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Attractive Financing Options Contribute to Increased Sales Satisfaction; Drop in Leasing

August 15, 2002

Low interest rates and manufacturer-sponsored

financing incentives have fueled a jump in the number of consumers who finance their vehicle and raised the overall satisfaction of new-vehicle buyers with the sales process, according to the J.D. Power and Associates

2002 Sales Satisfaction Index (SSI) StudySM released Aug. 15.

The percentage of respondents financing their vehicles increased from 48 percent in 2001 to 54 percent in 2002, and leasing dropped from 27 percent to just 20 percent - leasing's lowest rate in nearly a decade.

While favorable pricing has helped to increase consumer satisfaction with the automotive

sales process overall, it is more apparent among those who finance their purchase than among those who lease or pay cash. The average interest rate among those who finance is 5.5 percent, down from 7.1 percent in 2001.

The study also finds that consumers continue to prefer a hassle-free new-vehicle sales experience that features non-negotiable retail pricing. Saturn, the only automotive brand to offer non-negotiable pricing since the brand was introduced in the early 1990s, tops the study's satisfaction index for the third consecutive year.

"With the help of their one-price, low-pressure sales approach, Saturn's salespeople receive the highest marks in the industry," said Todd Wilson, director of retail distribution research at J.D. Power and Associates. "What

makes Saturn's performance so exceptional is that it achieves this high level of sales satisfaction selling non-luxury vehicles."

After Saturn, eight of the next 10 makes in the sales satisfaction ranking are luxury brands. Following Saturn are Cadillac, Lincoln, Lexus, and Jaguar and Mercedes-Benz (tied), respectively.

The study, now in its 16th year, reveals that the speed with which a customer is able to complete their transaction is directly linked to

satisfaction. In particular, buyers are most frustrated with wasted time, such as waiting to enter the business office to finalize the paperwork. The average customer spends nearly three hours at their selling dealer.

"The single biggest process-related improvement a dealership can make to increase sales satisfaction is to minimize the number of employees a customer must work with to complete their transaction," said Wilson. "Turning a customer over from one salesperson to another in an attempt to close the deal frustrates the customer and prolongs the process. Consumers

report higher levels of sales pressure and lower levels of satisfaction overall when subjected to this 'turnover' approach."

Influence of September 11

Sales satisfaction scores were also influenced by the way Sept. 11 affected auto sales. The very attractive financing incentives that began as many manufacturers responded to the events of September 11 created a highly price-competitive environment that has benefited the consumer.

"Even many brands that did not offer special financing rates discounted the price of their vehicles considerably compared to the same time period the year before," said Wilson. "Consumers are certainly the winners, and sales satisfaction scores are up because of it."

The 2002 Sales Satisfaction Index Study is based on more than 39,000 responses from buyers and lessees of new 2001 and 2002 model cars and light trucks. The study, which was fielded in January and February of 2002, provides the automotive industry with a comprehensive analysis of the new-vehicle purchase experience and gives vehicle manufacturers an understanding of customer needs and insights into improving the sales process.

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services firm operating in key business sectors including market research, forecasting, consulting, training and customer

satisfaction.

The firm's quality and satisfaction measurements are based on responses from millions of consumers annually.

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