Bad Service, Worse Quality

By Tom Peters

“We have a long way to go … generally it all stinks.” The opinion is that of E. Thomas Pappert, vice president for Chrysler’s U.S. Automotive Sales. The “it” he claims stinks is not Chrysler cars, but dealer service.

During a radio interview, a Ford executive claimed that U.S. car makers pretty much have the auto quality issue knocked, but second-rate dealer service is doing us in vis-a-vis the imports.

Essentially he implied that poor Ford, which at $53 billion in sales is the world’s second-largest non-oil company, has no ability to get nasty dealers to change their errant ways.

These remarks made me especially eager to receive this year’s annual report on automobile customer satisfaction by premier pollster, J.D. Power and Associates. After I reported the results of last year’s Power poll in this column, an executive at AMC/Renault, which trailed the pack in several categories, blasted me.

“A little knowledge is a dangerous thing,” he sniped. He proceeded to inform me that the Power Report’s Customer Satisfaction Index (CSI) puts heavy emphasis on customers’ perceptions of dealers.

“Heaven forbid,” I replied, “that ye should be judged by your dealers!” It’s not my fault, I added, that I associate car makers’ logos, so prominently displayed on dealership signs, with the companies themselves. It’s like a McDonald’s executive answering an angry customer by disavowing responsibility for a hypothetical franchisee’s restaurant that looked like a pig sty. The point is that auto makers, for better or (usually) worse, are perceived by their customers to be responsible for every tiny element of the dealer and car ownership experience.

Meanwhile, the latest Power Report is out, after yet another 12-month “breathing space” for Detroit with semi-voluntary, semi-quotas on Japanese imports that cost you and me about 500 bucks per domestic or foreign car. And it turns out that not much has changed.

Last year’s report dealt with 29 “automobile nameplates” (such as Mercury, Mercedes), whose customers were surveyed on their first-year’s experience with 23 factors in two categories: “technical” (essentially quality); and “people” (the dealership). Power measures the factors in these two categories separately, and then averages each nameplate’s two scores for an overall ranking. The average score, an index number, is 100.

The top half from last year included five of seven Japanese entrants, seven of the twelve European, and two of the ten American nameplates. Lincoln, tied for tenth, was the top U.S. make.

This year, even after Detroit’s fifth year of protection from foreign competition, American automakers’ scores have hardly improved. In 1986, the list of thirteen nameplates that scored above average includes: five of Japan’s seven entrants again, six of twelve European and two of eleven American nameplates.

Overall, Japanese cars scored 119; European cars came in at 106 and U.S. cars trailed, at 94 (that is, 6 percent BELOW average). The only two above-average American performers were Lincoln again (up to fifth place) and Mercury (twelfth), with respective scores of 112 and 103. They still don’t measure up to Japan’s top two—first-place Honda came in at 132 and third-place Toyota scored 127. (Mercedes wedged into second place.)

But as the executives at Chrysler, Ford and AMC/Renault said, those abominable dealers are to blame. Or are they?

Sorry, fellas! Power reports that our dealers selling Japanese cars are about at parity with those peddling U.S. brands. Where Japan really nails us, once again, is on quality, with an overall score of 134, compared with our sorry 90.

Look a little closer at the U.S. quality component of the CSI and you’ll find that Ford’s quality rating of 107 bested the Europeans’ 87. GM brought us down, finishing in last place with an 83 quality mark. They barely slipped in below Chrysler, at 85.

Look a lot closer and our American auto executives’ claims simply are baloney. On dealer ratings, our only two above-average cars (Lincoln and Mercury, remember) did better on average than the top two Japanese performers. On quality ratings, though, the two top U.S. nameplates were barely average at 101, while the Japan’s top two scored a whopping 152. (General Motors’ best was Cadillac, whose 100 overall score consisted of a miserable 72 quality rating, bailed out by a top-drawer 128 dealer score.)

Statistics aside, I agree with our auto executives that dealer service stinks. But at least when it comes to American cars, quality seems to smell even worse. This is not idle nitpicking. The implications are quite serious—not just because of the continued importance of the auto industry and its vast infrastructure, but also because with the trade tom-toms sounding stronger every day, we are in a finger-pointing mood.

Detroit, dear legislators, is not losing its collective shirts because low Japanese prices and lousy dealer performance are masking superior product quality. Detroit has tried its darndest to match Japanese price increases that have followed the yen’s rise. And dealers, however lousy, have to peddle an even lousier (relative) quality car.

One last statistic: AMC/Renault earns this year’s top accolade for performance improvement. Its overall quality score rebounded to a very respectable 98, just 2 percent below average. Do you suppose that my correspondent from AMC/Renault will find the J.D. Power polls to be less biased than they were last year?


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