J.D. Power: You can trust car dealerships

March 11, 2011

Contrary to popular perception, consumers do not think the up-selling of unnecessary work by automobile dealers is a commonplace occurance.

So says a recent study by J.D. Power and Associates. Results from its "2011 U.S. Customer Service Index (CSI) Study" reveal the following:

* During the last five years, auto dealer service facilities have gradually increased their share of service visits and spending, particularly among customers whose vehicles are under warranty.

* Between 2007 and 2011, the share of service visits at dealer facilities has increased from 67% to 74%. During the same time frame, overall share of spending for dealer service visits increased from 70% to 73%.

* "Customer perceptions of upsell pressure have a notable impact on overall satisfaction with dealer service."

(To view the results in chart form, click here.)

Overall, only 7% of service customers in 2011 indicate that their auto dealer attempted to sell them service work that they perceived as unnecessary. However, customer-reported rates of upselling increase as vehicles age.

Among owners of one-year-old vehicles, 4% indicated that the dealer tried to sell them unnecessary work. This increases to 9% among owners of four-year-old vehicles.

“Suggesting additional service work can actually benefit both customers and dealerships -- customers may prolong the life of their vehicle, while service facilities may gain additional revenue,” says Jon Osborn, research director at J.D. Power and Associates.

"However, it is key for dealerships to properly train their staff in the subtleties involved in adequately explaining the necessity and value of additional services without placing undue sales pressure on the customer.”

The study examines satisfaction among vehicle owners who visit a car dealership's service department for maintenance or repair work. The CSI rankings are based on dealer performance during the first three years of ownership, which typically represents the majority of the vehicle warranty period.

Five measures are examined to determine overall customer satisfaction with dealer service (listed in order of importance): service quality; service initiation; service advisor; service facility; and vehicle pick-up.

Lexus ranked highest in customer satisfaction with dealer service among luxury brands for a second consecutive year and received an award for a third consecutive year. Rounding out the top four nameplates in the premium segment were Jaguar, Cadillac and Acura. Among luxury brands, Volvo and Porsche achieved the greatest improvements from 2010.

Among mass market brands, MINI ranked highest. It performs particularly well in the vehicle pick-up and service quality factors, according to J.D. Power. Also among the top 10 brands in the mass market segment, in order of rank, are GMC; Buick; Chevrolet; Kia; Hyundai and smart (tie); Volkswagen; Ford and Honda.

Of mass market brands, Mazda and Suzuki achieved the greatest improvements in 2010 compared to 2009.

“By becoming more competitive in terms of cost and convenience, dealer service facilities are making some progress in capturing share from non-dealer service facilities,” says Osborn.

“Due to low sales levels during the past three years, service volumes for new in-warranty vehicles are expected to steadily decline through 2013. As a result, maintaining service customer share and loyalty will be vital to dealers in the coming years.”

The "2011 U.S. CSI Study" is based on responses from more than 97,300 owners and lessees of 2006 to 2010 model-year vehicles. The study was fielded between October and December 2010.