The Winners... Finance Companies

In the face of the credit crunch caused by the mortgage industry, the finance companies faired very well this year in the eyes of the dealers and achieved some of the highest scores. All categories, other than subprime, saw large increases in group averages. While subprime did see a very modest overall increase, it is important to note that the DCA voting closed just before many of the finance companies started making cutbacks in originations and support personnel. If the survey was held today, there might be some very different sentiments here. 

Captive Finance Companies are those that are controlled by the manufacturers and do not purchase paper from dealerships outside their manufacturing brand. Captive arms will often buy very deep in an effort to assist dealers in putting new vehicle rubber on the road. As in years past, there is a huge disparity between the relationship between the franchise arms of imports versus domestics and their dealers. This year was a virtual repeat performance by all three previous award winners.

Returning as a four-time Diamond Awardwinner, by the tiniest of margins but with the highest score of any company in this year’s awards (133.1), wasToyota Motor Credit.

American Honda Finance Corporation, who was barely edged out by less than one-tenth of a point, took the Platinum Awardfor the second year in a row. Making it a sweep for the imports, Nissan Motor Acceptanceat 120.9 points claimed the Gold Award.

The number of write-in votes in this category declined this year. Those that were written in scored very high but failed to garner enough votes to qualify in the final rankings. This category included the most companies to rate above the category group average with eight finance sources making the cut.

This year’s Diamond Award winner (123.3), JP Morgan Chase, has been a favorite every year, but had never earned the top spot in this category until now.

Efficiency, professionalism and quick responses were the qualities cited the most by dealers voting for JP Morgan Chase.

Wells Fargo Auto Financemoved up a spot to claim the Platinum Awardwith a 122.5. Wachovia, a finance company that has never placed during the last four years, was squeezed out by less than one-tenth of a point to become the Gold Awardwinner. Five additional finance sources with outstanding products and service also rated above group average. They were, respectively, Citi Financial, Citizens, Capital One, Bank of America and Fifth Third Bank.

Leasing isn’t likely to be the powerhouse of financing solutions for some time, but it does serve a very specific group of customers. The list of finance sources to qualify and rank above the category group average this year was considerably shorter, with only four spots filled. Again this year, Toyota Motor Credit and American Honda Finance Corporation went head to head. When the dust settled, it was Toyota Motor Credit that pulled ahead and regained their Diamond Award status (131.2), their third such award in four years.

Dealers claim that Toyota is very effective in their advertising of their lease programs and have excellent customer service.

The Platinum Award went to American Honda Finance Corporation, scoring 130.3. As with the Captive Finance category, it became a sweep for the imports as Nissan Motor Acceptance retained their Gold Award for the second year in a row by the narrowest of margins over GMAC, who took 4th  and was the only other leasing finance source to place.

This segment of the market is definitely not a stable segment at this time. Wall Street money has suddenly become scarce to anyone who services the subprime credit segment. As a result, some of the more prominent finance sources over the past few years are cutting back originations along with their support staff. With higher delinquencies occurring than in previous years, finance companies are tightening the reins as well as adjusting pricing.

This sector of the market sees more fluidity by the prominent players than any other category of the awards. The term “zero to hero” is often heard from the dealer body, and sometimes the opposite as well.

Wells Fargo Auto Finance took their second 2008 Dealers’ Choice Award with the Diamond Award (118.2) in the subprime category. It is a rare occurrence for a company to be ranked in the top two of both the prime and subprime finance categories, indicating that perhaps full-spectrum financing has finally arrived. This is Wells Fargo Auto Finance’s first Diamond Award in this category; previously they had only managed to rise to 4th.

Dealers responded by stating that Wells Fargo’s flexibility, advance structure and the terms available are what sets them apart. The fact that they give plenty of room for back-end products doesn’t hurt any, either.

Absent near the top for some time, the pendulum swung back and HSBC captured the Platinum Award (117.6). Wells Fargo and HSBC clearly stood out above the pack. From that point there was a bit of a gap in scores until arriving at the next group of winners headed by the Gold Award recipient, JP Morgan Chase (Chase Custom). Three other companies that were all above group average were Regional Acceptance, Capital One and Citi Financial, following closely at 4th through 6th respectively.

Click here for Complete Results of the 2008 Dealers' Choice Awards.