Customer Satisfaction Red Flags for Detroit (Except Cadillac)

The good news is that people overall are more satisfied than ever about the cars they buy. The bad news for the Big Three, unless we're talking about Cadillac, is that satisfaction levels are declining -- and far enough to send up some warning signs.

Cadillac was tied for first place in the annual and just-released University of Michigan "American Customer Satisfaction Index," with an 87 out of a possible 100. But its performance was a bright spot in a cloudy ownership picture for a Detroit that's still (despite the rhetoric to the contrary) dogged by poor quality, less than sterling service performance and indifferent customer follow-up. Four of six nameplates that declined this year in the Michigan survey -- Lincoln, Buick, GMC and Chrysler -- are domestic.

Bottom scraping at Chrysler
Chrysler products showed up so poorly that Dodge, Jeep and Chrysler itself were the three bottom-scraping brands. It's really not all that surprising, since quality control has been a big problem for the brand. The Chrysler brand was down 6.2 percent, the largest amount in the survey.

According to Claes Fornell, a Michigan professor:

Just when Detroit seems to think that it is safe to go back into the water, having escaped drowning in liabilities and low customer satisfaction, a familiar threat is back. After having bested or tied both European and Asian automakers in customer satisfaction by grabbing three of the top five slots in 2010, Detroit is falling behind again.

Meanwhile, six of seven Japanese and Korean automakers (with Mazda the low-performing exception) showed improvement this year. According to the survey's Amanda Piasecki:

American automakers are losing ground to Asian and European competitors. And that is not good news in a tight economy where competition for consumer dollars is fierce. The report says that lower satisfaction could impede Detroit's comeback.

Cadillac is a luxury star
But at least one brand stands out from the pack. Cadillac tied Toyota and Lexus for first place in the Michigan survey. People seem to be really happy with their luxury car buys. According to Fornell:

Luxury nameplates dominate the top of the industry. Quality almost always trumps price in impact on customer satisfaction.

That's a good lesson -- people may not remember how much they paid, but they'll be reminded of the quality touches they paid for every time they get in the car. And there's another reason people are heaping praise on the Cadillacs and Lexuses cars in their driveways -- they were also tops (along with Audi) in the luxury category in the annual Kelley Blue Book total cost of ownership survey, released Monday.

Over five years, an average Lexus that sold for $55,273 will cost you $73,605 to own, which just edges out a $53,684 Cadillac at $77,680. The $47,506 Audi is best of all with $68,866 over the period. These are among a handful of luxury cars that maintain more than 45 percent of their original cost after half a decade, says KBB's Eric Ibara (most cars are only at 30 percent).

The non-luxury top performers were further bad news for Detroit: Kia, Hyundai and Honda, in that order. You can own a $21,643 Kia for five years, and it will cost you only $38,884. The auto industry's most improved brand, Hyundai, was right behind.

No sales bump likely
Since consumers are pretty satisfied with their cars -- Michigan's overall approval number is 83, up 1.2 percent from 2010 -- it should be good news for sales. But since the recession of 2008, spending hasn't kept pace with customer satisfaction.

In the first quarter of 2011, for instance, the University of Michigan's statisticians say that satisfaction levels should have warranted 3.1 percent sales growth, but the actual number was a mediocre 0.9 percent. So there's not much evidence to point to a big pending sales increase. Except, maybe, at Audi, Cadillac and Lexus.

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Photo: Cadillac