August 16, 2002
J.D. Power survey shows leasing losing its popularity
Westlake Village, California – 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 U.S. new-vehicle buyers with the sales process, according to the J.D. Power and Associates 2002 Sales Satisfaction Index Study released on Thursday.
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 favourable 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.”
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.