JD Power Analyst Note August 2012

1. CANADA
CANADA February 28, 2012
August 14, 2011
The 15-Minute Rule
doris_harrison@jdpa.com
(416) 507-3256 Elapsed time vs. overall satisfaction
A recent J.D. Power online survey found that new- Price Negotiation Waiting for final paperwork
vehicle buyers largely view the shopping experience Completing F&I / final paperwork Vehicle Delivery
as a four-step process: browsing inventory at a
900
dealership without the interference of a salesperson;
Overall Satisfaction Score
taking a test drive; discussing the price and final
delivery of their new vehicle. 850
Moreover, when these findings are compared with 800
other J.D. Power study data, it’s clear that in each of
these steps, buyers have clearly defined timelines in
750
mind, and satisfaction suffers when expectations are
not met.
700
In fact, dealer staff would be wise to set the stopwatch 1 to 15 16 to 30 31 to 45 46-60 Over 60
at 15 minutes, as overall sales satisfaction with most Minutes
Source: J.D. Power and Associates 2011 Consumer Retail Experience Study
dealership activities drops significantly after that point.
Behind the Numbers
 While shoppers appreciate being greeted  Ensuring internal dealership processes / systems
immediately upon arrival, 66% of them say they’d are fluid and efficient is critical. After a deal is in
like to be given 15 minutes to browse through the place, buyers expect to have the final paperwork in
showroom without the guidance of a salesperson. front of them quickly. Again, overall satisfaction
declines if they’re kept waiting for more than 15
 This is likely due to the overwhelming majority of
minutes.
shoppers who build and price their vehicle online
before arriving at a dealership. In fact, 63% of  The business office may be a profitable place for
shoppers say they knew the exact vehicle they the dealership, but customers are not inclined to
wanted (including colour and options) before they spend much time there. While overall satisfaction
set foot in a showroom. is acceptable from one to 15 minutes, keep a
customer there any longer, and overall satisfaction
 Once the test drive is complete —an activity
deteriorates rapidly
shoppers say is less time-sensitive, but add that
they’d rather experience it without the presence of  Vehicle Delivery: The exception to the rule.
a salesperson— the dealership team is well and Unlike other dealership activities, vehicle delivery
truly on the clock. should be less time-sensitive, and more client-
focused. According to the online survey, customers
 60% of buyers would like to wrap-up the price
expect this to be an opportunity to fully understand
negotiation in 15 minuets or less, according to the
the features and functionality of their new vehicle.
online survey. This is echoed in the J.D. Power and
In fact, CRES shows overall satisfaction for the
Associates 2011 Consumer Retail Experience
vehicle delivery process is relatively poor at a
Study, where overall satisfaction dips significantly
rushed 15 minutes, but improves steadily up to the
after the 15 minute threshold, dropping close to
45 minute mark, before dropping off again.
100 index points. (See chart above.)
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.
1
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

2. Brian Murphy ▪ 416-507-3253 ▪ brian_murphy1@jdpa.com February 28, 2012
August 14, 2011
Vehicle Purchase Type Days to Turn
Percent of Total Transactions (Past 12 Months)
New Used
New Vehicles Used Vehicles 70
66
3
18 62
58
46
23 59 51 54
50
Jul-11
Nov-11
Dec-11
Oct-11
Jan-12
Feb-12
May-12
Jun-12
Jul-12
Mar-12
Sep-11
Aug-11
Apr-12
Cash Lease Loan
Monthly Payments MSRP vs. Transaction Price
Average per Customer
New Lease New Loan MSRP Transaction Price
$560 $32,000
$31,500
$540 $31,000
$520 $30,500
$30,000
$500
$29,500
$480 $29,000
Jul-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
May-12
Jun-12
Jul-12
Jul-11
Oct-11
Jan-12
Feb-12
Mar-12
Jun-12
Jul-12
Sep-11
Nov-11
Dec-11
May-12
Sep-11
Aug-11
Apr-12
Aug-11
Apr-12
Percent New-Vehicle Loan Term Percent Negative Equity + Trade-In
72 Months and Greater Percentage of negative equity vehicles at trade-in
% Negative Equity Trade-In %
70% 50%
57%
60%
50% 40%
40%
30% 30%
20%
10% 20%
Jul-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
May-12
Jun-12
Jul-12
Sep-11
Aug-11
Apr-12
0%
2007
2008
2009
2010
2011
2012
YTD
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.
2
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.