Customer Satisfaction Ratings Improve for Ford and GM

Although auto sales in the U.S. are down considerably compared to 2008, customer satisfaction has reached an all-time high. That’s the conclusion reached by a recent study conducted by the University of Michigan which was released on August 18.

For Detroit’s Big Three, the news was especially good. Ford Motor Company, which was seeing a rebound in sales even before the federal CARS program launched last month, was the big winner with a 5 % increase over last year. Following closely behind Ford was Chrysler – up by 4% over last year. Customer satisfaction among owners of GM vehicles was also up by 2 % over the 2008 study results.

In fact, Detroit’s Big Three took three of the top five slots in the study.

Topping the list for the second consecutive year was GM’s Cadillac line with an increase of 7.2 % over the 2008 report findings. Toyota’s Lexus line claimed the number two position. GM’s Buick division placed third, followed by Honda. Ford’s Lincoln-Mercury division placed fifth in customer satisfaction among owners.

The American Consumer Satisfaction Index (ACSI) conducts studies for 200 businesses and government agencies from 44 industries across 10 economic sectors on a quarterly basis.

In the study, automakers were ranked on a 0-100 scale

According to Claes Fornell, the lead researcher for the ACSI report, three factors led to Detroit’s improved performance. Fornell claims that the automaker’s efforts to improve their products and services are being recognized by consumers. Secondly, auto prices have stabilized and, in some cases, lowered due to manufacturer incentives and rebates. Finally, and perhaps most significantly, the consumer base has shrunk since last year’s study was conducted.

This last factor is not good news for U.S. automakers according to Fornell who claims it indicates that the majority of consumers who were dissatisfied with their products have moved their allegiance to foreign automakers.

Fornell, however, says that this may not be such a bad thing for Detroit. “Usually we would say it’s not a good thing, but in this case I wonder if this is not the beginning of a turnaround.” Amid the current turmoil within the auto industry, he asserts, “For Detroit, serving a smaller, more satisfied customer base should be easier to manage and to build from compared to what they had before, which was a large diversified mass of customers that almost always had lower satisfaction than those who bought cars from foreign competitors.”

Among domestic automakers, Ford appears to be the best at adapting to the new market pressures and has increased its satisfaction rating by 10 % since 2005. Ford’s Lincoln-Mercury division scored an overall satisfaction rating of 88, which is above the industry average of 84. Ford has also made slight gains in market share since 2008.

GM also appears to be poised for a turnaround, with its Cadillac and Buick divisions ranking in the top 10 although it has seen a 16% drop in market share since last year. Chrysler has lost 35% of its market share in the last year.

Ford’s gains can be attributed to its core best-sellers which include the F-150 pickup. The F-150 was the best-selling vehicle in the U.S. during July, outselling both the Toyota Camry and Honda Civic. Ford’s popular Focus has also posted impressive sales numbers. Last month’s sales numbers were up by 43.6%% over July 2008, in part because of the federal CARS program.

According to Kristen Kinley, a Ford spokesperson, changing consumer attitudes is a slow process. “They say on average it takes seven years to change your perception from negative to positive, but it takes so much less to lose that,” she says.

Ford hopes that its reintroduction of the Taurus sedan and “ecoboost” technology will sustain the automakers reemergence. Ecoboost is a turbocharger technology developed by Ford that increase the power of 4- and 6-cylinder gas engines to levels usually attained by heavier engines.

Overall, consumer satisfaction as reported in the ACSI was up 2.4 % from the previous year. Korean automaker Hyundai reported the largest single year gain in the report’s history: a 25% increase over its 2008 rating.

According to Fornell, the study bodes well for the economy in general. He says that, historically, there is a correlation between ACSI ratings, overall consumer spending, the U.S. Gross Domestic Product (GDP) and the stock market. Fornell says, “There are many conditions out there for a bright outlook. The problem,” he cautions, “is we don’t have the money, which is not a minor component of all of this.”

Posted in In the News

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