Monday, June 4, 2007

Credit cards increase service business

Jeep, Dodge and Chrysler cards are shown.

Credit cards increase service business
DCX dealers get bounce from branded plastic

Donna Harris
Automotive News
June 4, 2007 - 1:00 am

Service charge
These automakers use special credit cards to stimulate service business at dealerships.
  • DaimlerChrysler
  • Ford Motor
  • Lexus

  • DaimlerChrysler Financial Services is using branded credit cards to drive customers back to Chrysler group and Mercedes-Benz dealerships for service, parts and accessories.

    About 300,000 owners of Chrysler, Dodge, Jeep and Mercedes vehicles have branded Visa "rewards" cards, DaimlerChrysler Financial says.

    The Chrysler Rewards Visa gives cardholders five points for each dollar they spend at a Chrysler group dealership and one point for each dollar they spend elsewhere. Customers earn 2,500 bonus points after they make their first purchase on the card.

    The points can be redeemed for any product or service the dealerships offer; 100 points buy $1 worth of merchandise or service. There is no limit to the number of points customers can earn, as there is for typical awards-based credit card programs.

    'It adds up'

    "When customers use the rewards points, they get five points if they spend it here, and it adds up much more quickly," says Iva Harrison, finance and insurance manager for Shuman Motor Sales in suburban Detroit. "They use it for maintenance and parts."

    Once they accrue enough points, cardholders redeem 75 percent of their awards in dealership service departments and accessories shops, said Kathy Blake, director of credit card services for DaimlerChrysler Financial.

    Kathy Blake of DaimlerChrysler: "The card gets customers back to the dealership and keeps them loyal." Jeep, Dodge and Chrysler cards are shown.
    "We support more than just vehicle sales," Blake told Automotive News. "The card gets customers back to the dealership and keeps them loyal."

    Lexus Division offers a similar awards card that it says helps the brand keep service customers.

    Lexus cardholders visit Lexus dealers three times per year, compared with twice for non-cardholders.

    Ford Motor Co. issues a "Quality Care Auto Service Card." The card does not have award points, but offers same-as-cash financing.

    Repeat business

    Service business is critical to repeat vehicle sales, Blake said. Customers who visit a dealership service department within three months of their next vehicle purchase are 48 percent more likely to buy their car or truck from that dealership than those who don't, according to DaimlerChrysler Financial data.

    Harrison says many customers use their Chrysler Rewards Visa cards to charge aftermarket service contracts and prepaid maintenance plans when they buy vehicles, instead of rolling the cost into the transaction price. "It lowers their monthly payment," Harrison says.

    Such customers also tend to return to the dealership for service, she adds.

    DaimlerChrysler Financial also offers a Mercedes-Benz Award Visa card. One-third of points awarded under the program are redeemed on dealership service, parts and accessories, Blake said.

    Spending at dealerships is not as high as it is for the Chrysler Rewards Visa card, she said, because both the Mercedes-Benz card and an upgraded version offer broader awards options. They include gift cards for luxury merchandise and air travel.

    But Blake added: "Every time they use that card, it's a brand impression."

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