Consumers have problems with the auto industry but a recall isn’t one

Automakers recalled vehicles by the millions in the past year.

For the second time in the U.S., Kia issued a recall of over 342,300 Soul vehicles because of a steering flaw, and back in March, Ford announced a massive safety recall of 2014 through 2018 models of Ford Fusions and Lincoln MKZ cars built in Michigan and Mexico. More than 1.3 million Ford vehicles were recalled because of the risk that steering wheels could detach from the steering column. According to Ford, two accidents and one injury have been linked to the problem.

While the number of recalled vehicles remains high, at least it’s steady, according to drivers. Per the ACSI’s 2018 Automobile Report, the proportion of drivers who experienced recalls hasn’t changed over the past year.

What’s surprising, however, is the effect these recalls are having, or rather, not having, on customer satisfaction.

How do vehicle recalls affect customer satisfaction?

According to ACSI data, customer satisfaction among drivers who had a recalled vehicle is only moderately lower than individuals who didn’t have a recall (80 to 81, on a scale of 1 to 100). On top of that, the data for Ford’s Lincoln shows that customers with a recalled vehicle actually reported higher satisfaction than the ones without a recall.

What can we attribute this odd behavior to? For one, the automobile industry has been doing a better job of handling recalls. Automakers have become more efficient in their recall process, using a more proactive approach to the problem, as opposed to a reactive one. But most importantly, automakers are owning up to their mistakes. ACSI’s latest recall data shows this level of honesty goes a long way with car owners.

This isn’t to say that all car manufacturers are benefiting from a more understanding clientele. Mercedes-Benz, for one, hasn’t been quiet on the recall front, and it’s paid the price. The company recently recalled nearly 500,000 cars because of possible accidental airbag deployment and nearly 43,000 Smart cars because of the risk of engine fires, among others. These incidents have contributed to Mercedes-Benz’s customer satisfaction score falling 2 percent to 82 this year.

Areas of improvement for the driving experience

So, if recalls aren’t causing a blatant negative impact among car owners, then what is? The answer: gas mileage and warranties. It doesn’t matter if an individual owns a mass-market vehicle or a luxury automobile, these two areas really grind customers’ gears.

Among mass-market vehicles, gas mileage is the worst part of the customer experience, though its score rose 1 percent to 79. Warranties are second from the bottom, holding steady at 80. Among luxury vehicles, gas mileage fell 1 percent to 77, while warranties retreated 1 percent to 82.

However, this isn’t the case across the board. Volkswagen, one of the most improved mass-market cars with a 4 percent increase in driver satisfaction, has shown it’s listening to consumers when it comes to warranties and gas mileage. The automaker has doubled the length of its warranties and drivers say that the fuel economy of Volkswagen vehicles is now among the best in the industry.

Despite these areas for improvement, automobiles continue to rank high in customer satisfaction among the 46 industries ACSI measures on an annual basis. Making changes for better warranties and gas mileage could be enough to bring the automotive industry up to the top of the list in the near future.

How rising summer gas prices will change consumer spending habits

The weeks between Memorial Day and Labor Day are the busiest American travel days of the year. This summer, drivers are paying 60 cents more per gallon of gas than they were last year, and airline fuel prices are up 12 percent, with higher fares on the horizon. But the higher costs don’t seem to be stopping vacationers from hitting the road… or the sky.

In fact, airlines are expecting their busiest travel season ever, with an estimated 246.1 million passengers expected to fly between June 1 and August 31. And according to a National Association of Convenience Stores survey, even more vacationers, especially millennials, will travel by car than by plane.

With gas prices demanding more from Americans’ pockets, consumers will have to find room elsewhere in their budgets to keep their wheels turning and their vacation plans intact. For other retailers, that means doubling down on customer satisfaction to make sure their goods or services aren’t the ones to get cut.

Reprioritizing spending habits

Americans spend more than half their food budget on dining out, making it perhaps one of the easiest expenses to cut back on in order to fund those summer travel plans. This is especially true for millennials, who on average eat out a whopping five times per week, spending more on dining out ($92 billion in 2016) and on comforts and conveniences (like pricey coffee) than other generations.

There’s been a lot of fuss over the past several years, too, about the brand loyalty of these young consumers. And it’s at least in part for good reason. Consider 2017 data from all of the ACSI’s private sector industries, which found millennials are least loyal in 39 percent of the industries measured, with the highest loyalty intention score in just 13 percent of industries (perhaps not surprisingly, tech and personal computers). It’s worth noting, though, Gen X isn’t that far off – they’re least loyal in 42 percent of industries and considered to be the most loyal in just one (computer software).

This brand apathy could prove dangerous for the coffeehouses, restaurants, and bars that typically benefit from millennials’ dining out tendencies, particularly when they’ve got bigger, more expensive purchases on their minds.

Satisfaction gains power as gas prices rise

People are going to spend money wherever they’ll be the most satisfied and get the most enjoyable experience for their dollar. Quality plays a more important role than price in satisfying customers in almost all ACSI-measured industries. But the ultimate millennial craving can’t be satisfied with good food. Convenience continues to be the most important factor in attracting millennial customers across all industries.

That means that those restaurants (and other retailers) that cater to the expectations of these fast-moving, technologically savvy 20-and-30-somethings will have a better chance of staying in favor. Online ordering and payments and fast delivery or curbside pickup make it easier for consumers to buy (and be satisfied), while things like personalized discounts or offers based on purchase history will keep brands top of mind.

Those brands with the highest customer satisfaction scores are likely already doing these things well and may not have to fear a millennial shift in purchasing habits this summer. But those with below average satisfaction should take note and bolster efforts to improve the quality of interactions with customers.

The high cost of fuel this summer might not be enough for millennials to cancel their vacations, so something else will have to give. Restaurants and other “comfort” brands that fail to deliver the quality or convenience shoppers need could be the first to go.