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Content Consumers
Fuel By JON E.
HILSENRATH and SHOLNN FREEMAN Americans love their autos. The job market has stagnated and the stock market has tanked, but consumers keep buying new cars and light trucks at a remarkable pace. Last month, for example, such vehicles were selling at an annualized pace of 18.1 million vehicles, up from annualized sales of about 16.5 million in July 2001. There's little doubt that interest-free financing plans are partly responsible for surging sales. But the latest installment of the American Customer Satisfaction Index, scheduled for release Monday by the University of Michigan Business School, suggests that there is more than just cheap financing behind the buying binge.
According to the ACSI survey, consumers are more satisfied with their autos than they are with most other major products. In the latest survey, conducted during the second quarter, consumers gave the auto industry a score of 80 out of a possible score of 100. That far exceeded the average score for all categories and was eclipsed only by home appliances, at 82. J.D. Powers & Associates, a market-research company that closely tracks the auto market, says its own research backs up the latest Michigan findings. "We see satisfaction in the automobile industry to be at very, very high levels compared to other industries," says Brian Waters, director of product research. "Automobiles have a long, long history. They have basically conquered the idea of manufacturing a product that works," says Claes Fornell, a University of Michigan professor who oversees the survey. "The personal-computer industry has not figured it out yet. This is not a reliable product, and the service is possibly getting worse, even though computing power is increasing." Personal computers scored 71 on the survey. Each quarter, the ACSI focuses on a specific segment of the economy. The current survey tracks durable goods; previous surveys have measured nondurable manufacturing, services, the federal government and retail trade. The results for the second quarter left the overall index, a running tally of the different sectors, unchanged from the first quarter, at 73. Mr. Fornell says the steady level of overall satisfaction should help to underpin nationwide consumer spending in the months ahead. "Spending should increase by more than 1.9%," he says, the rate of growth in the second quarter. Mr. Fornell says spending is driven in part by the level of satisfaction that consumers get from their purchases; contented consumers will spend more than disgusted ones. With satisfaction holding up, he says, the rate of growth should return to its longer-term trend of about 3%. Mr. Fornell is also chairman of CFI Group, a private consulting firm that advises companies on how to improve satisfaction levels. Some economists do question whether there is actually a link between overall customer satisfaction and economy-wide consumer-spending trends. But within the auto industry, few doubt that satisfaction has improved in recent years. J.D. Power's research, for instance, shows that the quality of cars themselves has improved about 6% a year for five years running. In 1998, new-car owners reported 176 problems for every 100 new cars they bought, ranging from poorly designed cup holders to squeaky breaks. For 2002 models, that was driven down to 133 problems per 100 cars. The latest J.D. Power satisfaction study, released last week, shows that low interest rates and manufacturer-sponsored financing deals have increased satisfaction with the sales process at dealerships. The ACSI placed Bayerische Motoren Werke AG, Buick and Cadillac as the brands producing the most satisfaction. Each had scores of 86, placing them up with Hershey candy bars as among the most satisfying products to consumers. Each of those auto brands had clearly defined customer bases and met the demands of those customers. General Motors Corp.'s Cadillac and Buick, for instance, tends to sell to older men with clearly defined demands for car size and reliability. The gap in satisfaction scores among car makers is narrowing, as companies with traditionally low scores, like Hyundai Motor Co., have improved in recent years. Hyundai's numbers improved to 81 in 2001 from 68 in 1997. Last year, Hyundai's number dropped back down to 78, a 3.7% decline. Chris Hosford, a Hyundai spokesman, notes that Hyundai's market share has continued to rise this year, despite the latest drop in the Michigan satisfaction number. Sales are up 15.8% so far this year from a year ago. "We feel the quality of the brand and the quality of the product are improving," Mr. Hosford says. Mercedes Benz scores were also among the few declines in the second-quarter satisfaction index. Its number dropped 3.5% to 83, placing it behind Ford Motor Co.'s Lincoln Mercury in satisfaction. DaimlerChrysler AG's Mercedes has been struggling to maintain momentum as rivals continue to attack the highly sought-after American luxury market with improved products and stronger marketing. But Donna Boland, a Mercedes-Benz spokeswoman, said the company's own internal research shows no indications that customers are less satisfied with its products. "People do have higher expectations of car makers," she said. "Whatever those expectations, are we have to meet. We are pulling out all the stops to meet those expectations." To create the American Customer Satisfaction Index, the National Quality Research Center at the University of Michigan, in partnership with the American Society for Quality, and the CFI Group of Ann Arbor, Mich., conducts telephone surveys with about 16,000 customers of the companies being surveyed that quarter. Each year, that amounts to about 65,000 customers of products from about 190 companies and 70 government agencies. Sales of the measured companies constitute 30% to 40% of the U.S. gross domestic product. Companies are scored on a scale of 0 to 100. Industry indexes are constructed with company indexes, weighted by the sales of each company. The national index is made up of the industry indexes, weighted by their contribution to GDP. Different sectors are updated each quarter, so the entire index is fully updated each year. Customers are quizzed about their expectations and their perceptions of value and quality in the services they have purchased; for manufactured goods, retail stores and fast-food, quality is broken down into measures of the product and the service accompanying the product. These are translated through computer models into overall customer-satisfaction scores, which are used to predict customer loyalty. American Customer Satisfaction IndexThe University of Michigan Business School's National Quality Research Center annually surveys customers of more than 190 companies and 70 government agencies, but each quarter it only updates selected industries. Individual companies are included based on their size, as measured by revenues. Internet companies are included based on the number of hits to their web pages. Here are the index scores, out of a possible 100, for the second quarter of 2002: Tracking Satisfaction ![[Chart]](wsj_8_19_02_files/satisfaction_FV93608182002214748.gif)
Note: N.A. means not applicable Sources: National Quality Research Center at University of Michigan; American Society for Quality; Foresee Results Write to Jon E. Hilsenrath at jon.hilsenrath@wsj.com and Sholnn Freeman at sholnn.freeman@wsj.com Updated August 19, 2002   REPRINTS INFORMATION: To distribute multiple copies of this article, visit the Dow Jones Reprints site. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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