Slump in sales prompts search for new revenue

Overall satisfaction with after-sales service at authorized dealerships in China is on the decline in 2013 largely due to rising customer expectations, according to a JD Power study.

The JD Power Asia-Pacific 2013 China Customer Service Index Study released last week found that overall customer satisfaction with after-sales service in China has dropped to 815 on a 1,000-point scale in 2013 from 832 in 2012, the first drop in recent years, driven largely by a decline in satisfaction with domestic, Japanese and European brands.

Customer satisfaction with domestic brands declined by 31 points to 751 in 2013, and satisfaction with Japanese brands dropped from 860 in 2012 to 831 this year.

The rating of European brands decreased by 17 points to 832, while US brands achieved an average score of 851, a 1-point decrease from 2012.

Only South Korean brands collectively showed improvement in customer satisfaction, with a year-on-year increase of 13 points to 874.

The decline in satisfaction is attributed to a significant increase in customer expectations about the service experience, according to the marketing information services company.

"The competitive landscape continues to be aggressive, driven by product proliferation and rising customer expectations, making it imperative for manufacturers and dealerships alike to develop points of differentiation on delivering a superior customer experience in after-sales service," said Tony Zhou, director of automotive research at JD Power China, Shanghai.

"The industry should also be attuned to macroeconomic dynamics and be agile in adapting dealer-service processes and standards in response to the changing business environment."

The latest statistics from the China Association of Automobile Manufacturers show that China delivered 8.66 million passenger vehicles in total in the first half, up 13.8 percent year on year.

"Despite aggressive dealer network expansion, the increase in the number of vehicles has put immense pressure on capacity at dealer service departments," said Zhou.

Profit center

He noted that customer loyalty is particularly important because after-sales service is a significant profit center for dealerships.

After-sales service accounted for 50 percent of overall dealer profits so far this year, an increase from 44 percent in 2012, according to the JD Power Asia Pacific 2012 Dealer Attitude Study.

"And profit from new vehicle sales declined to 33 percent, meaning that dealers should change their operational focus from sales to after-sales service," said Mei Songlin, vice-president and managing director of JD Power China, Shanghai.