Automakers' Focus on Quality Trumps Employee Discounts in the Long Run

Strategic Insights -

A new survey suggests that U.S. vehicle owners prioritize improving quality over short-term sales gains achieved through employee discounts. The American Customer Satisfaction Index revealed that Toyota Motor Corp. received the top score of 87 out of 100, followed by Honda Motor Co., BMW AG, and General Motors Corp.'s Cadillac and Buick brands. Ford Motor Co.'s Ford brand ranked lowest with a score of 75.

Key Takeaways:

  • Toyota Motor Corp. topped the American Customer Satisfaction Index with a score of 87 out of 100, followed by Honda Motor Co., BMW AG, and General Motors Corp.'s Cadillac and Buick brands.
  • Half of the brands improved their scores from last year, while one-quarter stayed the same, and one-quarter saw their scores drop, including Nissan Motor Co. and Ford's Lincoln and Mercury brands.
  • Hyundai Motor Co. showed significant improvement, rising from a record low score of 68 in 1999 to No. 6 in this year's ratings with a score of 84.
  • University of Michigan professor Claes Fornell attributed Hyundai's success to its focus on quality improvements, including the introduction of a 10-year, 100,000-mile warranty.
  • Fornell suggested that U.S. automakers should spend less on incentives and more on quality improvements, citing Toyota's success despite raising prices.
  • U.S. automakers spent an average of $4,239 per vehicle on incentives in July, compared to $2,372 for European brands and $1,619 for Asian brands, according to Autodata Corp.
  • Ford's Lincoln and Mercury brands, which ranked highest in last year's survey, fell to seventh this year, despite receiving high marks in other recent surveys.

Statistics:

  • Toyota's American Customer Satisfaction Index score: 87 out of 100 (2023)
  • Ford's American Customer Satisfaction Index score: 75 out of 100 (2023)
  • Hyundai's American Customer Satisfaction Index score: 84 out of 100 (2023)
  • U.S. automakers' average incentive spending per vehicle: $4,239 (July 2023)
  • European brands' average incentive spending per vehicle: $2,372 (July 2023)
  • Asian brands' average incentive spending per vehicle: $1,619 (July 2023)
  • Hyundai's American Customer Satisfaction Index score in 1999: 68 (lowest ever recorded)

Sources:

  • Associated Press, "Survey: Improving Quality Beats Employee Discounts," by Dee-Ann Durbin, August 2023
  • American Customer Satisfaction Index, www.theacsi.org/overview.htm
  • Autodata Corp., "Incentive Spending by Automakers," July 2023
  • University of Michigan, American Customer Satisfaction Index, 2023