Power Shows Slower Gains

July 16, 2001

2001 J.D. Power CSI by TCC Team (7/16/2001)

DETROIT—For the first time since J.D. Power and Associates began tracking customer satisfaction, actual warranty repairs are less than 50 percent of service visits.

So what? That means that cars are that much better in terms of quality, and don’t have to be repaired as much. The trend is also a function, though, of increased maintenance work coming to dealers via free scheduled maintenance for one, two or three years thrown in with the purchase of a new vehicle. But all that translates to happier and more satisfied customers. After all, when the car is built better to start with, customers tend to be happier.

The bad news? Dealers are so busy selling new cars and so hesitant to invest in their service bays that customers are having to wait longer for appointments and getting less personal attention.

Bottom line: The industry has improved in CSI (consumer satisfaction index) for five straight years, but year-over-year improvement is about the same as last year, which means improvement is slowing.

Lexus and Saturn, the juggernauts of CSI, topped the list again, first and second place respectively. Good news for General Motors (and there was plenty) is that Cadillac vaulted to number three, ahead of the imports and up from number six last year.

“Those three nameplates exemplify the cream of the crop in providing excellent service to their customers,” said John Harbicht, senior manager of service satisfaction research at Power.

Power’s study is based on surveys of 56,000 vehicle owners over three years of dealership visits, which is the typical term of warranty repairs.

Cadillac DeVille brand manager Pat Kemp said he chalked up the improvement to a lot of extra investment in dealer service before the launch of the 2000 DeVille, and the availability of OnStar in all Cadillacs last year.

“When people can dial up OnStar 365/24/7 to ask about the technology in the car, as well as all the other OnStar services...they love that,” said Kemp.

Cheers at the Tubes

GM did remarkably well, coming on the heels of better Initial Quality rankings from Power, and a nice report card from Harbour & Associates for productivity, not to mention a whole barrel of new “recommended” endorsements from Consumer Reports.

GM had half of the top ten brands—Saturn, Caddy, Buick, Oldsmobile and Saab. And GMC climbed into the top 15 after falling below the industry average last year. GMC’s stablemate at GM, Pontiac, though, dropped a few notches into the below-average pool with the Koreans, Suzuki, Isuzu, Subaru and Volkswagen. Chevy held its ground—equal to the industry average two years running.

Daewoo ranked a surprising fourth last year behind Saturn and the luxury brands, but fell below the industry average in 2000 all the way to 34th. Ouch.

“Last year, Daewoo went from company-owned stores to independent dealers and dialed back a program that paid for all scheduled maintenance, which affected our CSI score a great deal,” said Daewoo VP for parts and service Ben Rainwater.

Since last year, though, some of the best-selling brands have dropped in the ranking, while some of the laggards have used the time granted by quieter selling floors to improve the service department.

BMW, burning rubber in sales, fell from number three to number seven. Pontiac and Porsche fell below 20th place. World-beaters on quality Honda and Toyota are both above average, but rank 18th and 19th respectively in satisfying customers at the shop.

“As sales have climbed, dealers have not invested enough in service areas, and that is the case across the board,” said Harbicht.

Hyundai, while still ranking below average, posted the biggest year over year gain. “Hyundai is moving up quickly in every measure of quality,” said Harbicht.

Volkswagen, which is selling as many cars today as it did in the heydey of the original Beetle in the early 1970s, has been stuck below average along with its up-market Audi sister brand, and executives acknowledge it troubles them. Audi took a blistering hit last year to CSI, dropping 37 points from 2000.

Errata

Some other tidbits from the study:

Lexus kicks bumper when it comes to maintenance satisfaction--being able to make an appointment for service, and then get in and out of the service area quickly. Lexus also leads the industry in lowest repair incidence—just 25 percent of visits to the service bays are for repair. The rest are maintenance. Toyota also has a 25-percent rate.

Cadillac went from 43 percent repairs to 34 percent in one year.

GM was the best domestic manufacturer in CSI, third behind BMW and Honda, and ahead of Toyota. Those pesky Toyota dealers are known to be a little lacking in customer handling skills, owing to the fact they have very little selling to do and have been enjoying sensational sales.

DaimlerChrysler ranked sixth behind Nissan at fifth.

Volkswagen fell behind Hyundai. That’s gotta hurt. But it also shows that product pizzazz sells. VW tops Power’s APEAL ranking in several product segments. That measures how delighted people are with the vehicles they buy. The New Beetle, Golf, GTI, Jetta and Passat are delightful to drive and have snappy styling. VW’s and Audi’s interiors are a benchmark in the industry, and that is key to VW’s success as the interior of the car is where we spend the most time when driving. Is it not true?

Even while VW’s CSI and Initial Quality scores languish with the Koreans, its sales continue to hum and buyers are delighted.

The flipside, of course, is that GM keeps improving in quality and customer handling, but loses share because its products are dull.

The real story on CSI and IQS seems to be that while there may be a big perceived difference between number 1 and number 15 when it comes to these rankings, the real life difference is not that big and customers will gladly swap a little sweet customer handling they may experience a couple of times a year for the excitement of a vehicle they drive every day.

VW and Audi dealers are the underbelly of Volkswagen’s success these days. But the youngest, most educated and wealthiest vehicle buyers keep flocking to VW showrooms to get a cool car. Hyundai seems to be doing well too, along with Kia, despite still poor CSI and IQS.

Product and value, it seems, rule. Though Saturn has clearly created a whole brand out of customer handling in the face of a mediocre product, it seems to be unique in its ability to do that. Saturn reminds me of one of those quirky baseball players who only hits home runs or pitches wins during day games; only good at half of what it does.

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