Dealers give highest marks to European captives

Finance chiefs
How credit companies fared in J.D. Power's 2001 Dealer Financing Satisfaction Study
Retail lease
RANK/COMPANY INDEX
1 Audi Financial 924
2 BMW Financial 923
3 VW Credit 907
4 M-Benz Credit 883
5 Volvo Finance 878
6 Saab Financial 864
7 GMAC 853
8 Toyota Financial 847
9 Ford Credit 826
10 Honda Finance 815
  Industry average 800
     
Floorplanning
RANK/COMPANY INDEX
1 VW Credit 957
2 Comerica 947
3 Toyota Financial 926
4 Bank of America 914
5 GMAC 903
  Industry average 900
     
Retail loans
RANK/COMPANY INDEX
1 Audi Financial 941
2 BMW Financial 920
3 VW Credit 912
4 Volvo Finance 876
5 SunTrust Bank 865
6 GMAC 861
6 Toyota Financial 861
8 Hibernia Bank 859
9 Branch B&T 849
10 Ford Credit 847
11 Primus 841
12 AM South 838
13 Charter Nat'l 833
  Industry average 831
Source: J.D. Power and Associates; J.D. Power does not release scores for companies that finished at or below average

Captive finance companies for European imports dominate the top of the charts in a dealer satisfaction survey by J.D. Power and Associates.

For the second straight year, VW Credit Inc. and its Audi Financial Services subsidiary swept all three categories - retail loan, retail lease and floorplan - in J.D. Power's annual Dealer Financing Satisfaction Study.

As a category, captive finance companies have steadily improved their dealer satisfaction scores, while many banks and other lenders have quit or reduced auto finance. At the same time, European imports have gained U.S. sales and market share. Both trends benefit the European captives.

Dealers ranked credit unions and banks higher than captives in the 1997 Power survey, but captives as a group have improved ever since.

In the 2001 Power survey, Audi Financial Services was No. 1 in both loan and lease satisfaction. VW Credit, which includes the Volkswagen, Audi and Bentley brands, was No. 1 in floorplanning. Floorplan is the money dealers borrow to finance their inventory.

Jeff Parent, national sales director for VW Credit, said Audi Financial Services business is about four-to-one leases to loans. "In the high-line market, that is not that unusual. Volkswagen is about 50-50 leases to loans," he said.

Growth for VW Credit

VW Credit has about $11.5 billion in managed assets in the United States. Through August, the captive had 611,000 accounts, according to CEO Kevin Kelly.

Kelly said in an interview that VW Credit is pursuing growth on several fronts. They include special offers for recent college graduates and first-time buyers; offers to finance certified used cars; and an application to start its own bank, based in Salt Lake City, to offer credit cards, checking and savings accounts, and other services.

Originations are growing rapidly. Through August, VW Credit had 199,000 new accounts, including loans and leases, and new and used vehicles. That was 29 percent ahead of the year-ago period and almost as many as the total for all of 2000, which was 212,000. The company had 165,000 originations in 1999.

The growth this year represents a greater market share for VW Credit among Volkswagen and Audi dealers. Through August, new-vehicle sales were virtually flat for the VW brand, down 0.1 percent to 243,765. Audi sales were up 8.3 percent to 58,732 year in a year that has seen total U.S. sales fall 4.9 percent.

A rising tide

Other import captives are benefiting from some of the same trends.

For the second year in a row, the Power survey results showed BMW Financial Services was No. 2 in both loan and lease satisfaction. BMW's U.S. sales were up 20.4 percent through August.

BMW Financial Services already has a Utah bank charter. The BMW captive also has special offers for recent college graduates and graduate students, said Bob Devine, managing director for the U.S. market. He said BMW probably will tailor a similar program for the more affordable Mini, which will debut in the United States in March.

"Due to the price of our (BMW) car, it may be a little outside the reach of some recent graduates. But for the BMW brand, it does have an appeal to people going into the professions, or the kind of income level you expect when you have an advanced degree," he said.

More than 4,700 dealer principals participated in the 2001 survey, according to J.D. Power, of Agoura Hills, Calif.

You can reach Jim Henry at autonews@crain.com

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