Virus Crisis ‘Inevitably’ Will Hurt Car Dealers' Service Ops

The latest business sector facing financial damage from the coronavirus crisis: auto dealership service departments.

That’s according to J.D. Power, which says that as the virus disrupts global automotive supply chains, dealers brace for parts shortages that could linger, undermining recent gains in service-customer satisfaction.

Those improvements are reflected in the J.D. Power 2020 Customer Service Index Study released today.

“There’s no telling how widespread or long-lasting the ripple effect of the coronavirus will be for the automotive industry, but it inevitably will have a financial effect on dealers’ service business,” says Chris Sutton, J.D. Power’s vice president-U.S. automotive retail practice.

“Automakers and dealers need to prioritize securing sources for their parts supplies or face the consequences of losing business.”

Customers likely will cut dealers some slack, understanding the disruptiveness of the pandemic, “but shortages will continue well beyond the current public health crisis,” he says. “Customers will not understand in August, for example, why there are no parts to repair their vehicles.”

According to J.D. Power’s latest customer service index, overall satisfaction in dealership back-shop operations increases to 837 on a 1,000-point scale. It marks the fifth straight year of increased satisfaction.

But as the public-health crisis carries on, it will undermine the ability to meet customer expectations for prompt service and repairs, Sutton says.

“Performing work right the first time is the most critical activity for service satisfaction, and dealers now do a good job by successfully completing work 94% of the time,” he says.

“Under normal circumstances, 20% of the work that isn’t completed the first time is due to parts being unavailable, which is a source of frustration for customers.

“That 20% could dramatically increase due to parts suppliers’ extended shutdowns in China and other locations. When parts are unavailable, customer satisfaction and intended loyalty significantly decline.”

Overall satisfaction declines 155 points among luxury vehicle owners when parts are unavailable. It's a 141-point satisfaction decrease for mainstream-vehicle owners.

That translates to going from 63% to 30% of owners in the luxury segment who say they “definitely will” return for service. That falls from 58% to 26% in the mass-market segment.

The study measures service satisfaction at franchised dealerships and independent shops for maintenance and repair work for owners and lessees of 1- to 3-year-old vehicles.

Study takeaways include:

“Several long-term challenges lie ahead for the service business aside from supply issues,” Sutton says. “With vehicles requiring less frequent maintenance and owners driving fewer miles – thus, stretching out the time between service visits – dealers need to do everything they can to keep satisfaction moving in a positive direction.”

Retaining customers as their vehicles age and warranties expire is vital for dealers, he says. “Simple things like returning a vehicle to the customer cleaner than when it was brought in can increase satisfaction scores by 31 points," he says. Yet dealers do that less than half the time.

In the study, Buick ranks highest in dealer-service satisfaction among mass-market brands for a fourth year in a row with an index score of 861. Chevrolet (852) ranks second, then GMC (847), Mitsubishi (846) and Toyota (843).

At the bottom are Fiat (742), Jeep (794), Ram (801) and Dodge (804).

Lexus at 889 ranks highest among luxury brands. Cadillac and Porsche tie for second, each with 882. Then come Infiniti (875) and Lincoln (872).

Land Rover (785), Alfa Romeo (792) and Genesis (834) score at the bottom of the premium list.

The index ranking comes from feedback from 71,286 verified vehicle owners and lessees.