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Banks better bet for car financing: J.D. Power

Our Bureau

MUMBAI, July 23

CUSTOMERS who obtained their car financing loan from a nationalised bank are relatively more satisfied than those choosing a non-banking finance company (NBFC) or a foreign bank for the same, according to the results of the J.D. Power Asia Pacific 2001 I ndia Consumer Financing Satisfaction Study, announced here.

State Bank of India (SBI) topped the survey with a consumer finance score (CFS) of 797, much above the industry average of 735. Sundaram Finance with a CFS score of 774 was at second place. ICICI, placed first in last year's survey, returned a below sect oral average score of 704 in 2001, to take the 11th position.

The J.D. Power study examines customers' satisfaction with the entire finance process among new-car buyers at one to six months of ownership. It profiled owners who purchased their vehicles between September 2000 and April 2001, covering responses from 2 ,566 new-car owners, spanning more than 20 models representing 12 different makes.

Performance is measured by four factors that determine satisfaction. In order of importance, these are: application process (44 per cent), approval & documentation (22 per cent), finance advisor (18 per cent) and loan value (16 per cent).

Application process evaluates attributes such as speed of completing the application process, ease of filling out paperwork, variety of loan plans offered and lack of hassles during the finance process. Loan value which evaluates competitiveness of inter est rates and other aspects of the loan term contributes least to satisfaction with the finance process, an official statement from J.D. Power Asia Pacific said.

``The trend over the past two years shows that the interest rate, while important, is not a key driver of satisfaction,'' Mr Rajeev Lochan, Business Manager, J.D. Power Asia Pacific, has said.

ICICI was impacted mainly by its relatively weak performance on the application process and approval & documentation measures for which customers provided below average ratings. The institution, did however increase its volumes over last year.

The gathered data revealed key differences between customers who got their loans from nationalised banks and those who got financing from a NBFC or a foreign bank, in terms of reasons for choosing the finance provider and the channel through which financ ing was obtained.

Low interest rates and reputation of the finance company were among main reasons for customers who opted either for a NBFC or a foreign bank. In comparison, past experience and personalised service were the main reasons indicated by those choosing a nati onalised bank.

Besides, more than 50 per cent of NBFC and foreign bank customers obtained their financing at an automobile dealer or through a direct selling agent of the finance provider. In contrast, more than 90 per cent of nationalised bank customers obtained their financing directly through the bank.

``Customers who obtain financing through an intermediary result in relatively lower satisfaction scores than those who deal directly with a financing institution. The lower score indicates that in order to meet customer expectations, NBFCs and foreign ba nks need to strengthen the process of their selling agents,'' Mr Lochan noted.

While the 2001 study included, besides the 13 ranked players other finance providers such as Maruti Countrywide, GE Countrywide and American Express, in 2000, current topper SBI, Canara Bank, HDFC and American Express were included but not ranked due to a small respondent sample.