Mercedes continues to top a closely watched rating of customer satisfaction with their cars. No surprise there. But some other luxury brands have fallen to the bottom of the rankings, including Acura, BMW, Audi and Cadillac.
Overall, the American Customer Satisfaction Index declined for a second straight year. Satisfaction scores rose to historic high following the Great Recession, as the Detroit Three automakers -- General Motors (GM), Ford (F) and Chrysler -- used big price incentives to lure in customers. The government was also providing tax incentives. Sales boomed, and buyers were happy with the cars and trucks they bought, believing that they got good value on their purchase.
However, over the past few years, automakers have reduced the number and size of buyer incentives. "Much of customer satisfaction is driven by price incentives, and as those have gone away, satisfaction has diminished," said Forrest Morgeson, director of research for the index.
Reputations of Imported Cars Decline More
The score for 16 of the 21 brands measured declined, with imports from Europe and Asia taking the biggest hit. "That's a win for the domestic automakers," said Morgeson, "just to close that gap a little bit." The only brands with higher scores compared to last year are Chevrolet and Buick.
At the top of the rankings, Mercedes-Benz fell 2 percent from a year ago, with a score of 86 (on a 100-point scale). Subaru received the second-highest rating, followed by Lexus, Volkswagen, Toyota (TM) and Honda (HMC). Buick was tied with Toyota and Honda, making it the only domestic brand to beat the industry average of 82.
It's unusual to see luxury brands falling to the bottom of the ratings, and Morgeson said it's "not a good sign for their future success, if that holds." Historically, foreign and luxury brands have dominated the ACSI rankings.
BMW fell only 2 points from last year, "but still, you'd expect a luxury brand to be closer to Mercedes than to Chrysler," according to Morgeson. Not surprisingly, consumers expect more for their money when they pay a premium price.
Acura fell 7 points, falling into last place in the rankings with a score of just 77. Researchers point out that this is only the second year Acura has been included in the rankings, so it's numbers could fluctuate.
"As products across the board become better and better, consumers expect quality to be better," said Morgeson. "Manufacturers have in essence set a higher bar."
Impact of Vehicle Recalls
Another factor that has hurt the satisfaction scores is the record number of vehicle recalls over the past year. The ACSI ratings cover vehicles sold in the past three years, and although most of the biggest recalls cover autos the predate that, the publicity surrounding the recalls has had an impact. "If you haven't been living in a cave, it can't help but tarnish the broader image of General Motors and others," according to Morgeson.
Auto sales have been very strong throughout this year, running an annual rate of about 16 million. If that continues, we're likely to see a flood of used cars hit the market, giving buyers more alternatives and making it harder for the automakers to live up to customer expectations, which are closely tied to price.
Morgeson says the two-year decline in overall customer satisfaction is not enough to signal any long term trend, but it is a warning that automakers need to take seriously. He says they can't afford to lose satisfaction to rival brands.
8 Reasons You'll Overpay on Your Next Car
Customer Satisfaction with New Luxury Cars Hits the Skids
When you get into that back office and start signing all the paperwork, the topic of extended warranties will come up pretty quickly. Ellie Kay, an author of 15 finance-related books, notes that such warranties are negotiable.
"Before you sign on the dotted line, check out other sources of extended warranty pricing," she says, such as those provided by your bank or insurance company. "Then either use this lower price in the financial and insurance office for negotiation to get them to match the price, or buy it from the other source."
A scenario from Kay during her last car purchase: "The dealer quoted me $4,200 for a three-year extended warranty for my 280SLK Roadster Mercedes that included a $250 deductible. USAA -- my insurance company -- gave me a three-year warranty for $3,200 with zero deductible. I've used the new warranty once already. The bill was $1,100 and I paid nothing because of the zero deductible."
Bottom line: The default extended warranty is almost always the worst deal.
You may have a monthly payment figure in your head when shopping for a new car, but your interests are better served when you focus on the out-the-door price instead.
"A sales rep can often trick you by offering a lower monthly payment, but [one that] will stretch out the terms of the loan," says David Bakke, a car buying expert at MoneyCrashers.com.
You can reduce the overall cost of the car via negotiation and by skipping accessories and add-ons. "Things like navigation systems, rims, floor mats or car audio/entertainment systems can be purchased from a third party vendor, usually for less."
All our experts agree: Don't even mention your preferred or maximum monthly payment price.
If you decide to trade in your current vehicle for another, Kay says to negotiate this apart from the price of the new car and only after you've negotiated everything else. You can learn the full value of your car by going to Edmunds.com or kbb.com. Once you know what the car is worth, don't settle for anything less. Kay also advises you to seriously consider selling your old car yourself, and applying what you get toward the principle of your loan.
It may be tempting to just head to one local dealership, take a test drive or two, and walk out the door with a new car, but you'll save yourself a lot more money by doing a little pre-shopping research.
"Once you have your choices narrowed down to a few makes or models, contact the Internet sales manager of a few dealerships," suggests Bakke. "These folks can often offer better pricing than what you'd find dealing with an on-site sales person. Plus, you save time."
In addition to, or in lieu of, e-shopping, Joshua Duvall of Capital Financial Services says to "find a few vehicles from different manufacturers and pit them against one another." He explains that the car buying market is based on quantity and the fact that dealers want to move cars. "Force them to compete for your business."
"Dealerships often employ hard-sell tactics that can be overwhelming for a first-time buyer, so it is a good idea to go with someone who has been through the process before," explains John Ganotis, founder of CreditCardInsider.com.
Granotis also says that if you're buying a used vehicle, it's wise bring along a friend who knows his or her stuff when it comes to car health. For example, a mechanic who can peek under the hood, or recognize if something subtle is wrong during the test drive, would be especially handy.
You've likely heard it before, but we have to repeat this fact: Buying a used car is almost always a better value compared to buying new. If you like a particular model, buy the same car, but a year or several years older. Unless there have been major body changes, you'll hardly be able to tell the difference.
OK, so sometimes ol' Sally breaks down, and you need to get a new set of wheels, stat. If you don't fall into that category, though, our experts recommend choosing your purchase date strategically, such as during a major sale. Better yet, wait for theend of a promotion.
Dealership salespeople often receive a bonus if they meet their targets during a promotion. Even if they lose money on a vehicle at the end of a promotion, they typically make up for the loss with their promotion target bonus.
Erin Konrad of CouponPal suggests buying near the end of the month. This is when salespeople are trying to meet monthly quotas and are more likely to negotiate.
Be familiar with common strategies employed by dealerships and sellers. For example, MSN Money warns against the "four-square" trick. (I've had this one used on me.) In this trick, the salesperson draws four boxes with a number in each: your old car's trade-in value, the new car's price, the down payment, and your monthly payment. "From there, the salesperson begins crunching numbers -- most likely making it too hard for you to follow," writes MSN. He or she will shift your focus to the monthly payment, which can result in a longer loan and a higher interest rate.
Another common trick is to heighten your sense of urgency, says Business Insider via Gregg Fidan, founder of RealCarTips.com and the author of "Honest Guide to Buying a Car." For example, the dealer may tell you "that color is not available; there's only three left statewide; the price is good only for today; someone else is interested in the car, better decide quickly, etc." In this case, be patient and courteous, but remain level-headed and never rush to buy. Study up on Fidan's list of 112 car-buying scams.
To sum up the list: Don't let yourself get too caught up in the excitement of shiny metal, and remember that in six months that "new car excitement" will have faded, and you'll be due for an oil change.