Nearly half (43%) of Malaysian new-car buyers do not fully understand the terms of their hire-purchase product, according to results of the inaugural J.D. Power 2017 Malaysia Auto Consumer Finance Study.

The study measured customer satisfaction with their automotive finance provider by examining six key factors ranked in order of importance:

Interaction

On-boarding

Billing & payment

Finance deal

Origination

Finance advisor

The survey found satisfaction levels during the purchasing process varied greatly between customers whose finance application was handled by a finance advisor as opposed to a car salesperson.

On a 1,000-point scale, a finance advisor has an average score of 777, compared with a salesperson’s average score of 735.

Anthony Chiam, Practice Leader of service industries at J.D. Power added, “With less than half of auto finance customers claiming the finance arrangement actually met their requirements, there is a clear need for the industry to become more customer-centric. Auto finance is a long-term commitment and it’s crucial that dealership salespeople spend sufficient time to clearly explain the services, terms, and fees related to each customer”

Satisfaction levels also varied according to the finance product. More than 30 percent of Islamic finance customers say they “definitely would” use the same finance provider for their next purchase, whereas, only 22 percent of customers who purchased a conventional auto finance product said they would return.

Mr. Anthony added that Islamic finance has been growing rapidly over the past 30 years and has been a key factor in the auto industry’s impressive and continuous expansion.

Additionally, the survey also concluded the following:

Higher satisfaction drives loyalty: With a country average of two cars per household, 55% of customers who were delighted with their experience (overall satisfaction scores of 852 or higher) say they “definitely would” use the same provider for their next auto finance product, compared with only 5% of those who were dissatisfied (650 or below).

Islamic auto finance products: Overall satisfaction is higher among customers buying such products than among those buying conventional auto finance products (758 vs. 744, respectively).

Finance company vs. dealer financing: Nearly one-third (32%) of new-car buyers who purchase a finance product directly from a finance company are more satisfied than those going through a dealer to arrange for financing (759 vs. 742, respectively).

In terms of banking institutions, CIMB ranks highest across all six factors with an overall satisfaction score of 772. Maybank ranks second (759), performing particularly well in the on-boarding and billing & payment factors. AM Bank ranks third (757), performing well in the finance advisor factor.

The 2017 Malaysia Auto Consumer Finance Study is based on responses from 2,683 new-car buyers who financed a vehicle in the past 12 months. The study was fielded in January-March 2017.