In the face of a sales downturn, dealers in Japan are battling to satisfy new-vehicle shoppers, especially on price, says a JD Power study.
The JD Power 2016 Japan sales satisfaction index points to an overall drop in customer satisfaction with the sales process.
“With new-vehicle sales tapering off, it’s critical for auto dealers to focus on each customer who visits the showroom in order to satisfy them and help them find the vehicle that meets their needs,” says Koichi Urayama, director of the automotive division at JD Power. “From the customer’s perspective, the dealers are not doing that, specifically when it comes to negotiating the price of the vehicle.
“It’s critical for auto dealers to maintain and improve loyalty among existing customers. In fact, in this study, overall satisfaction is higher among existing customers than new customers.”
He adds that even though overall satisfaction is higher among existing customers, it is still declining. “If auto dealers miss an opportunity to delight their customers, they could lose their foundation for future business.”
It’s not just owners who bought from the brand for the first time who are critical of the sales experience. For example, among repeat buyers in the luxury segment, salesperson satisfaction dropped 19 points year over year, while satisfaction in working out the deal slipped 18 points. Further, 32% of repeat buyers in the luxury segment say the purchase price was higher than their expectations, up four percentage points from 2015, and 16% say they are “somewhat” or “very much” felt pressure from their salesperson to purchase the vehicle, a six-percentage point increase.
The national consumption tax and a sluggish economy is causing this continued slowdown in new vehicle sales in Japan, which dropped to 4.2 million units in 2015 from 4.7 million in 2014, and is expected to remain flat this year.
Customers say slower sales have resulted in dealerships being less willing to negotiate on price, resulting in a five-point decline in overall satisfaction to 660 – on a 1,000-point scale – in 2016 from 2015.
While satisfaction in the mass market segment dropped five points to 658 in 2016, the decline is more pronounced in the luxury segment, which slipped by 12 points to 696.
The study, now in its 15th year, measures customer satisfaction with the sales process at automotive dealerships based on the salesperson at 34%, working out the deal at 26%, the facility at 21%, and delivery at 20%.
In the mass market segment, year-over-year satisfaction declines in all factors, most notably in working out the deal (-12 points). In the luxury segment, year-over-year satisfaction improves in delivery by two points, but drops by at least 10 points in each of the remaining three factors.
Additional key findings of the study reveal that sales satisfaction builds advocacy, customers who are satisfied with the sales process are likely to recommend their dealer to family and friends; it benefits the salesperson to chat about personal lifestyle or preferences during the sales negotiation, and a mini car slump has been the order of the day.
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