J.D. Power Asia Pacific Reports: Actions to Improve Service Department Profitability Differ by Dealer Brand

Toyota Ranks Highest in Dealer Satisfaction for 11th Consecutive Year

TOKYO: 8 December 2005 — With growing concerns over slowing new-vehicle sales, strategies to increase profitability within service departments clearly vary among dealer brands, according to the J.D. Power Asia Pacific 2005 Japan Dealer Attitude StudySM released today.

The study, now in its 11th year, is designed to measure the level of dealer satisfaction with the automobile manufacturer or importer and identify dealer attitudes toward the automotive sales business. The study examines market conditions and dealer actions in the service department, which includes vehicle inspections, maintenance and repair, and sheet metal processing and painting services. Responses from 416 franchises were collected between July and September 2005.

In an effort to combat the lack of growth in retail sales, many dealership brands are taking actions to improve customer satisfaction and profitability with their vehicle service departments. In vehicle inspections, Toyota dealers are taking the lead in the adoption of quick inspection systems, while Honda dealers are expanding their service facilities. Within the area of in-house maintenance/repair and sheet metal processing and painting services, Toyota dealers are also improving staff and facilities. Some improvements made by Toyota dealers include hiring more skilled mechanics, building or rebuilding service workshops and increasing equipment purchases.

“Although the current industry trend is in enhancing service departments, the implementation of profitable improvement measures clearly varies among dealer brands,” said Hiroaki Endo, manager of J.D. Power Asia Pacific. “Dealers that have actually made the necessary physical and capital investments to improve their service departments are likely to enjoy higher profits as a result.”

The Toyota brand ranks highest in overall satisfaction among dealers for an 11th consecutive year with an index score of 121 points. BMW makes its debut in the 2005 study and follows Toyota with a score of 108 index points. Honda, Mazda and Volkswagen tie to rank third at 102 index points.

The study also finds Nissan dealers are increasingly dissatisfied with their present and future profitability. Nissan dealers have shown a dramatic decrease in profitability satisfaction. While 47 percent of dealers expressed satisfaction with present profitability and 59 percent for future profitability in 2002, approval from Nissan dealers has declined significantly to 13 percent and 25 percent, respectively, in the 2005 study.

Inversely, Mazda dealers have shown a considerable increase in dealer satisfaction with profitability. While only 8 percent of Mazda dealers were satisfied with profitability in 2002, almost 50 percent of dealers say they are satisfied in 2005. At the industry level, dealer satisfaction with profitability has also increased. Satisfaction with present profitability is at 39 percent—a 6-percentage-point increase from 2004.

About J.D. Power Asia Pacific
J.D. Power Asia Pacific, established in 1990, conducts customer satisfaction research and provides consulting services in the automotive, information technology and finance industries. Information regarding J.D. Power Asia Pacific and its products can be accessed through the Internet at www.jdpower.co.jp Media e-mail contact: mkawano@jdpower.co.jp

About J.D. Power and Associates
Headquartered in Westlake Village, Calif., J.D. Power and Associates is an ISO 9001-registered global marketing information services firm operating in key business sectors including market research, forecasting, consulting, training and customer satisfaction. The firm’s quality and satisfaction measurements are based on responses from millions of consumers annually. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies
Founded in 1888, The McGraw-Hill Companies is a global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor’s, McGraw-Hill Education and BusinessWeek. The Corporation has more than 300 offices in 40 countries. Sales in 2004 were $5.3 billion. Additional information is available at: http://www.mcgraw-hill.com.

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