As the coronavirus crisis continues to interrupt global supply chains, auto dealers are bracing for parts shortages that could undermine hard-fought gains made in customer satisfaction over the past few years. According to the J.D. Power 2020 Customer Service Index (CSI) Study,SM released today, overall satisfaction increases to 837 (on a 1,000-point scale), marking the fifth consecutive year of increasing satisfaction. As the crisis unfolds, however, the ability to meet customer expectations for prompt service and repairs will be undermined.
“There’s no telling how widespread or long lasting the ripple effect of the coronavirus will be for the automotive industry, but it inevitably will have a financial effect on dealers’ service business,” said Chris Sutton, vice president of the U.S. automotive retail practice at J.D. Power. “Automakers and dealers need to prioritize securing sources for their parts supplies or face the consequences of losing business. Customers will be initially understanding of coronavirus consequences, but shortages will continue well beyond the current public health crisis. Customers will not understand in August, for example, why there are no parts to repair their vehicles.
“Performing work right the first time is the most critical activity for service satisfaction, and dealers now do a good job by successfully completing work 94% of the time,” Sutton said. “Under normal circumstances, 20% of the work that isn’t completed the first time is due to parts being unavailable, which is a source of frustration for customers. That 20% could dramatically increase due to parts suppliers’ extended shutdowns in China and other locations. When parts are unavailable, customer satisfaction and intended loyalty significantly decline.”
Overall satisfaction declines 155 points among luxury vehicle owners when parts are unavailable. There’s a 141-point drop in satisfaction among owners of mass market vehicles when parts are unavailable. What this decline means, in business terms, is a drop from 63% to 30% of owners in the luxury segment who say they “definitely will” return for service. That drop is down to 26% from 58% in the mass market segment.
The study measures satisfaction with service at a franchised dealer or independent service facility for maintenance or repair work among owners and lessees of one- to three-year-old vehicles. It also provides a numerical index ranking of the highest-performing automotive brands sold in the United States, which is based on the combined scores of five different measures that comprise the vehicle owner service experience. These measures are (in order of importance) service quality (27%); service initiation (20%); service advisor (20%); service facility (17%); and vehicle pick-up (16%).
Following are key findings of the 2020 study:
- Time is most important: Customers rate the total time to complete service on their vehicle and amenities offered by the dealership the lowest (in a tie) of 16 attributes analyzed in the study. The third-lowest attribute is fairness of charges. The highest-rated attributes are courtesy of service advisor; cleanliness of dealership; and knowledge of service advisor.
- Higher expectations for younger customers continue but gap is narrowing: Gen Y1 customers range from ages 25 to 42 and represent a growing percentage of new-vehicle buyers. Historically, younger customers have lower satisfaction than older customers and this holds true for this year’s study: overall service satisfaction among Gen Y customers is 36 points lower than among customers who are older. However, when compared to similarly aged customers 15 years ago, overall satisfaction of those aged 25-44 was 57 points lower than among those aged 45 and older. Gen Y customers currently have higher intended dealer loyalty for paid service work than similarly aged customers did 15 years ago: 49% say they “definitely will” return in the future compared with 42% in the 2005 study.
- Fewer miles and longer service intervals decrease interactions between dealers and customers: After three years of vehicle ownership, Gen Y customers drive 13% fewer miles than similarly aged customers did 15 years ago in 2005. Coupled with the lengthening of service intervals, the average number of service visits Gen Y customers make annually is down to 2.4 visits vs. 3.0 visits in 2005. The good news for dealers is that now they capture a far higher percentage of service visits by Gen Y owners than they did for similarly aged customers 15 years ago. Dealers need to be aware of their limited access to this group of customers and identify ways to make a positive impression to drive repeat business before current vehicle warranties expire.
- Dealers capture a greater percentage of service visits: Dealers capture 88% of customers’ annual service visits in the first three years of ownership vs. non-dealers. This is up from 79% in 2015. It is critical that dealers retain customers throughout the warranty period as defection to the aftermarket occurs rapidly after the warranty expires. Additionally, the J.D. Power 2019 U.S. Aftermarket Service Index StudySM finds that 21% of aftermarket service customers who own five-year-old vehicles serviced their vehicle at a new-vehicle dealership in the past year and only 8% of aftermarket service customers who own vehicles 10 years old or older visited a dealer for service in the past year.
“Several long-term challenges lie ahead for the service business aside from supply issues,” Sutton said. “With vehicles requiring less frequent maintenance and owners driving fewer miles—thus, stretching out the time between service visits—dealers need to do everything they can to keep satisfaction moving in a positive direction. Retaining customers as vehicles age and warranties expire is key for dealers, especially as the sales market slows. Simple things like returning a vehicle to the customer cleaner than when it was brought in can increase satisfaction scores by 31 points, and dealers do this less than half the time. There’s no time to slack on delivering what customers expect if service departments are to continue to comprise a large percentage of dealership profitability.”
Lexus ranks highest in satisfaction with dealer service among luxury brands, with a score of 889. Cadillac and Porsche rank second in a tie, each with a score of 882. Infiniti (875) ranks fourth and Lincoln (872) ranks fifth.
Buick ranks highest in satisfaction with dealer service among mass market brands for a fourth consecutive year, with a score of 861. Chevrolet (852) ranks second, followed by GMC (847), Mitsubishi (846) and Toyota (843).
The 2020 U.S. Customer Service Index Study is based on responses from 71,286 verified registered owners and lessees of 2017 to 2019 model-year vehicles. J.D. Power goes to great lengths to ensure that survey respondents are true owners of the brand they are representing. The study was fielded from August through December 2019.