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Claes Fornell
  Claes Fornell
 

Detroit Responds: Customer Satisfaction Matches Asian Competitors

8/18/2009 --

ANN ARBOR, Mich. — Taxpayers are getting a first hint of potential returns on their investment in the American auto industry: Detroit automakers are doing a much better job of satisfying their customers, according to the University of Michigan's American Customer Satisfaction Index.

After trailing the competition for a long time, domestic automakers posted a large gain in customer satisfaction. Rising contentment with the automobile industry spurred the increase in the overall ACSI, particularly among the American brands, which now equal Asian vehicles for the first time in a decade, says Claes Fornell, a marketing professor at the Ross School of Business and director of the National Quality Research Center.

After having slumped prior to the recession, the overall ACSI registered a gain for a third consecutive quarter, now standing at 76.1 on a 100-point scale -- up 1.3 percent from a year ago.

"Although the future will obviously be challenging for Detroit, the rise in customer satisfaction provides a much needed improvement in competitive standing," Fornell says. "Making sure that customers are satisfied will be a most important task for the automakers because it leads to higher levels of repeat purchase and fewer customer defections. If they were to remain at the bottom of customer satisfaction in their industry, these companies would not be able to survive."

Overall, customer satisfaction with autos jumped 2 percent to an all-time high of 84. With Ford leading the way, the three Detroit automakers improved much more than their Asian competitors. The domestic nameplates are no longer the lowest scoring cars in the industry, Fornell says.

Even though ACSI data suggest that quality has improved and that customers recognize the progress, some of the rise in customer satisfaction is the result of a shrinking customer base, Fornell says. As the least satisfied customers depart, the ones who remain are, on average, more satisfied. For example, Buick, Cadillac, Lincoln Mercury, Jeep, and Chrysler were among the most improved in ACSI, but all saw sales drop by 50 percent or more in the past year.

"This is not all bad in the context of a downsized company," Fornell says. "The domestic car companies now have a smaller, but more satisfied, customer base to build on. This is going to be more sustainable than having a large, diversified mass of buyers, who tend to be less satisfied than the customers of competition. Not only is a smaller, more satisfied, customer base less difficult to grow, it is also much easier to defend against competitive inroads."

Cadillac and Lexus topped all auto manufacturers at 89, followed by Buick, Honda, and Lincoln Mercury, all at 88. BMW is at 87, with Mercedes-Benz, Toyota, and Volkswagen next at 86. Volkswagen makes one of the biggest improvements in customer satisfaction this quarter, leaping 6 percent, the first time VW has bested the industry average since 2004. Asian brands are mostly flat with Honda showing a modest 2 percent gain. Kia and Mazda are both at 81 and Nissan fell 5 percent to 78 to round out the bottom of the industry.

In addition to automobiles, second-quarter ACSI results include the durable goods sector (personal computers, major appliances) and e-business (portals and search engines and news and information websites). For a complete list of measured companies and scores, visit www.theacsi.org.

The ACSI is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States. It is updated each quarter with new measures for different sectors of the economy replacing data from the prior year. The overall ACSI score for a given quarter factors in scores from about 200 companies in 44 industries and from government agencies over the previous four quarters. The index is produced by the University of Michigan's Ross School of Business in partnership with the American Society for Quality and CFI.



For more information, contact:
Bernie DeGroat, (734) 936-1015 or 647-1847, bernied@umich.edu