There is a decline in customer satisfaction in China as experienced salespeople are in short supply as auto dealerships continue to expand. Coupled with the slow down in Chinese vehicle sales this year, there is a “notable deterioration” in overall sales satisfaction among new-vehicle owners in China.
After experiencing explosive increases during the past decade, the growth in China’s passenger-vehicle sales slowed significantly in late 2011. Year-to-date 2012 vehicle sales are up 8%. Manufacturers – taken by surprise in what was a robust market – have not cut production to meet current demand. Instead they continued to add capacity and open new dealerships in anticipation of a return stronger growth in the future.
While this scenario sound all too familiar to western observers, in the current Chinese market, this has led to increased inventories at dealerships and acute pressure to sell vehicles with inexperienced staff.
Overall sales satisfaction for the industry declined to 841 index points (1,000-point scale) in 2012, a six-point decrease from 2011. The most significant declines are in the salesperson, sales initiation and delivery process factors, according to the J.D. Power Asia Pacific 2012 China Sales Satisfaction Index.
“Nearly 80 percent of dealers indicate that high inventories are their greatest challenge, which means dealers are under immense pressure to sell more vehicles at a faster pace,” said Liza Wang, senior automotive analyst, J.D. Power Asia Pacific. (Power is not without self-interest here, since it sells more detailed versions of its studies to automakers.)
More than 60% of Chinese dealers expect sales in the second half of the year to remain flat, and nearly 30% of dealers anticipate sales will decline in the months to come. LMC Automotive projects a 9.6% increase in passenger-vehicle sales for the full year.
In the latest power study, Audi ranks highest in sales satisfaction for a third consecutive year with a score of 898 points and performs particularly well in sales initiation, dealer facility, salesperson and delivery process. Dongfeng Nissan ranks second with a score of 897, followed by Beijing Hyundai (891), Dongfeng Citroen (882) and Dongfeng Honda (881).
The gap in sales satisfaction scores between Chinese domestic brands and international brands has widened to 67 points from 33 points in 2011. The overall sales satisfaction score for domestic brands is 793, compared with 860 for international ones. The largest gaps in scores between domestic and international brands are in the dealer facility, delivery process and deal factors. Chery is the only domestic nameplate to perform above industry average in overall sales satisfaction.
Now in its 13th year, the study measures customer satisfaction with the new-vehicle purchase experience across seven factors: delivery process, delivery timing, dealer facility, salesperson, paperwork, deal, and sales initiation. The study is based on survey responses of new-vehicle owners during the first two to six months of ownership.