Dealer satisfaction jumps in 2024 on inventory, pricing improvements

Customer satisfaction with dealers is improving, thanks to higher inventory levels and lower pricing.

Driving the news: J.D. Power’s U.S. Sales Satisfaction Index Study highlights shifts in car buyer sentiments compared to last year.

• Overall ratings improved slightly, with the index gaining eight points from last year to reach a score of 801 (on a 1,000-point scale).

• Market conditions contributed heavily to the increase. Rising vehicle inventory has reduced the number of mass market customers paying over the MSRP down to 8%, compared to 15% in 2023. Premium buyers saw a similar decrease, shifting from 10% last year to 6%.

Zooming in: Some factors are constraining satisfaction with dealerships and the sales process, highlighting areas where the industry can optimize the customer experience.

• Keeping customers happy is an all-or-nothing game. Dealers who met nine to 10 of the top 10 key performance indicators (KPIs) saw scores of 917, well above the average.

• Meeting only seven to eight KPIs resulted in a 90-point drop, bringing retailer scores down to 827. J.D. Power studies a range of typical KPIs, including the sales consultant’s understanding of customer needs, condition of the vehicle on delivery and the effective use of technology by personnel.

• Electric vehicle buyers continue to see poorer satisfaction ratings than buyers of internal combustion engine (ICE) vehicles. The gap has notably shrunk over the last year, from 58 to 35 points among mass-market brands. However, this year’s weaknesses still echo those found in J.D. Power’s prior studies, with customers giving lower ratings based on staff experience and product explanations.

Zooming out: The top brands continued to trade places in terms of overall customer satisfaction. J.D. Power does not include Tesla or other electric vehicle companies in its analysis.

• Porsche continues to rank highest among premium brands, followed by Infiniti and Jaguar. Last year, Alfa Romeo ranked third overall in its segment, with a score 11 points higher than the industry average; the company is now eight points below average at 13th place.

• In the mass market segment, MINI saw a significant improvement in scores, jumping to first place after coming in eighth last year. Buick, last year’s top brand, is now in second, followed by Subaru. Chrysler ranks last this year, with a score 30 points below the segment average.

Bottom line: Overall, dealers are building momentum towards better customer satisfaction, with cooling market conditions playing a key factor. But with those same conditions putting downward pressure on profit margins, identifying and solving buyer pain points will be key to improving retention, accelerating growth and boosting revenue in the months ahead.

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