Latest JD Power study indicates a 24 percent increase in reported problems in 2013. Must OEMs be concerned and what can they do to restore consumer sentiment about aftersales?
The Indian automobile industry is witnessing a slowdown. It does in various intervals in markets across the world. But what can be a cause for an equal, if not more, concern is a drop in the dependability of vehicles. That is what the findings of the 2013 Vehicle Dependability Study by J D Power Asia Pacific reveal. The 2013 study has shown a 24 percent increase in problems across problem categories and models. This cannot be attributed to a significant increase in one or more areas, or to all-new models included in the survey. Importantly, it found that an increased number of vehicles do not have extended warranties/service contracts, and the frequency of their owners going for scheduled or routine maintenance has decreased. Longer periods between maintenance tend to lead to an increase in vehicle problems. The study, now in its sixth year, measures problems experienced by original owners of 30- to 42-month-old vehicles in 169 different problem symptoms across nine vehicle categories: vehicle exterior; driving experience; features, controls and displays; audio and entertainment; seats; heating, ventilation and air-conditioning (HVAC); vehicle interior; engine; and transmission. The study includes 61 models in 11 vehicle segments: entry compact; compact; premium compact; entry midsize; midsize; premium midsize; entry luxury; luxury; multi-utility/multi-purpose vehicle (MUV/ MPV); sport-utility vehicle (SUV); and van. Maruti Suzuki and Toyota Kirloskar Motor are the two OEMs with two models each that rank highest in their respective segments. In 2013, overall vehicle dependability averages 280 problems per 100 vehicles (PP100), compared with 225 PP100 in 2012. Overall dependability is based on the number of problems reported per 100 vehicles, with a lower score reflecting higher long-term vehicle quality.
Among the vehicle owners surveyed, 43 percent have said they had unexpected repairs on their vehicle, up four percent from 2012. In addition, the proportion of owners who have taken their vehicle in for repairs at an authorised service centre (ASC) three or more times has doubled from 2012. On average, these customers report 2.4 times more problems than those who have not taken their vehicle in for repairs (418 PP100 vs. 174 PP100, respectively). “One of the key reasons for the increase in unexpected repairs is the decline in routine servicing,” says Arora, executive director, J D Power Asia Pacific. “Given that the average ownership cycle is about five years, the owners surveyed are close to replacing their current vehicles. Higher incidences of repairs are likely to dissuade them from purchasing the same make,” he adds. Among owners who indicate that they did not experience problems with their vehicle, 70 percent say they ‘definitely would’ recommend their vehicle to others. When owners experience one or more problems with their vehicle, the likelihood of a recommendation drops to 46 percent, the study says. This means a brand with a higher dependability is at an advantage. In times of a slowdown, this feedback may translate into flat growth.
The report points out that ‘gap in consumer’s expectation when comparing new models on the road with their present cars’ and ‘decreased’ attention by OEMs to customers whose cars are not within warranty period are two key reasons for the vehicle dependability decline. This year’s survey also shows that two of the ‘top 3 reported problems’ by consumers are different from previous years. Engine performance and brakes were cited by the 2013 respondents who said their vehicles can improve further. Interestingly, the ‘problem’ of ‘excessive fuel consumption’ does not figure in the ‘top 3 reported problems’ this year. It featured in the list in 2011 and 2012.
Routine servicing declines
The study also finds that the routine servicing and maintenance at authorised service centres has been declining during the past two years. Only 69 percent of owners took their cars to an authorised dealer/ service centre four or more times, down from 91 percent in 2011. Following a prescribed servicing schedule helps in keeping vehicle problems and incidences of unexpected repairs in check. “One way of ensuring that owners continue to regularly service their vehicle at authorised centres, particularly in the post-warranty period, is by offering an extended warranty,” says Arora. However, Arora points out that this year the proportion of owners who are covered under an extended warranty programme has fallen which may have contributed to the decline in the frequency of service visits.
The 2013 India Vehicle Dependability Study was based on responses from 7,032 original owners who purchased a new vehicle between July 2009 and September 2010. The study includes 61 models covering 16 nameplates and was conducted from January to April 2013 in 25 cities across the country.
INTERVIEW WITH MOHIT ARORA, EXECUTIVE DIRECTOR, JD POWER ASIA PACIFIC
The 2013 VDS Study shows that 43 percent of the respondents indicate unexpected repairs on their vehicle, up 4 percentage points from 2012. What could be the reasons?
One of the key reasons for the increase in unexpected repairs is the decline in routine servicing. All vehicles require regular/ routine maintenance and need to be taken to service centres regularly. However, we find that this year there has been a decrease in the proportion of customers who are taking their vehicles for routine maintenance. This also reflects that there are fewer customers in 2013 who say that they are covered under extended warranty, which in turn gives them less of an incentive to take their vehicles to service centres.
Also, OEMs need to be more proactive in reminding their customers to service their vehicles at specified intervals. In order to ensure that buyers who come to the dealerships receive a speedy and seamless experience, there needs to be a concomitant development of a wide network and training customer-facing personnel at the dealership to be aware of the customer individual preferences and requirements.
Do you think the fall in dependability can be attributed to a drop in durability of vehicles or some components in them?
As compared to last year, fewer components were actually replaced. Last year, our study found that two-thirds of the owners had to change at least one component. This year, this figure has come down to 54 percent. While this points to an increase in durability, the drop in component replacement rate could also be due to the drop in owners bringing in their cars for service.
Recommendations by existing owners depend highly on the level of dependability they experience with their vehicles. What should carmakers do to address the falling dependability of vehicles?
OEMs must ensure that customers visit authorised service centres on a regular basis. Encouraging car owners to register for extended warranty or service contracts will further assist in this endeavour.
The study shows that Indian OEMs are behind their international peers in the dependability index. Why is it so and how can they be at par?
The overall dependability perception is a composite result of multiple parameters like actual built quality, quality of materials, feature complexity, operating conditions, customer habits/ behaviour. While it is difficult to compare the sum total of the dependability measure across markets by just comparing the scores, all scores need to be referenced to some or all the variables mentioned above. Clearly, India offers very unique operation conditions and consumer habits in addition to the quality difference in materials and feature complexity. Also, consumers in different markets differ in terms of the way they respond to different questions.
Having said that, for any car models to be truly successful, it is essential that carmakers are sensitive to local market nuances and optimise their offerings based on customer requirements.
SUMANTRA BAROOAH