Customer Satisfaction with New Luxury Cars Hits the Skids

Auto Show Cadillac Hot Wheels
Louis Lanzano/AP
Mercedes continues to top a closely watched rating of customer satisfaction with their cars. No surprise there. But some other luxury brands have fallen to the bottom of the rankings, including Acura, BMW, Audi and Cadillac.

Overall, the American Customer Satisfaction Index declined for a second straight year. Satisfaction scores rose to historic high following the Great Recession, as the Detroit Three automakers -- General Motors (GM), Ford (F) and Chrysler -- used big price incentives to lure in customers. The government was also providing tax incentives. Sales boomed, and buyers were happy with the cars and trucks they bought, believing that they got good value on their purchase.

However, over the past few years, automakers have reduced the number and size of buyer incentives. "Much of customer satisfaction is driven by price incentives, and as those have gone away, satisfaction has diminished," said Forrest Morgeson, director of research for the index.

ACSI Automobile Report 2014
ACSI Automobile Report 2014
Reputations of Imported Cars Decline More

The score for 16 of the 21 brands measured declined, with imports from Europe and Asia taking the biggest hit. "That's a win for the domestic automakers," said Morgeson, "just to close that gap a little bit." The only brands with higher scores compared to last year are Chevrolet and Buick.

At the top of the rankings, Mercedes-Benz fell 2 percent from a year ago, with a score of 86 (on a 100-point scale). Subaru received the second-highest rating, followed by Lexus, Volkswagen, Toyota (TM) and Honda (HMC). Buick was tied with Toyota and Honda, making it the only domestic brand to beat the industry average of 82.

It's unusual to see luxury brands falling to the bottom of the ratings, and Morgeson said it's "not a good sign for their future success, if that holds." Historically, foreign and luxury brands have dominated the ACSI rankings.

BMW fell only 2 points from last year, "but still, you'd expect a luxury brand to be closer to Mercedes than to Chrysler," according to Morgeson. Not surprisingly, consumers expect more for their money when they pay a premium price.

Acura fell 7 points, falling into last place in the rankings with a score of just 77. Researchers point out that this is only the second year Acura has been included in the rankings, so it's numbers could fluctuate.

"As products across the board become better and better, consumers expect quality to be better," said Morgeson. "Manufacturers have in essence set a higher bar."

Impact of Vehicle Recalls

Another factor that has hurt the satisfaction scores is the record number of vehicle recalls over the past year. The ACSI ratings cover vehicles sold in the past three years, and although most of the biggest recalls cover autos the predate that, the publicity surrounding the recalls has had an impact. "If you haven't been living in a cave, it can't help but tarnish the broader image of General Motors and others," according to Morgeson.

Auto sales have been very strong throughout this year, running an annual rate of about 16 million. If that continues, we're likely to see a flood of used cars hit the market, giving buyers more alternatives and making it harder for the automakers to live up to customer expectations, which are closely tied to price.

Morgeson says the two-year decline in overall customer satisfaction is not enough to signal any long term trend, but it is a warning that automakers need to take seriously. He says they can't afford to lose satisfaction to rival brands.

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