Influential analytics firm J. D. Power recently released the 2015 edition of its Customer Service Index Study, and it was a mixed bag for the Detroit automakers.
General Motors (NYSE:GM) showed strong progress, with all four of its brands ranking above average. (In fact, GM's Buick brand topped the non-luxury segment rankings.) Ford's (NYSE:F) results were more uneven: Lincoln did well among luxury brands, the Ford brand less so among its mainstream rivals.
But the results for Fiat Chrysler (NYSE:FCAU) were unequivocal: Its five mainstream U.S. brands were the bottom five in the rankings.
Ouch. Is this a sign of bigger problems at FCA?
Bottom-of-the-list results for FCA, once again
Unlike some of J. D. Power's well-known studies, which measure the quality of the vehicles made by an automaker, this one is about satisfaction with dealers -- specifically, dealer service departments.
J. D Power said the study measures "customer satisfaction with service at a franchised dealer facility for maintenance or repair work among owners and lessees of 1- to 5-year-old vehicles."
This is a tricky area for automakers. Dealers are independent businesses, but as owners of franchises granted by the automakers, they have an interest in doing things the automakers want -- at least, up to a point.
The automakers (and to be fair, many dealers) want happy customers who keep coming back. The lesson here is that whatever GM and its dealers are doing is working pretty well, and whatever FCA is doing is not.
For FCA investors, it may be time to worry
The case for FCA as an investment goes roughly like this: The company's ambitious five-year plan, announced last year, aims to dramatically increase profits and sales with new products and new markets. If it works, FCA's stock should rise significantly -- and there is cause to believe it will work, because CEO Sergio Marchionne's track record over the last five years has been pretty good.
But here's the thing: The plan has a lot of moving parts. It requires a lot of investment and a lot of work around the world, including a slew of new Jeep dealers in China, $2 billion in new products for Alfa Romeo, new Maseratis and Dodges, hybrid Chrysler minivans, and on and on.
All of this work is happening, and so far it seems to be more or less on schedule. Meanwhile, though, there are increasing signs (including these latest study results) that FCA is neglecting some of the basics.
Just a few weeks ago, another J. D. Power study -- the Vehicle Dependability Study that measures problems with cars after three years -- also rated FCA's U.S. brands well below average. (Only the Ram truck brand came in above average.) And Consumer Reports' latest auto-brand ratings also put FCA's brands at or near the bottom of the charts.
Is FCA trying to change too much too quickly?
The question FCA investors should be asking is this: Is the company spread too thin right now?
While it's crucial for FCA to build those new dealerships and roll out all of those new models, it's also crucial that the company and its dealers deliver an experience that will make new customers happy.
Simply put: If all the new customers FCA is working hard to win don't say good things about the automaker's products, if they don't come back after a few years to buy another vehicle, then FCA's boom is going to be short-lived. Stay tuned.