Autos: Ongoing Recalls Deflate Driver Satisfaction
With automobile recalls at record-high levels, it comes as no surprise that car buyer satisfaction declines for a third straight year, according to recent results from the American Customer Satisfaction Index (ACSI). At the industry level, driver satisfaction falls 3.7% to 79 on ACSI’s 100-point scale in 2015, and nearly all nameplates lose ground in the eyes of their customers.
While consumers are seeing a rapid influx of technology innovation that is transforming the driving experience, recalls are becoming a more common occurrence for car owners. The ACSI automobile customer satisfaction survey asks all respondents to indicate whether or not their car has been the subject of a recall since the time of purchase, allowing researchers to investigate the impact of recalls on satisfaction.
In 2011, ACSI researchers used a pooled sample of 2010 and 2011 data to show that customers who experience recalls are significantly less satisfied with their cars than those who have not. One of the industry’s highest-profile recalls happened before and during that period—Japanese automaker Toyota’s massive, worldwide safety recall that started in 2009.
Recalls generally signal major quality defects, so it is not unexpected that they will depress satisfaction. But, as automobiles become more and more complex, there is the possibility that consumers could come to accept recalls as a normal part of car ownership. Nevertheless, ACSI data from the past three years confirm the 2011 findings. Customer satisfaction for owners who experience recalls is significantly lower than non-recall respondents, and the percentage of owners that say they have gone through a recall has increased substantially in 2015.
The negative impact of recalls on automakers does not end with lower satisfaction. Because there is nearly a one-to-one relationship between satisfaction and customer loyalty for this industry, recalls create customers who are significantly more likely to defect to a competitor the next time they purchase a car. And because current customers are generally “cheaper” customers for automakers (requiring fewer acquisition costs), recalls have tangible and negative economic consequences for automakers. A pooled sample of 2013 to 2015 data for all nameplates shows that customers who experience recalls are significantly less likely to be repeat buyers.
Satisfaction declines caused by recalls also have a host of indirect, negative consequences because satisfaction drives behaviors such as word-of-mouth, cross-selling, up-selling, brand image, and corporate reputation. Like many other nameplates, Volkswagen’s driver satisfaction tumbles 5% in 2015, but the drop is based on interviews that took place prior to the company’s well-publicized emissions scandal. Although diesel engines are less widely used in the United States than elsewhere around the globe, the revelation of emissions rigging by Volkswagen—along with the sheer number of vehicles that the company will now recall and refit—could be devastating on future satisfaction. Current customers may be even less likely to repurchase from Volkswagen if they perceive the company’s actions as a breach of trust.