Automotive Dealers Face Headwinds as Service Spend Declines, J.D. Power Finds

With India experiencing a decline in sales volume and a drop in average after-sales spend, automotive dealers are feeling the effects of a difficult year, according to the J.D. Power 2019 India Customer Service Index (Mass Market) Study^SM, released today.

The study finds a 10% drop in the average amount spent per service visit compared with 2018. On average, customers spend ₹5,000 per service visit, compared with ₹5,600 in 2018. The decline is greatest among after-sales customers who are 39 years or older, whose spend declined 17% year over year. The decline in service revenue is significant for dealers as 31% of their profits are generated from after-sales vs. 25% from sales^[1].

“Typically, dealers rely on service work to keep their businesses profitable especially during a downturn in new-vehicle sales,” said Kaustav Roy, Director and Country Head for India, J.D. Power. “A drop in average service spend bodes negatively for overall dealer profitability. More than ever, dealers need to focus on delivering an excellent service experience to retain customers and encourage loyalty and advocacy.”

For the customers who rate their experience in the top quartile of satisfaction (929 points and above on a 1,000-point scale), 89% are more likely to return for post-warranty service work. Similarly, 90% of customers in the top quartile will recommend the service centre to a friend or relative.

Following are additional key findings of the 2019 study:

• Reluctance to go digital: After-sales customers rarely use digital channels to set appointments despite indicating higher satisfaction when used. Satisfaction is 875 among the 1% of customers who use a manufacturers’ app and 868 for the 2% who use a dealers’ website. For the majority (81%) who still prefer to call a dealer, satisfaction is 831. Customers who walk in without an appointment (14%) are the least satisfied (786) across all appointment types.
  
• Fewer customers stay at the dealership: More than one-fifth (21%) of customers stay at the service centre during their visit, a decline of 10 percentage points from 2018. However, satisfaction is typically higher among customers who wait for their vehicle service to be completed (837) vs. those who opt to leave and then return (821).

Study Rankings

Hyundai ranks highest in overall service satisfaction with a score of 903. Tata (870) ranks second and Mahindra (863) ranks third.

The J.D. Power 2019 India Customer Service Index (Mass Market) Study^SM is based on responses from 7,177 new-vehicle owners who purchased their vehicle between March 2016 and August 2018. The study was fielded from March through August 2019.

Now in its 23rd year, the study measures new-vehicle owner satisfaction with the after-sales service process by examining dealership performance in five factors (listed in order of importance): service quality (30%); service initiation (18%); service facility (18%); service advisor (17%); and vehicle pick-up (17%). This study examines service satisfaction in the mass market segment.

The study also includes the Net Promoter Score® (NPS)^[2] which measures new vehicle owners’ likelihood to recommend their vehicle brand on a 0-10 point-scale.

J.D. Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable J.D. Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, J.D. Power has offices serving North America, South America, Asia Pacific and Europe.

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^[1] J.D. Power-FADA 2019 India Dealer Satisfaction with Passenger Vehicle Manufacturers Index (DSWAMI) Study^SM

^[2] Net Promoter, ® Net Promoter System, ® Net Promoter Score,® NPS,® and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.