The Ultimate Leasing Machine

BMW Financial Services tops all four retail leasing categories in the latest J.D. Power and Associates dealer financing satisfaction index, marking the fourth straight year it has led the study.

BMW Financial scored a total of 954 points on a 1,000-point scale, outranking closest competitors Mercedes-Benz Financial (948) and GMAC Financial Services (934).

Mercedes-Benz Financial scored highest in the retail credit category with 948 points, with BMW Financial a point behind and Toyota Financial Services in third (941).

Mercedes-Benz also scored first in floor planning for the second straight year with 966 points, followed by Chase Auto Finance and Volkswagen Credit. The dealer finance satisfaction study analyzed responses from 4,845 dealer principals surveyed between March and May 2007.

“This highest ranking (in leasing satisfaction) recognizes our consistently high performance in an area that represents a significant part of our business,“ says Edward A. Robinson, president and CEO of BMW Financial Services-Americas Region. “Our dealer relationships are the foundation of our business success.“

The BMW subsidiary services more than 625,000 customers and leases or finances about 64% of new BMWs sold in the U.S. Leasing accounts for the majority of BMW's U.S. business, a spokeswoman says. However, leasing-penetration rates vary by model and geographical regions. BMW's finance arm controls more than $24 billion in serviced assets.

Competition in the auto-finance market is intensifying, Power says. Lenders are catering to both prime and subprime customers to boost volume and market share, as well as improve service to dealers. Many prime-finance providers are transitioning to the subprime market, the study says.

Some 57% of dealers use traditional prime lenders for subprime customers, Power says, while only 33% use traditional subprime lender services for prime customers.

“The challenges that subprime 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,” says David Lo, Power's director-automotive finance and investment services.

Lo notes that non-captive finance providers are engaging new-vehicle shoppers before they enter dealerships. Some 20% of dealers say the number of directly financed loans made without their assistance has risen during the past year. He says direct lending negatively impacts the amount of financing business dealers receive.