Study Reveals Which Car Dealers Treat Customers Best

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Though the brand is being wound down, HUMMER dealers scored exceptionally well in the J.D. Power and Associates Customer Satisfaction Survey (GM).

The diviners of all things related to quality, J.D. Power and Associates, just announced the results of their 30th annual Customer Satisfaction Survey for Auto Dealer Service. If you are thinking about purchasing a new vehicle, this is great information to know. Nobody wants to buy a new vehicle from a brand known for crummy service.

While the overall quality of newer vehicles continues to improve, new vehicles still require routine maintenance as well as occasional warranty repairs and recall service (Toyota owners now know this all too well). How happy you are with your new vehicle depends a lot on how happy you are with your servicing dealer.

To find out which brands offered customers the best after-sale service, J.D. Power and Associates (JDPA) surveyed 114,200 real people who owned 2005-09 models from every brand sold in the U.S. The company looked at five key measures for 2010:

How the service experience was initiatedThe experience with the service advisorThe overall impression of the service facilityThe experience picking up the vehicle from a service appointment.

To make sure that the cost of the vehicle didn't cloud their results, JDPA grouped dealers into luxury and mass market brands.

Overall trends

Generally, there's good news in these numbers. The JDPA study finds that overall satisfaction with dealer service has improved between 2009 and 2010. This makes the 10th consecutive year of industry-wide gains. The composite average for all brands increased to 767 for 2010, up from 761 the year before.

Actions that customers positively responded to included the availability of convenient service appointments; being greeted immediately on arrival; the dealer knowing a vehicle’s service history; returning vehicles to customers all clean and shiny; and offering alternative transportation to customers leaving their cars for service.

While these courtesies may seem intuitive, many dealers do not provide them consistently. If a dealer addresses these points, customers leave happier (provided, of course, that the service performed on their vehicle is also executed properly).

Lexus Wins Again

For those who have owned a Lexus, it comes as no surprise that Lexus tops the quality charts again. While the average for all luxury brands increased to 813 points on a 1000-point scale, Lexus scored an impressive 837. Lexus also won the 2009 survey with a score of 835.

The top five brands that are above the luxury-brand average are:

Cadillac and Mercedes-Benz posted the largest improvement compared to 2009. Cadillac rose from 806 points to the number two position, leapfrogging Jaguar and BMW. The revitalized American brand posted a fourth-place last year. Mercedes-Benz rose from 789 to 805, but still failed to finish above the average for the luxury group.

These increases demonstrate a general trend toward improving customer satisfaction with dealership service. Bucking the trend was Volvo, with scores that fell from 767 to 763, ranking below purveyors of "common" vehicles; Chevrolet, Ford and Hyundai.

HUMMER Tops Mass Market Brands

Scoring an impressive 815, the soon-to-be-gone HUMMER brand achieved a level above the average for luxury brands. For those who remember how HUMMER got its start, this great performance should come as no surprise. GM launched HUMMER as a luxury brand with special stand-alone dealerships that catered to buyers looking at the expensive (and now out of production) H1 models.

Now that HUMMER no longer sells a majority of luxury-class vehicles, it is grouped with the mass market brands. It's ironic, perhaps, that its existing dealer body performed better than eight leading luxury nameplates including Land Rover, Lincoln and Audi.

The six of the top seven mass market brands were, or still are, divisions of General Motors. Following HUMMER, the recently shuttered Saturn brand ranked an impressive number two, followed by Buick, and Chevrolet. MINI managed to take spot five, followed by Pontiac (also dead) in sixth, and GMC taking the seventh spot. Looking at this data, it makes one wonder whether GM made a good decision to cut Saturn and Pontiac. It appears that their dealers were doing a good job with customers.

Surprises

Toyota's score may catch some shoppers off guard while simultaneously confirming the feelings of many Toyota owners.

In the JDPA survey, Toyota scored only 746, behind even Chrysler and Mitsubishi. Toyota's score, however, was up slightly from 2009, when the company was still sub-par at 736.

According to Jon Osborn, Research Director at J.D. Power and Associates, Toyota's mid-pack performance is normal for the auto giant. Osborn made an important point when he explained more about Toyota's performance.

"Toyota dealers lead the industry in sales per franchise, so that means they have a huge volume of customers to deal with at every dealership," Osborn said. "Their survey performance tends to reflect the fact that they have service capacity issues."

Osborn went on to say that he didn't believe these scores showed a lack of focus on quality from Toyota.

Curiously, Toyota has the corporate knowledge in-house to do better. In case you didn't know, Lexus is a division of Toyota.

Trouble ahead?

Low scores could mean trouble for some brands, including Fiat-owned Chrysler and the up-and-coming Suzuki.

With a relatively old product lineup, Chrysler, Dodge and Jeep dealers are forced to rely more heavily on service to help support their business's bottom line because of slow new-vehicle sales. Low service CSI scores mean more customers will go elsewhere for service, putting the dealerships under even more financial stress as they wait for new products to hit the market.

Suzuki hopes to grow its market share with models like its excellent all-new 2010 Kizashi sports sedan. Poor service scores hurt its dealers and the company's overall reputation. Neither of these outcomes is favorable in this competitive market. Suzuki needs to address its falling scores that were down to 693 from 702 in 2009. Unfortunately, Suzuki gets no extra credit for being consistent; the company finished dead last in quality in 2010 as well as in 2009.

What CSI means to you

“With service customer retention becoming more crucial than ever during the next few years. Dealerships must focus on not only providing superior levels of customer service, but also on enhancing convenience for vehicle owners and providing pricing that is more competitive with non-dealer facilities,” Osborn said.

What Osborn means is that car dealers need to earn your business in order to keep it so that they can come out of this recession financially healthy.

This economic reality should mean that good dealers will continue to improve. Furthermore, dealers who want to stay in business are highly motivated to improve your service experience so that you'll remain their customer, even as your vehicle drives out of its warranty.

Keep in mind that dealer service can vary widely, so if your experience with, for example, a local Dodge dealer is excellent, don't abandon them on account of this survey. Just be thankful your experience was better than customers of other similarly branded outlets.

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Toyota Gives Customers $500 During Its Tweetathon

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Toyota is giving customers $500 simply for tweeting (Toyota).

Toyota has taken to Twitter to promote its latest end-of-year sale, offering its customers the potential to get five hundred bucks, just for tweeting this: "If I get my new Toyota during Toyotathon they'll give me $500 just for this Tweet. http://buyatoyota.com @Toyota #shareathon."

"If you get your new Toyota by January 3rd, you can earn a $500 pre-paid debit card, just for Tweeting about it," according to Toyota's Twitter page. "Until December 15th, the Twitter users with the fastest fingers can get one of 250 certificates available each day."

While I'm usually all for companies taking to social media to engage their customers, this is one instance where I'm left wanting. Earlier this year, I wrote about how Toyota's recall woes were made worse because it had largely ignored the social networking space. Had the company understood the power of that medium it would have realized that active, personal participation would have gone a long way to quelling fears, responding to concerns, and directing people to the appropriate places to get answers and help. Instead, Toyota was late to the game and used "canned" responses, which created little satisfaction to concerned owners.

I asked a Toyota spokeswoman if this new Twitter campaign came about as a result of its experience during the recalls of the past year and didn't get a satisfactory response. At least it appears that the company is trying to figure out what works and what doesn't in the social space, which is a good thing. But the unfortunate reality is that this promotion comes across more like spam than anything that engages the consumer in a dialogue. It's great that customers get money back once they buy a new car, that is, if they were one of the lucky 250 each day that actually got the certificate and they manage to take delivery of their car by January 3rd. But is this enough to make you a fan of the brand? Is the rather small incentive worthwhile or energizing? Would it make you think highly of the brand and tell others about it?

Using social marketing is one thing ,but the message is key. It is no secret that in the past year, Toyota has not seen its sales recover as much other carmakters. There are plenty of thoughts on why this has happened. One is that the recalls have tarnished Toyota's quality image. Another is that it has lacked any significant or exciting product launches. A third is that the competition has really stepped it up and have stolen some of the excitement -- and sales -- as a result.

Likely, all of these and more have been factors, and Toyota has reacted by increasing its sales incentives. In fact, Toyota's average auto incentive rate in November of 2010 was up about 10 percent from the previous year, and yet it was one of the few carmakers to show a year-over-year loss in sales.

In the past, Toyota would have likely stayed the course, kept incentives low, managed its production to match the slowing demand and remained on top where it counts, in profits and customer satisfaction. But it seems that the pressures of the past few years have pushed the company towards more distressed marketing, like this Shareathon Tweeting campaign.

When I worked at Ford and then Chrysler, we were often in awe of the discipline that Toyota managed to have when it came to sales incentives and the accompanying sales events. The former Big 3 were big on pushing out a sales event whenever the forecast showed the slightest downturn, while Toyota was a "steady as she goes" company, always looking beyond the 30-day horizon to the long-term effects of its marketing. Toyota seemed to realize what we didn't or wouldn't acknowledge: that once you train the customer to expect that they can get your car for less than the sticker, you can never, ever go back and ask them to pay full price.

Today though, Toyota seem to offer up sales events with as great a frequency as its Detroit rivals. The amounts it offers have gone up too, and now it's offering these deals, unique as they may be, in new places. Has Toyota finally picked up Detroit's bad habits? I hope not. So while I applaud the effort to engage people in new ways, in new places, I wish Toyota would engage in a way that didn't say "desperate for a sale".

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How Dealers are Making Customers Happier These Days: Are You One of Them?

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You are here: Cars > Articles > How Dealers are Making Customers Happier These Days: Are You One of Them? Cadillac dealers were ranked among the best in customer satisfaction (GM).

It's Spring. Time to buy a new car. You pull up to the dealership driving your trade-in on a Saturday morning. You are met by an anxious, eager sales person whom you know is trained to try and close the sale that day. But you, the consumer, want to shop around and take your time. The more you resist an immediate deal, though, the deeper the salesperson digs into their toolbar to "close you."

Soon comes the dreaded, "What can I do to put you in this car...today?" It's a dance of trepidation that car buyers have long detested. What makes it all so daunting is that car salespeople do the negotiation every day. Consumers know they are better than they ever will be at it, as the typical car buyer only goes to the dealership once every four or five years.

But there is good news if you haven't been to a new-car showroom in a while: That high-pressure, unpleasant experience is becoming more the exception than the norm, except in dealerships where the calendar hasn't been flipped to the 21st Century. In fact, customers are increasingly satisfied and happy after visiting a dealership and buying a car, according to the most recent survey by J.D. Power and Associates.

Who are the best at keeping customers happy?

Lexus ranks highest in customer satisfaction with dealer service among luxury brands for a second consecutive year, achieving an overall CSI score of 846 out of a possible 1000 points. Rounding out the top four nameplates in the premium segment are Jaguar (837); Cadillac (830); and Acura (828). Among luxury brands, Volvo and Porsche achieve the greatest improvements from 2010.

Among the "mass-market" brands, MINI ranks highest with a score of 805 and improves by 19 points from 2010. MINI performs particularly well in the vehicle pick-up and service quality factors. Also among the top 10 brands in the mass market segment are GMC (803); Buick (799); Chevrolet (792); Kia (784); Hyundai and smart, in a tie (783 each); Volkswagen (779); Ford (773); and Honda (765). Of mass market brands, Mazda and Suzuki achieve the greatest improvements from 2010.

Good news for consumers: satisfaction is likely to improve further. Why?

Automakers are investing more in training dealership personnel. Many dealerships handling U.S. brands are being shuttered, reducing the kind of "Ford dealer versus Ford dealer in the same city" competition that has long driven dealers to exert every high pressure and upselling tactic in the book. And consumers are so savvy about shopping on the Internet that they have almost all of the information ahead of time. They often have already negotiated the final price by e-mail, so the visit to the dealer is designed to close or end negotiation, not start it.

There is no mistaking an overall trend of happier car buyers and owners, said Jon Osborn, J.D. Power's research director. Adjusting for changes in the way Power actually computes the survey results 2007 to 2011, each year has been better than the previous one, he said. "Over time, dealers are providing much higher levels of customer satisfaction than they have in the past."

How are they doing it? Coffee bars. Free wireless Internet service. Online booking of appointments. Increasing the number of service bays and establishing longer hours to accommodate customers; some service departments staying open into the evening and on Saturdays. When it comes to selling the car in the first place? More communication online where the customer is more comfortable.

The goal is simple for dealers: As a customer switches on the ignition after a service appointment, they don't want him or her to worry about whether a repair was done correctly. And dealers want your experience to be comfortable, convenient and even upscale. They wouldn't mind it if you confused your time at the dealership with a visit to a spa or café.

In asking consumers about the process of buying a car, J.D.Power looks at consumers' attitudes toward their negotiations, their salesperson, the delivery process, and the dealership facility. Fully one-third of the score relates to the process of working out the actual deal. The questions in the study that relate to service weighs the quality of repair work completed more than other factors, such as the service adviser, the facility, or vehicle pick-up.

Osborn said improvements have been made across all dealership operations. "There isn't one area that has been improving drastically more than others. It's a little bit of everything."

Customers may find that the negotiations over price these day are going more smoothly than in the past. Car owners should also be seeing a trend of getting their cars in for service on the day that they call. And they should see much less "upselling" in the sales or service departments.

Upselling and having customers complain can seriously damage the service scores of a dealer, and cause them problems with the vehicle manufacturer, which often rewards dealership staff and salespeople for high satisfaction ratings with swag such as trips to Las Vegas or Florida, or even cash.

Power says satisfaction scores soar from 642 out of 1000 points to 780 points if customers feel they have not have been pressured to buy more maintenance or repairs than they think they need.

Fewer dealers selling Motor City metal

Since General Motors and Chrysler went through Chapter 11 Bankruptcy in 2009, much has been reported about the companies using its bankruptcy protection to close dealerships the companies felt were under-performing or superfluous. Without that protection, dealers, even poorly performing ones, were hard to get rid of because of tough franchise laws state by state. Both companies had thousands more dealers than they needed today given their market share. The excess is a legacy from when Detroit held North of 60% of the U.S. auto market. Today, it is closer to 45%.

But as the number of dealerships is falling, service is improving. Weaker, older dealerships have closed, concentrating more business with the healthier ones. "The retail networks have improved over the years as the auto companies have cut some of the poorer performing dealers in both sales and customer satisfaction,"says Power's Osborne. Says Erin Kerrigan, senior vice president at Autostar, a real estate finance firm serving the auto retail market, "When businesses are run well and making money, they tend to serve their customers better."

It's working. With fewer dealerships overall, dealer profits in general are up 38 to 129 percent so far this year, according to Urban Science, an automotive retail consulting firm. It hasn't hurt that the demand for vehicles has picked up, too. On average, dealers are already selling more cars per store – an average of 656 in 2010 compared to 564 in 2009.

The reductions in dealers selling Detroit brands are putting those dealers on a par with their foreign-brand counterparts "which had been selling two to three times as many vehicles," said Randy Berlin, a global director at Urban Science.

With their dealerships on a better financial footing, Detroit-brand dealers have more money to invest in nicer stores, and can reward their sales-force for keeping customers happy rather than churning sales and service bills to keep up, Berlin said.

Lounges with plush sofas and cappuccino bars are sometimes part of the recipe.

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