February 14, 2011

J.D. Power and Associates does not guarantee the accuracy, adequacy, or completeness of any information contained in this publication and is not responsible for any errors or omissions or for the results obtained from use of such information. Advertising claims cannot be based on information published in this publication. Reproduction of any material contained in this publication, including photocopying in part or in whole, is prohibited without the express written permission of J.D. Power and Associates. Any material quoted from this publication must be attributed to J.D. Power and Associates.© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

1

Behind the Numbers

CANADACANADA August 28, 2012

Source: J.D. Power and Associates 2011 Consumer Retail Experience Study

While shoppers appreciate being greeted immediately upon arrival, 66% of them say they’d like to be given 15 minutes to browse through the showroom without the guidance of a salesperson.

This is likely due to the overwhelming majority of shoppers who build and price their vehicle online before arriving at a dealership. In fact, 63% of shoppers say they knew the exact vehicle they wanted (including colour and options) before they set foot in a showroom.

Once the test drive is complete —an activity shoppers say is less time-sensitive, but add that they’d rather experience it without the presence of a salesperson— the dealership team is well and truly on the clock.

60% of buyers would like to wrap-up the price negotiation in 15 minuets or less, according to the online survey. This is echoed in the J.D. Power and Associates 2011 Consumer Retail Experience Study, where overall satisfaction dips significantly after the 15 minute threshold, dropping close to 100 index points. (See chart above.)

Ensuring internal dealership processes / systems are fluid and efficient is critical. After a deal is in place, buyers expect to have the final paperwork in front of them quickly. Again, overall satisfaction declines if they’re kept waiting for more than 15 minutes.

The business office may be a profitable place for the dealership, but customers are not inclined to spend much time there. While overall satisfaction is acceptable from one to 15 minutes, keep a customer there any longer, and overall satisfaction deteriorates rapidly

Vehicle Delivery: The exception to the rule.Unlike other dealership activities, vehicle delivery should be less time-sensitive, and more client-focused. According to the online survey, customers expect this to be an opportunity to fully understand the features and functionality of their new vehicle. In fact, CRES shows overall satisfaction for the vehicle delivery process is relatively poor at a rushed 15 minutes, but improves steadily up to the 45 minute mark, before dropping off again.

doris_harrison@jdpa.com(416) 507-3256

The 15-Minute Rule

A recent J.D. Power online survey found that new-vehicle buyers largely view the shopping experience as a four-step process: browsing inventory at a dealership without the interference of a salesperson; taking a test drive; discussing the price and final delivery of their new vehicle.

Moreover, when these findings are compared with other J.D. Power study data, it’s clear that in each of these steps, buyers have clearly defined timelines in mind, and satisfaction suffers when expectations are not met.

In fact, dealer staff would be wise to set the stopwatch at 15 minutes, as overall sales satisfaction with most dealership activities drops significantly after that point.

700

750

800

850

900

1 to 15 16 to 30 31 to 45 46-60 Over 60Minutes

Ove

rall

Satis

fact

ion

Scor

e

Price Negotiation Waiting for final paperwork

Completing F&I / final paperwork Vehicle Delivery

Elapsed time vs. overall satisfaction

February 14, 2011

J.D. Power and Associates does not guarantee the accuracy, adequacy, or completeness of any information contained in this publication and is not responsible for any errors or omissions or for the results obtained from use of such information. Advertising claims cannot be based on information published in this publication. Reproduction of any material contained in this publication, including photocopying in part or in whole, is prohibited without the express written permission of J.D. Power and Associates. Any material quoted from this publication must be attributed to J.D. Power and Associates.© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

2

Vehicle Purchase TypePercent of Total Transactions (Past 12 Months)

New Vehicles Used Vehicles

59

18

23

Cash Lease Loan

4651

3

50

54

58

62

66

70

Jul-1

1

Aug-

11

Sep-

11

Oct

-11

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Apr-

12

May

-12

Jun-

12

Jul-1

2

New Used

Days to Turn

$29,000

$29,500

$30,000

$30,500

$31,000

$31,500

$32,000

Jul-1

1

Aug-

11

Sep-

11

Oct

-11

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Apr-

12

May

-12

Jun-

12

Jul-1

2

MSRP Transaction Price

MSRP vs. Transaction Price

$480

$500

$520

$540

$560

Jul-1

1

Aug-

11

Sep-

11

Oct

-11

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Apr-

12

May

-12

Jun-

12

Jul-1

2

New Lease New Loan

Monthly PaymentsAverage per Customer

Brian Murphy ▪ 416-507-3253 ▪ brian_murphy1@jdpa.com August 28, 2012

Percent Negative Equity + Trade-InPercentage of negative equity vehicles at trade-in

Percent New-Vehicle Loan Term72 Months and Greater

57%

0%

10%

20%

30%

40%

50%

60%

70%

2007

2008

2009

2010

2011

2012

YTD

20%

30%

40%

50%

Jul-1

1

Aug-

11

Sep-

11

Oct

-11

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Apr-

12

May

-12

Jun-

12

Jul-1

2

% Negative Equity Trade-In %