American Automakers Fall Further Behind Foreign Competition in Customer Satisfaction

Lexus and BMW led all auto manufacturers in customer satisfaction.

Customer satisfaction continues on a bumpy path without momentum or trend in the second quarter, according to the American Customer Satisfaction Index. After a small uptick last quarter, ACSI slips 0.1% to 75.1 on a 100-point scale. The ACSI second quarter report, released on August 19 from the University of Michigan's National Quality Research Center, forecasts consumer spending will remain weak with growth of no more than 2.3% in the third quarter.

"The American consumer has long been the single biggest force propping up the U.S. and the global economy," said Professor Claes Fornell, head of the ACSI at the University of Michigan. "But declining customer satisfaction combined with weaker demand for U.S. exports may make it difficult for American households to shoulder the burden of being the locomotive for world economic growth."

Hit with record losses, American auto manufacturers are also suffering from slumping customer satisfaction. No domestic car maker is represented among the top four nameplates, but the bottom three in the industry are all American brands. Yet customer satisfaction for the industry as a whole remains at an all-time high (unchanged at 82), and one American car maker, GM's Saturn, shows considerable improvement, climbing 5% to tie its all-time high from 1998.

"The problem for domestic companies is that they now lag further behind their foreign counterparts," said Prof. Fornell. "This is not going to be helpful as the Big Three will lose more pricing power and be forced to continue dependence on rebates and discounting in a market where consumer preferences keep shifting away from domestic cars."

Lexus and BMW lead all auto manufacturers at 87. Toyota and Honda each improve 2% to 86. Mercedes Benz, once no. 1 in customer satisfaction, continues to fall behind the leading car makers. From being the top scorer in ACSI eight years ago, Mercedes has seen a slow but steady erosion in customer satisfaction -- it is now no better than the industry average. Chevrolet, GM's best-selling brand, takes the biggest fall, losing 4% to 79. Chrysler's Dodge (-3% to 78) and Jeep (+1% to 76) anchor the bottom of the industry

The personal computer industry suffers a second consecutive drop in satisfaction, falling 1% to 74 and losing all gains made since 2005. Apple defies the industry by moving in the opposite direction and posting its largest gain ever to 85, a new all-time high for the industry. The 8% leap puts 10 points between Apple and its nearest rival, one of the largest gaps between first and second in any industry measured by ACSI. As Apple's satisfaction improves, so too have its sales, market share, net income, and stock price.

The industry aggregate decline is largely for Windows-based machines -- Hewlett-Packard (73), Gateway (72), and Compaq (70) each sink 4%. The exception is Dell -- up 1% to 75.

Customer satisfaction with major appliances slides 3% to 80 this quarter. All three major companies decline, with Whirlpool dropping the most (-5% to 80). General Electric and Electrolux each drop 1% to 80.

Whirlpool, the world's biggest appliance manufacturers, faces increased competition at a time when domestic demand is shrinking and the cost of shipping and raw materials is rising. The company's customer satisfaction rose after its acquisition of rival Maytag in early 2006, but the gains in satisfaction were short-lived.

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