CAPPED-PRICE servicing schemes operating through car companies’ authorised retail network are having a positive effect on customer satisfaction and playing a significant role in motivating owners to return to the dealership rather than use an independent service centre, according to JD Power’s latest Customer Service Index (CSI) Study.

The independent study released this week found that a majority of respondents (52 per cent) said their service was covered by a capped-price scheme – up from 47 per cent last year and 38 per cent in 2014 – while 29 per cent said they were not covered and the balance did not know.

Significantly, more than a quarter (26 per cent) of those customers who were not offered a capped-price scheme reported that they had visited an independent service centre or garage – such as Ultra Tune or Kmart Tyre and Auto Service – at least once to get their vehicle serviced.

In contrast, only nine per cent of customers who were offered a capped-price scheme from the car company or dealer from whom they purchased their vehicle said they had gone to an independent service centre/garage.

Transparency in terms of servicing costs is increasingly promoted by car companies, and the CSI study shows that nameplates covered under capped-pricing servicing report a positive effect (11 index points above the mass-market average of 809) on their service satisfaction compared to those who were not (13 points below average).

In overall terms, 70 per cent of customers surveyed said they had returned to the dealer where they purchased their new vehicle for servicing, which marks a 10 per cent rise on last year.

JD Power attributes this increase in customer loyalty to measures that ease concerns around servicing and maintenance costs, citing capped-price schemes, service packages and longer warranty periods as all playing a role in encouraging vehicle owners to return to the authorised dealer.

For 33 per cent of respondents surveyed this year, a capped-price servicing offer was the key reason for selecting their dealership for servicing – up from 26 per cent in 2015 – while 16 per cent of customers returned to their dealership for a service package offered, up from eight per cent last year.

This multiple-response question saw capped-price schemes rate highly compared to other significant reasons for choosing the auto brand’s service centre, such as past experience (29 per cent), qualified mechanics (28 per cent), use of factory authorised parts (24 per cent), speedy service (24 per cent) and open on convenient days/hours (20 per cent). See Figure 1.

The top reasons relate to the fact that the vehicle was purchased there and that the dealership is at a convenient location (both 44 per cent), while the new-vehicle warranty (39 per cent) and reliability of service (36 per cent) were also just ahead of capped-price servicing – for now.

According to JD Power, capped-price programs and related initiatives are helping drive down costs incurred by vehicle owners, with the average amount paid for service coming in at $296 this year – down from $326 in 2012.

“Aftersales service contributes significantly to a dealer’s overall profitability,” said JD Power Asia-Pacific vice-president Mohit Arora.

“Customer retention is a vital aspect of a dealer’s business that not only allows them to grow their business but also builds long-term customer relationships.

“Offering service packages and capped-price servicing options entice customers to visit the dealership for their regular servicing needs, but it needs to be complemented with a proficient, convenient and an engaging customer experience.”

As it has done each year since the first Australian CSI study was released in 2010, JD Power’s research and assessment makes it clear that dealerships which impress their customers in all facets of the aftersales service process are rewarded with loyalty, advocacy, repeat business and, not least of all, new business brought through recommendations.

This loyalty/advocacy is measured in terms of whether customers plan to stick with the brand and the dealership involved – in both purchasing and ongoing servicing – and would recommend the brand and the dealer to others.

In every case, those respondents whose service was covered by a capped-price scheme were more likely to have future loyalty/advocacy intentions with the brand and dealer than those whose service was not.

For example, 41 per cent of ‘capped-price customers’ said they “definitely would” repurchase or lease the same brand of car compared to 36 per cent of those customers whose service was not covered by such a scheme.

And the trend is repeated across other areas measured: would purchase/lease a vehicle from the servicing dealer (33% vs 23%), would recommend the same make (54% vs 47%), would recommend dealer to a friend/relative (40% vs 34%), and would revisit dealer for service work that you: a. pay for (53% vs 48%); and b. do not pay for, such as warranty-related work (68% vs 63%). See Figure 2.

This year’s CSI study was based on responses from 4666 owners who purchased their new vehicle between August 2011 and September 2016, and who took their vehicle for service to an authorised service centre between August 2015 and September 2016.

The study was fielded from August through September 2016.

By Terry Martin