Accurate Measures of Customer Satisfaction?
When Toyota or General Motors or Mercedes claims that its cars rank in the top 10 of customer satisfaction, does that really mean they make the highest-quality cars, and did the surveys really mean that the car buyers were happy?
Or are the surveys measuring something very narrow about customer satisfaction?
Some experts think so, saying that many motorists are not truly satisfied with the system for buying cars.
After all, how well served are consumers when some car buyers leave show rooms with cars priced as low as $100 over invoice and others leave paying substantial premiums over the sticker price?
“There is no pricing integrity anymore,” said Jeremy Anwyl, president of Marketec Systems, a consultant to auto manufacturers. “There is a tremendous fear when you drive home that you may have paid too much money.”
Sticker prices have never meant less. The average transaction price for cars has fallen well below the sticker price. Dealers are under a lot of profit pressure, and hundreds have gone out of business.
When a dealer sells a car for $100 over invoice, he is obviously making more than just the $100. There is something called a holdback that he gets from the manufacturer, but it is not nearly as large as a lot of people assume.
For example, Ford holds back about $620 on many Taurus models, but it charges against that a monthly finance fee of about $190. If the dealer sells the car on the first day after delivery, he claims most of that $620.
But if the car stays on his lot for four months, it’s a potential money loser. It’s one reason that so many dealers are disappearing and the remaining dealers are getting larger. Many dealers rely on the rare customer, typically a poorly informed one, who is willing to pay way too much.
Of course, this isn’t the way dealers see it.
“They are just paying the price of ignorance,” said Mickey Garrett, executive vice president of the Greater Los Angeles Car Dealers Assn.
Garrett added: “You can’t tie this into sales satisfaction. There is nothing in those surveys that asks about price.”
That seems to be the very criticism that Anwyl makes about satisfaction surveys. Why don’t they take into account consumer misgivings about price negotiation?
“Customer manipulation must end,” Anwyl argues.
But Garrett says that price negotiation is just a part of the system and that recent efforts by some dealers to sell all their cars at fixed prices will eventually collapse.
“That will last (until) the dealer down the road says, ‘I’ll cut the price by $50,’ ” he said.
Another reason why customer satisfaction indexes are not meaningful, Anwyl said, is that product quality is converging, though manufacturers and dealers often tout their standing in J. D. Power or Consumer Reports surveys.
The top 30 models in several surveys are separated in their rankings by a small fraction of a defect per car. And the surveys don’t register the seriousness of defects. So a misaligned fender is given the same weight as a brake failure.
