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J.D. Power Reports: GMAC Ranks Highest in Canadian Dealer Satisfaction with Retail Credit, Retail Leasing and Floor Planning

June 11, 2007

TORONTO — For the fifth time, GMAC ranks highest among finance providers in retail credit, leasing and floor planning, according to the recently released J.D. Power and Associates 2007 Canadian Dealer Financing Satisfaction Study.

The study examines dealership satisfaction with their finance providers within three segments: retail credit, retail leasing and floor planning. GMAC ranks highest in retail credit with an index score of 907 points on a 1,000-point scale, as well as in retail leasing (897) and floor planning (938).

At the industry level, captives still outperform other providers in dealer financing satisfaction, while improvements made by individual providers in 2007 have been minimal. Specifically, dealer satisfaction with their overall provider relationship has declined slightly for the second consecutive year, with banks in particular declining 14 index points within the factor. However, independents improved by 10 index points from 2006 in the provider/dealer relationship.

“Overall satisfaction among dealers is certainly varied, with some providers posting strong gains and others falling back — a contrast to the more uniform improvements experienced in 2006,” said Rohan Lobo, manager of syndicated automotive research at J.D. Power and Associates. “Strong gains in dealer satisfaction in 2006, most notably made in the areas of retail credit and leasing, were essentially non-existent in 2007, as satisfaction remained unchanged in these two areas and declined slightly in the area of floor planning.”

The study finds that the importance of retail credit among Canadian dealers has increased, with 47 percent of dealers citing it as the most important finance area — up from 44 percent in 2006. Conversely, the importance of retail leasing among dealers has declined by 3 percent from 2006 to 37 percent in 2007.

“The most important finance area varies considerably depending on the franchise,” said Lobo.“For example, retail credit has become more significant to Japanese brand franchises, while floor planning has gained ground among Korean franchises. The shift away from leasing reflects the actual volume of lease transactions in the market compared with financing transactions. This is partially attributed to strong sales among Japanese franchises and the increasing number of new models from Korean brands, which makes floor planning more complicated for them.”

The study also finds that although the subprime market is more developed in the United States, dealers in Canada are increasingly putting energy into subprime transactions. Only providers that focus on the sub-prime market increased their market penetration significantly compared with 2006. Currently, 49 percent of dealers report using VFC and 54 percent cited Wells Fargo — up by 14 percent and 8 percent, respectively, from 2006.

The 2007 Canadian Dealer Financing Satisfaction Study is based on responses from 1,355 new-vehicle dealers.

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