GM Financial, the Detroit-based automaker’s captive finance arm, performed well in a recent evaluation of financial entities’ lease retention rates that was conducted by J.D. Power.
J.D. Power says its 2022 U.S. End of Lease Satisfaction Study identifies “lease-end practices and timely marketing opportunities that optimize lease retention for the same brand and at the same dealer.” In other words, it measures how well an automaker and its captive finance arm is performing with regard to retaining customers when their vehicle is approaching the end of its lease term. The study, which assigned scores based on a 1,000 point scale, is based on the responses from 3,075 mass-market and premium vehicle lease customers who were within six months of their lease end.
GM Financial received a score of 852 out of a possible 1,000 points in this study, placing it third overall among mass-market captive finance institutions. Ford Credit was first with a score of 864, followed by Honda Financial Services with a score of 853. This industry average was 841, with multiple companies falling below this threshold, including Toyota Financial Services, Kia Motors Finance and Chrysler Captial, among others.
J.D. Power says captive finance arms like GM Financial can implement “targeted and purposeful,” communication strategies with existing customers to help retain lessees and secure conquest sales opportunities. This could mean reaching out to a customer with offers or deals in the months leading up to their lease’s expiration date, whilst also considering the types of vehicle they may be interested in, explains Patrick Roosenberg, director of automotive finance intelligence at J.D. Power. For example, a Chevy Equinox owner with a budding family that is coming to the end of their lease period may not be interested in downgrading to a smaller vehicle like a Chevy Trailblazer, but rather may want to upgrade to a Chevy Traverse or Tahoe. Dealers can take these factors into consideration to help retain customers.
“The days of the one-size-fits-all lease loyalty strategy are long gone,” said Roosenberg. “In this market, lenders, dealers and OEMs really need to understand the unique individual journeys of their customers and develop tailored, highly targeted outreach strategies creating the greatest opportunity to retain them. Ultimately, successful customer retention and conquest strategies are coming down to detailed analytics.
Going forward, GM will launch Cadillac Financial – another captive finance arm tasked with providing tailored financial services to owners of vehicles from its Cadillac luxury brand. Cadillac Financial will compete with other luxury brand-specific captive finance companies such as BMW Financial Services and Lexus Financial Services.