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Financing buoys new-vehicle sales satisfaction: J.D. Power study

November 23, 2010
Jaguar, Lexus tie for 1st
New vehicles cost more compared to 2003, but satisfaction with the dealership's vehicle prices has increased, due largely to lower interest rates and aggressive financing incentives, according to a J.D. Power and Associates study released Nov. 17. The median price paid for a new vehicle in 2004 is $26,000, up slightly from $25,500 last year. However, interest rates on car loans have dropped from an average of 4.8 percent in 2003 to 4.5 percent in 2004. Zero-percent financing, offered mainly by domestic brands, continues to play an important role in the automotive industry. Eleven percent of buyers financed their new vehicle with a 0% interest rate in 2004, compared to 9 percent in 2003. Also, the average length of a new-vehicle loan has increased from 58 months in 2003 to 59 months in 2004. The availability of low-interest financing continues to change the way consumers pay for their new vehicles," said Scot Eisenfelder of J.D. Power, commenting on the 2004 Sales Satisfaction Index Study. "Buyers are willing to pay a higher sticker price as long as the interest rate is low and they can afford the payments." Customer satisfaction with the vehicle delivery process has declined, the study also found. Customer ratings with vehicle delivery are particularly lower in terms of the cleanliness of the vehicle, timeliness of delivery and the amount of time the salesperson spends explaining vehicle features. "At a minimum, customers expect that their new vehicle will be clean and in good condition," said Eisenfelder. "Surprisingly, this is not always the case. "Declining gross margins for dealers are placing more pressure on salespeople to make the sale and, consequently, they are too often ignoring delivery. Since delivery is typically the last contact the salesperson has with the customer, this can have a dramatic effect on sales satisfaction with the dealership." With significant improvements over 2003, Jaguar and Lexus tie to rank highest in sales satisfaction in the J.D. Power poll.