Car Buyer's Notebook

"The challenges that sub-prime lenders are facing while breaking into the prime market are not surprising, given that captive finance providers dominate much of the prime new-vehicle financing market," said David Lo, director of automotive finance and investment services at J.D. Power and Associates. "It is important for these traditional sub-prime lenders moving into the prime space to consider both price and service within their full-spectrum program. While competitive pricing is an entry point for these lenders, service is the key to a successful long-term strategy."

In addition to the rise in full-spectrum lending efforts, non-captive finance providers appear to be engaging new-vehicle shoppers before they even enter the dealership, as one in five dealers report that the number of loans financed directly and without their assistance has increased during the past 12 months.

"While direct lending is a viable strategy to gain share, non-captive finance providers walk a fine line between capturing new business through direct lending and compromising their relationship with the dealer, as many dealers report that direct lending negatively impacts the amount of business they receive," said Lo.

With a score of 954 points on a 1,000-point scale, BMW Financial Services ranks highest in retail leasing satisfaction for a fourth consecutive year, performing particularly well in all drivers of dealer satisfaction: finance provider offering; termination policy/service; application/approval process; and credit personnel. Mercedes-Benz Financial (948) and GMAC (934) follow BMW Financial Services in the retail leasing segment.

With considerable improvements across all financing areas since the 2006 study, Mercedes-Benz Financial ranks highest in the prime retail credit segment in 2007 with a score of 948. BMW Financial Services closely follows with 947 points, and Toyota Financial Services ranks third in the segment with 941.

Mercedes-Benz also ranks highest in floor planning for a second consecutive year with 966 points, performing particularly well in each of the three floor plan satisfaction factors: finance provider offering; process and service; and floor plan support personnel. Chase Auto Finance (959) and Volkswagen Credit (954) follow in the segment.

Source: J.D. Power and Associates