of banks and credit unions increased primarily in the prime retail credit segment (averaging 91% in 2010, compared with 87% in 2009) and subprime retail segment (averaging 17% in 2010, up from 6% in 2009).

“Banks and credit unions are increasing their footprint in the auto financing market to fill the void left by the exit or reduced presence of some traditional lenders,” said Lubo Li, senior director and leader of the financial services practice at J.D. Power and Associates, Toronto. “This shift will increase the level of competition between banks, credit unions and captive lenders, as each attempt to capitalize on the slow but steady improvement in auto sales in Canada—which may ultimately result in better levels of service for dealerships.”

The J.D. Power survey, which polled more than 1,300 new-vehicle dealers in Canada during February and March, 2010, asked dealers to rate their satisfaction with finance lenders in four segments: prime retail credit; retail leasing; floor planning, and subprime retail credit. Results of the survey, as reported in the recently released J.D. Power and Associates 2010 Canadian Dealer Financing Satisfaction Study,^SM are as follows:

Prime Retail Credit Segment Rankings
In the category of prime retail credit service, BMW Financial Services ranks highest in dealer satisfaction with a score of 893 on a 1,000-point scale. BMW’s captive lender performs particularly well in two of three factors driving the dealer satisfaction experience: application/approval process, and sales representative relationship. Mercedes-Benz Financial follows in the ranking with a score of 887, and performs particularly well in the provider offering factor. VW Credit Canada ranks third in the segment with a score of 819.