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Satisfaction gap shrinking between domestics, imports: study

November 18, 2010

Customer satisfaction with automobiles reached an all-time high during the second quarter of this year, with the satisfaction index rising to 81, up 1.3 percent from the same period in 2005.

 

The American Customer Satisfaction Index is compiled by the University of Michigan Business School’s National Quality Research Center. The ACSI measures how happy people are with the service they received from leading airlines, hotels, hospitals, manufacturers, government agencies and the like. More information about ACSI is at www.theacsi.org.

 

The reason behind the domestic car industry’s improved index is different this year compared to 2005, the index’s authors said. Now it is more about quality, less about price. Satisfaction edged up last year because of big price incentives. Detroit still uses incentives, but the recent increase in customer satisfaction has more to do with improvements in quality, both in product and in service.

 

And although the demand outlook presents a challenge, ACSI representatives said these improvements should help compensate for the effects of higher interest rates and gas prices because quality improvements shift the demand curve upwards, whereas price promotions create higher price elasticity and more pressure on price.

 

While Detroit is narrowing the gap a bit, ACSI representatives said there is still a long way to go. The domestic car industry continues to lag behind its foreign competition in customer satisfaction and most of Detroit’s nameplates are among the lower-scoring cars.

 

Paradoxically, the loss of market share has also contributed to higher customer satisfaction for domestic cars. As more dissatisfied car owners are leaving Detroit for the more satisfying foreign competition, the net effect is higher overall customer satisfaction for the industry as a whole.

 

Toyota made a notable improvement to an all-time high of 87 in 2005 and holds steady this year with the lead industry score. Toyota sales are up almost 11 percent for the year. This contrasts with Ford, for which customer satisfaction has dropped since 2004 to register the industry’s lowest score last year. Its sales are down nearly 10 p[ercent for the year. This year, however, Ford moves up to a score of 77—still the lowest in the industry, but now shared by Kia and Jeep.

 

Honda follows closely behind Toyota at 86, along with two high-end nameplates—GM’s Buick division and the Lexus division of Toyota. It remains a telling indicator that only the higher-end nameplates like Buick, Cadillac and Lincoln are competitive on customer satisfaction with the Toyota, Honda, and Hyundai nameplates, while the more comparable U.S. counterparts, such as GM’s Pontiac (down 1 percent to 79), Daimler-Chrysler’s Dodge (unchanged at 78) and Ford, remain well behind.

 

Among the Asian automakers, only Mazda (down 1 percent to 79) and new entrant Kia (77) are below the industry average. Nissan was in a similar position a year ago, but several new models and a commitment to product innovation boosted the Japanese automaker to a score of 82.

For a complete listing of the scores, please contact Erik Higgins at 630-424-6008.

 

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