The internet is filled with stories about dealers tacking on thousands of dollars in surcharges for buyers looking for the hottest new models, now that inventories are at record lows. But that hasn’t had any real impact on overall customer satisfaction, according to a new study by J.D. Power.
One key reason appears to be the extra money that buyers are receiving when they trade in their old vehicles, Power reports in the 2021 Sales Satisfaction Index.
“Despite the lack of inventory, dealerships have overcome what might be thought of as a challenging sales environment for shoppers,” said Chris Sutton, vice president of automotive retail at J.D. Power.
On a 1,000-point scale, overall sales satisfaction held flat from 2020 to 2021, at an average score of 789, the SSI reveals.
Surcharges and rising trade-in prices
Automotive manufacturers have been slammed by shortages of parts, components and raw materials this past year, especially the semiconductor chips that have become a crucial part of today’s high-tech vehicles. Power and other analysts report that dealer inventories are, on average, barely a third of the industry-normal 60- to 70-day supply. Some manufacturers, including Toyota and Subaru, report that dealers have less than 10 days’ worth of stock.
That has led to numerous reports of dealer abuse. Some dealers have placed surcharges in the thousands of dollars on hot products like the Chevrolet Corvette and the Ford Bronco. While automakers claim these reports are the exception, rather than the norm, they also acknowledge prices are rising.
With factory incentives on the decline, the average transaction price for a new vehicle sold in the U.S. last month hit a record of more than $45,000, according to industry data. And that’s if a customer can find what they’re looking for.
“Right now, it’s hard to see the light at the end of the supply chain tunnel, so dealerships need to continue to sell vehicles through their inbound pipeline and help customers with special orders,” said Sutton. “However, the silver lining for customers is that trade-in values remain high and this has had a positive effect on customer sales satisfaction.”
Satisfaction depends on who you bought from
A closer look at the SSI data shows that car buyers actually reported a slight, year-over-year increase in satisfaction with the dealers they bought from. That reflects the higher payouts on trade-ins they received, Power found.
On the other hand, satisfaction dropped sharply with “rejected” dealers. That could be due to a variety of reasons, from a lack of inventory to excess surcharges.
The lack of inventory is hurting both dealers and manufacturers in a number of ways. Monthly sales have dropped by as much as a third from the beginning of this year as dealer stocks run dry. And that’s reflected in the sharp decline in earnings reported by carmakers like General Motors and Ford.
But there’s a longer-term impact on customer loyalty, said Power, a summary of the SSI noting, “Manufacturers struggling most with inventory shortages are losing shoppers to competitors.” The question is whether buyers will return the next time they trade in. Domestic brands Chevrolet, Ram, GMC and Dodge have been the hardest hit here.
Among individual brands, Porsche had the highest SSI score overall, at 833, followed by Infiniti, Lexus, Cadillac and Lincoln, among luxury marques. GMC was the top-ranked mainstream brand, followed by Buick, Chevrolet, Dodge and Nissan.
Tesla would have ranked among the top 10, Power noted, but the automaker refuses to release information on buyers in a number of states, so its data is incomplete.
BEV buyers aren’t amused
Unfortunately, the 2021 Sales Satisfaction Index reveals a large gap, on the whole, between buyers of conventional gas and diesel-powered products and those running on battery power. “There is a large disparity in satisfaction among buyers of battery-electric vehicles (BEVs) and buyers of internal combustion engine (ICE) vehicles,” Power’s summary said, blaming a lack of knowledge and expertise among dealer sales personnel.
“BEV buyers are a unique challenge for dealers,” said Sutton, who stressed that automakers and dealers must “ramp up training and knowledge” so potential customers can get answers about topics like range and charging times.
Separately, the SSI found that among buyers who have completed the shopping experience online, “satisfaction is much higher … than among those buyers who go to the dealership.”