Article JSR

Journal of
Services Research
Volume 13 Number 1 April - September 2013
Commitment to service quality in auto-

motive dealerships: results from an Aus-
tralian pilot study
Dr. Kym Fraser

Adjunct Researcher
University of South Australia
Australia
Email: kym.fraser@unisa.edu.au.
Chihiro Watanabe
Professor-Industrial Management,
Tokyo Seitoku University
Japan
Hans-Henrik Hvolby
Professor-Logistics
Aalborg University
Denmark
The Journal of IIMT

Commitment to service quality in auto-
motive dealerships: results from an Aus-
tralian pilot study
Kym Fraser Chihiro Watanabe Hans-Henrik Hvolby
Automotive dealerships play an integral role in the initial and on-going relation-
ship between the purchaser and vehicle manufacturer. Evidence, mostly anec-
dotal, suggests that the buying and servicing experience of the paying public in
regards to automotive dealerships is far from ideal. With continuous improve-
ment systems such as TQM firmly embedded into the supply side of the car indus-
try, questions still exist surrounding the level of service quality being adopted by
car dealerships. The purpose of this paper is to establish if service quality is a
pursued culture within new car dealership operations and determine if key qual-
ity principles such as top management support, customer focus, process manage-
ment, and employee involvement are practised factors. Results indicated a rea-
sonably high level of commitment to service quality within dealerships, including
the factors considered important to the success of quality outcomes. Questions
still remain about quality endorsement, the type of quality systems being used
and the depth of penetration of quality at the ground level.
Introduction
S
ervices and service industries have become key contributors to the
economic wellbeing of many national economies around the world.
This has made many companies concerned about the level of ser-
vice quality being provided to customers (Poujol, 2009; Sabharwal et al.,
2010). It is now recognised that service quality can have a profound effect
on customer satisfaction, therefore driving the need for a dramatic shift
towards customer-focus service (Galetzka et al., 2006; Haverila and Nau-
mann, 2011). This fundamental and strategic shift, provides organisations
with an opportunity to build a competitive advantage.
One of the most important contributions to competitive advantage in
the past decade derives from an organisation’s quality strategy. The find-
ings of a joint study ‘Excellence in Quality Management’ undertaken by
the automotive supply industry in Europe, the USA, Japan and Germany
found that “companies can only be successful in the long term if they place
quality at the core of their corporate philosophy and strategy” (Rommel
et al., 1996). Over a decade later studies are finding that quality improve-
ment can lead to enhanced competitive advantage and improved organi-
Journal of Services Research, Volume 13, Number 1 (April - September 2013)
©2013 by Institute for International Management and Technology. All Rights Reserved.
8 Commitment to Service
zational performance and customer satisfaction (Gill, 2009; Edvardsson

et al., 2010).
The level of service quality demanded by new car owners is continu-
ing to rise, increasing the pressure on manufacturers and dealerships alike
to provide better quality products and services (Hulett, 2008). While the
manufactured quality of cars has greatly improved over the past few dec-
ades (Lin and Lu, 2006; Zadry and Yusof, 2006), the quality provided by
dealerships is still being questioned. Dealerships form an important link
in the value system of the automotive industry, which can be broken down
into four major groups: component suppliers, car manufacturers, dealer-
ship networks and buyers. Dealerships represent the car manufacturers at
the point of sale and act as a means of continuous contact between the car
producers and the customers, long after the customer has taken delivery
of the vehicle.
Evidence, most of which is anecdotal, tends to indicate that there is
reluctance within many new car dealerships to embrace quality princi-
ples, leading to a less than desirable experience for customers buying and
servicing motor vehicles. Joetan and Kleiner (2004) state “Automobile
salespersons have long been viewed by the general public as cunning and
cold”. Sinha (2006) discusses the need for improved quality in an article
titled “Quality needed at more car dealerships”. In a survey by the Harvard
Business School, automotive servicing and repair was found to be among
the most unpleasant experiences faced by American consumers (Andaleeb
and Basu, 1994).
One way for dealerships to improve their level of service and devel-
op a quality culture is to implement a total quality management (TQM)
philosophy throughout their organisations. This proven business strategy
has been successfully employed by many organisations around the world,
thereby not only improving quality of products and services but also re-
ducing business costs. Prajogo (2005) explains that “the emergence of
TQM has been one of the major developments in management practice
in the last two decades”. It is now recognised that firms which foster a
culture of quality service through TQM are more successful than firms
that do not (Kumar et al., 2009). Having said that, Evans and Lindsay
(2002) argue that while “many organisations have integrated quality prin-
ciples so tightly with daily work activities that they no longer view quality

9 Fraser, Watanabe, Hvolby
as something special, many other organisations have barely begun”. It is

also recognised that most of the TQM attention has been directed towards
manufacturing practice with little consideration being given to the service
sector (Khamalah and Lingaraj, 2007; Kumar et al., 2011).
Therefore, the aim of this paper is to empirically investigate if a qual-
ity culture is being developed within the dealership network in South
Australia by firstly; establishing if service quality is a practised manage-
ment philosophy within dealerships, and secondly, testing a number of
key principles of TQM such as: the support and commitment from top
management, customer focus and satisfaction, process management, and
employee involvement.
Importance of industry and consumer concerns
The automotive industry is one of the oldest industries in the world. The
wellbeing of the industry has long been seen as an indicator to the health
of the general economy in many developed countries. It is not just the
manufacturing of cars and car parts but the marketing, selling and after-
sale service have an equally enormous impact on the economy. In 1999,
18 million automobiles were sold in the United States. In the same year,
car manufacturers spent about $8.3 billion in advertising aimed directly at
prospective car buyers (Spaulding and Plank, 2007).
In global terms, the car industry is one of the most globalised indus-
tries in the world, employing upwards of 20 million people and has been
a long-standing driver of economic prosperity (Strategic Direction, 2002).
The European market alone offers about 50 car marques, each with a vary-
ing array of models. The car industry also plays an important and major
role in the Australia economy, contributing an annual turnover of over $88
billion and the employment of over 230,000 Australians (MTAA, 2002).
In 2007, new motor vehicle sales in Australia topped 1 million units for
the first time (ABS, 2009).
The role of the service sector is also paramount in both the econo-
my and automotive dealerships. The service sector dominates the United
States economy in terms of share of the gross domestic product and the
number of jobs generated (Lohr, 2006). In the retail automotive sector,
about 70% of the dealership’s gross profit comes from service, parts and
body operations (Kachadourian, 2005). The role of car dealerships within

the industry cannot be understated. Automobiles move from the manufac-

turer’s assembly line to the consumers’ driveway via new car dealerships.
Therefore, car dealerships play an integral role in the initial and on-going
relationship between the purchaser and vehicle manufacturer.
It is this relationship which has and continues to present challenges
to the expectations of many new vehicle purchasers. Over the years there
have been many anecdotal accounts of perceived poor levels of service
quality within both new and used automotive dealerships. Car salesper-
sons, finance/business managers and service departments have each re-
ceived a disproportional amount of criticism from the buying public when
compared to their other buying experiences. John Golding, a senior execu-
tive of Volvo Cars Norway, stated “believe it or not, customers told us that,
given the choice, they would rather visit a dentist than a car showroom”
(Kramer & Mina, 1996). Dale et al. (2001), in an article titled “Quality
– why do organisations still continue to get it wrong?”, highlight issues
associated with poor quality at a dealership network selling top branded
German cars.
It is established that about one-half of car buyers who leave a dealer-
ship unhappy with their sales experience will not buy the same brand again
(Automotive News, 2003). This reflects the importance of sales and ser-
vice staff within dealerships building successful and lasting relationships
with buyers because customer satisfaction will impact service department
patronage and future sales. Joetan and Kleiner (2004) argue that there is
a negative stereotype in the mind of the public when it comes to the pro-
fessionalism of automotive salespersons. They state that car salespeople
have long been viewed by the general public as cunning and cold. Merrick
(1995) painted an even worst picture by claiming that most people per-
ceive the car salesperson only marginally better than serial killers.
In describing a series of unpleasant experiences while buying a new
car Hulett (2008) made the following comment, “When I got back to my
office with my new car, I had a voice message from the business manager.
He wanted me to come back to the dealership – a 30 minute drive – to fill
out two more forms. After several voice mails, I suggested he fax me the
paperwork. When I received the forms, I realized that I had signed one
of them at the dealership. My confidence in the dealership dropped even
lower”. In another example, Khanfar and Loudon (2008) stated, “Even

though the dealership was a member of the prestigious President’s Club,

unfortunately the personnel reflected a negative image that has become
widespread within the new car industry”. The authors go on to say that a
“lack of understanding of customer wants and desires has cost the automo-
tive business dearly in the poor perceived reputation they currently have”.
An analysis of complaints investigated by the Office of Consumer and
Business Affairs (OCBA) in South Australia for the year 2001/02 showed
that the motor vehicle industry attracted the third highest of investiga-
tions (out of 11 categories) after Residential Building Construction and
General Consumer Products (OCBA, 2002). Complaints investigated by
the OCBA range from the purchase of new and used motor vehicles, au-
tomotive repair and servicing, and spare parts and accessories. Further
analysis of the OCBA data showed that the number one reason (out of
12 categories) for the complaint involved quality, clearly ahead of issues
involving contracts and warranties. Six years on and quality still remains
the number one reason why complaints are investigated followed closely
by scams and schemes.
Therefore, it would seem that issues involving quality and car dealer-
ships still abound. The importance of quality products and quality service
to consumers cannot be overstated. Rommel et al, (1996) state, “even to-
day, customers explicitly reward quality. There is, for example, a close
correlation between the American J.D. Power Index (customer satisfaction
with automobiles) and growth in the sales figures of different makes of
car”. While the quality of manufactured cars has no doubt made major im-
provements over the past few decades there still remains questions marks
over the level of quality being adopted by new vehicle dealerships. To
demonstrate this point it was only relatively recently, 2005, that a car deal-
ership won the prestigious Malcolm Baldrige National Quality Award, the
first dealership in the US to win such an award (Edmund, 2006). Follow-
ing the win, the editor of the American Society for Quality responded by
titling an article “Quality Needed at More Car Dealership” (Sinha, 2006.)
Clearly implementing a quality culture at the dealership level hasn’t
been easy. In a study exploring strategies to improve customer satisfaction
and business performance at Volvo Trucks North America, Edvardsson et
al. (2010) found, that despite agreement among all dealerships regarding
the importance of continually implementing product and service quality

improvements in order to gain higher customer satisfaction, ‘the challenge

had come from implementing it at the dealership level’, and ‘implement-
ing in a consistent manner throughout all the dealerships’.
The McKinsey study ‘Excellence in Quality Management’ on which
the book Quality Pays is based, finds there are still major differences in
practice between quality companies and others (Rommel et al, 1996).
With the majority of car dealerships being SMEs evidence indicates that
the rate of implementation of quality initiatives such as TQM in SMEs is
much lower than larger organisations (Gill, 2009; Fotopoulos and Psomas,
2010). Therefore, it would seem that many automotive dealership opera-
tions still have a way to go on improving their levels of service, via de-
veloping a quality culture through the implementation of an improvement
strategy such as TQM.
Service quality commitment and measurement factors
Many empirical studies have confirmed that organisations that have adopt-
ed a quality-oriented strategy have achieved improved productivity, great-
er customer satisfaction, increased employee morale, improved manage-
ment-labour relations, and higher overall performance (Longenecker and
Scazzero, 2000; Isaksson, 2005; Klefsjo et al., 2008; Sharma and Kodali,
2008; Kumar et al., 2009). A philosophy which has been successful in
achieving these improvements is total quality management (TQM).
TQM represents an integrative approach to pursue customer satisfac-
tion, and has generated a huge amount of interest in many sectors of the
economy such as manufacturing, service, government and education in
many countries around the globe (Chin et al. 2001). Prajogo (2005) added
“the recognition of TQM as a source of competitive advantage has been
widely promoted around the world, especially in Western countries, and
today very few (especially manufacturing) companies can afford to ignore
the term”. Isaksson (2005) defined TQM as, “A constant endeavour to ful-
fil and preferably exceed, customer needs and expectations at the lowest
cost, by continuous improvement work, to which all involved are commit-
ted, focusing on the processes in the organisation”. Antony et al. (2002)
described TQM as an integrative management philosophy aimed at con-
tinuously improving the performance of products, processes and services
to achieve and exceed customer expectations.

While TQM may be view as a dated management philosophy by

many, Conti (2011) argues that if inter- and cross-functional barriers in
organisations can be broken down by managers, specifically top manage-
ment, TQM will continue to make a major contribution to the goals of
the organisation. Conti goes on to say that too often managers succumb
to the ‘menace of functional power’ and ‘ascribe their shortcomings in
implementing TQM to inadequacy of the instrument’. Kumar et al. (2011)
added support to the on-going importance of TQM by stating ‘TQM is a
modern management philosophy and a journey, not a destination’. Gill
(2009) argued that TQM was a strategy towards becoming leading edge
and world class, if only we can see beyond the fad, and the expectation of
quick results. A further endorsement of the benefits associated with TQM
comes from the automotive industry in Japan when number of warranty
claims made on new vehicles are significantly lower than warranty claims
made on car manufacturers in Europe and the US.
In the context of TQM, it is essential that organisations identify the
critical success factors (CSFs), which need to be given special attention
for ensuring the successful implementation and on-going development of
a TQM philosophy. CSFs are those few things that must go well to en-
sure success for a manager or an organisation, and therefore, they repre-
sent those managerial or enterprise areas that must be given special and
continual attention to bring about high performance (Wali et al., 2003).
Van Schalkwyk (1998) found that the underlying key principles of TQM
were customer focus, continuous improvement, management commitment
and leadership, employee empowerment, and process management, and if
implemented well would ensure that companies continued to meet their
customers’ rising needs and expectations. Wali et al. (2003) carried out a
review of critical success factors of TQM in 12 studies between 1974 to
1995. While many factors were discussed, Wali et al. found that the most
popular CSFs identified were employee involvement, top management
leadership and process management. In a more recent study, Lewis et al.
(2006) reviewed 10 studies in an attempt to identify critical success factors
of TQM in small and medium-sized enterprises. The study consolidated
a list of 46 criteria items into 12 factors with customer focus and satisfac-
tion, process management, leadership and management commitment, and
employee involvement ranking the highest.

In a study to determine the impact of TQM and organisational per-

formance, Sohail and Hoong (2003) used a quality management criteria
model with six factors, these being employee empowerment, customer
involvement and satisfaction, process management, top management
commitment, quality measurement and benchmarking, and strategy and
planning. In another review of both academic-based and awards-based (in-
ternational and national quality awards) frameworks, Sharma and Kodali
(2008) found that top management commitment, customer focus/satisfac-
tion, employee involvement, and process management clearly feature at
the top of the list of core elements needed to achieve excellence in TQM.
While only a few studies are discussed above, many researchers have
investigated the principles and critical success factors associated with
TQM (Sila and Ebrahimpour, 2002; Rahman and Sohal, 2002; Tari, 2005;
Karuppusami and Gandhinathan, 2006; Seetharaman et al., 2006; Sharma
and Kodali, 2008; Kumar et al., 2011). At an individual level some stud-
ies have focus purely on a single principle; top management commitment
(Soltani, 2005), customer focus and satisfaction (Edvardsson et al., 2010),
employee involvement (Welikala and Sohal, 2008), and process manage-
ment (Fotopoulos and Psomas, 2010).
In regards to the automotive industry, the literature shows that stud-
ies have been conducted on the quality of car component suppliers and
automotive manufacturers (Shadur et al., 1994; Zeller & Gillis, 1995; Mc-
Dermott, 1996; Kawahara, 1997; Wilson & Collier, 2000; Lin and Lu,
2006; Zadry and Yusof, 2006), but research at the dealership level is very
limited. The few studies found tended to focus on the relationship between
customer and dealership, customer satisfaction and the buying experience
(Bouman and van der Wiele, 1992; Ehinlanwo and Zairi, 1996; Poscino
and Pollice, 2004; Joetan and Kleiner, 2004; Spaulding and Plank, 2007;
Darley et al., 2008).
Clearly from the many studies discussing critical factors associated
with TQM, four factors have been identified as being critical to the ongo-
ing success of TQM. These four key factors are:
• Top management commitment
• Customer focus and satisfaction
• Employee involvement
• Process management
In a project to establish quality as a strategic process at a large UK motor

trade group, Willoughby and Wilson (1997) discuss the need to 1) imple-
ment a formal quality system, 2) hold regular meetings to discuss both
quality issues and system improvements, and 3) ensure the quality system
is maintained and managed by designated personnel, not simply added as
another task to already busy departmental managers. These three condi-
tions, including the four critical success factors listed above, will be tested
in this paper to determine the level of commitment to service quality in
new car dealerships in South Australia.
Methodology
A questionnaire survey was designed to answer two key questions and
associated sub-questions as listed in the findings section. To test the sur-
vey design, a draft copy of the questionnaire was given to two service
managers, a general manager and a dealer principal from four different
dealerships and an interview was held with each participant. The feedback
obtained from this trial was important in ensuring the readability and un-
derstandability of the survey. Also, the likelihood of the questionnaire an-
swering the proposed research questions was maximised (Neuman, 2003).
The target sample for this study was all new car dealerships listed un-
der ‘Motor Cars – New’ within the Adelaide Yellow Pages. The Adelaide
Yellow Pages directory covers the Adelaide metropolitan and surround-
ing areas. Research shows that the Yellow Pages directory is the most
used source of buying information, for people in the Adelaide area when
they are looking for a supplier of goods or services (Sensis, 2008). To
overcome any bias, which may have occurred due to the fact that some
dealerships may choose not to be listed in the telephone directory, the
list of dealerships obtained from the Yellow Pages was checked by mo-
tor industry representatives to ensure that all dealerships within the target
sample had been included.
The target group for this study were Service Managers of new car
dealerships. Service Managers were chosen for two main reasons. Firstly,
due to regular servicing and the manufacturers’ new car warranty, Service
Managers are required to establish long term relationships with new car
buyers and maintain high levels of customer satisfaction over the warranty
period and beyond. Secondly, Service Managers have a central role to play

within car dealerships. The success of a Service department relies on the

sales generated by the New and Used car departments therefore a lot of
time is spent ensuring that this important (internal) customer is satisfied
with the level of service provided. On the other hand, the Service depart-
ment is a major customer for the dealership’s Parts department. Therefore,
at an internal dealership level, most Service departments are both service
providers and customers.
From the original listing of 105 dealerships, 38 listings were found to
be part of either a multi-franchised or multi-location group. Another two
listed dealerships were found to be no longer operating, therefore reduc-
ing the total number of Service Managers, available to be targeted by the
survey, to 65. Each Service Manager of the 65 dealerships was mailed a
questionnaire. Forty-three Service Managers responded to the survey, pro-
viding a response rate of 66 per cent. Data analysis of the responses was
carried out using the statistical package SPSS version 16.0.
Findings and discussion
This section presents the findings of this study in two tables and following
each table is a related discussion. The first table (Table 1: Commitment
to service quality) presents the results of a series of questions associated
with three areas within dealerships: quality systems, quality meetings, and
systems management. The second table (Table 2: Commitment to quality
principles) presents the outcomes of the four quality success factors tested:
top management commitment, customer focus and satisfaction, employee
involvement, and process management.
Table 1: Commitment to service quality
Quality systems in dealerships Percentage
Dealerships which are quality endorsed/quality assured companies 60
Dealerships which have a quality system/s in place. 69
Service departments which have a quality system in place. 86
Parts departments which have a quality system in place. 62
Dealerships which are either quality endorsed and/or the Service/Parts departments
93
have a quality system in place.
Of the dealerships with a quality system/s in place, how many are using ISO
45
9002*.
Of the dealerships with a quality system/s in place, how many are using either
66
RAA** Approved or MTA*** Approved.

Of the dealerships with a quality system/s in place, how many are the franchisor
62
requirements.
Of the dealerships with a quality system/s in place, how many are using either ISO
90
9002 or the franchisors**** requirements.
Dealerships which are required by the manufacturer to be quality endorsed to
21
ISO 9002.
Quality meetings in dealerships
Dealerships which conducted either ‘weekly’ or ‘monthly’ meeting concerning
78
quality issues.
Service Managers which discuss quality issues with staff on either a ‘weekly’ or
86
‘monthly’ basis.
Dealerships which conducted meeting concerning quality issues on a 6 monthly
22
or longer period.
Service Managers which discuss quality issues with staff on a 6 monthly or longer
14
period.
Systems management
Dealerships which have a designated person whose duties include maintaining
74
and managing the quality system.
Service departments whose staff are aware of the quality system and the areas
100
which relate to them.
As discussed in the literature review, TQM assumes that quality is the
outcome of all activities that take place within an organisation. Accord-
ingly, all functions and all employees have to participate in the improve-
ment process and, to ensure this; organisations need both quality systems
and a quality culture (Wilkinson & Willmott, 1995). From this important
viewpoint the following discussion will focus on quality systems in deal-
erships.
In regards to the spread of quality systems in dealerships, the survey
identified that Service departments have the highest percentage of quality
systems in place (86 per cent). This compares with 62 per cent of Parts de-
partments and the 69 per cent of dealerships with a company-wide quality
system (see Table 1). One reason which may have influenced the findings
above is that the questionnaire was answered by Service Managers who,
logically, would have a better understanding of their own departments and
therefore are likely to feel more confident answering questions about is-
sues which are under their direct control. Of the six Service departments
without a quality system in place, it was found that five of these were in
the group of dealerships with the smallest number of employees, 1-20.
The survey also found that many companies have quality systems in
place but are not a quality endorsed/quality assured company. Nearly one-
third of dealerships which indicated that they have a quality system in

at least one department were not quality endorsed or quality assured.
This issue also showed up at the beginning of questionnaire when par-
ticipants were asked to indicate if the dealership was a quality endorsed/
quality assured company. Of the 19 (44 per cent) respondents who either
indicated that the dealership was not quality endorsed (16) or gave a
non-response (3), five (26 per cent) of these went on to give details about
their quality systems.
These figures raise some issues in regards to the actual level of qual-
ity systems within dealerships and the linkage between quality systems
and quality endorsement. Of the 43 dealerships that returned the survey,
only three (7 per cent) indicated that the dealership was not quality en-
dorsed and neither the service nor the parts department had a quality sys-
tem in place. Interestingly, two Service Managers (5 per cent) indicated
that the dealership was quality endorsed but neither the service nor parts
departments had a quality system in place.
It must therefore be noted that some confusion may surround the
meaning of the question asking whether the dealership is a quality en-
dorsed or quality assured company. It is accepted that some companies
may demonstrate a high level of quality in the products and/or services
that they provide without having the certified ‘5 ticks quality endorsed’
sticker on the window, or any type of endorsement (RAA Approved,
MTA Approved, etc). This in some ways is borne out by the fact that
six Service Managers (14 per cent) indicated that their dealership was
not quality endorsed but that both the Service and Parts departments
had quality systems in place, and why others choose to indicate that the
dealership was not quality endorsed but carried on to answer questions
within the section. This highlights the fact that some companies may in
fact practice a quality philosophy or have a quality system in place, but
not be a quality ‘certified’ company. As identified in a study on busi-
ness performance, ISO 9000-certified companies did not perform sig-
nificantly better than the companies that were not certified (Terziovski et
al, 1999). Therefore, using quality endorsement as a measure to a firm’s
commitment to quality must be viewed with caution.

The literature indicates the ISO 9000 can help in a company’s devel-
opment towards TQM. The study found that less than half (45 per cent)
of the dealerships with a quality system had ISO 9002. Some question
must be asked about the quality value of endorsements such as RAA Ap-
proved and MTA Approved. ISO 9002 is an internationally recognised
system while RAA Approved and MTA Approved are not systems as
such but certification that a minimum standard has been achieved.
Another point of interest with regards to the use of ISO 9000 was
to test if manufacturers required their dealerships to be quality assured
to this standard. The literature demonstrated the pressure being applied
to components suppliers from manufacturers (‘backward looking’) to
improve their standard of quality, but this study found that there does
not seem to be the same ‘forward looking’ pressure on dealerships. The
results of this study indicated that only 21 per cent of dealerships were
required to be quality endorsed to ISO 9002.
The use of quality systems as criteria to evaluate the level of com-
mitment to quality in dealerships was done for two main reasons. Qual-
ity systems are identifiable and have close links with the development
of TQM within an organisation. As discussed in the literature, it is not
easy to measure how successful an organisation’s quality management
is, therefore the focus is on whether an organisation has achieved some
form of certification such as ISO 9000 (Noronha, 2002).
It would be true to say that most of the dealerships surveyed in this
study displayed quality endorsed/quality assured signs on or around
their dealerships. The real challenge for new car dealerships is not to say
they are a quality organisation, but to demonstrate quality in the goods
and services they provide. IBM’s CEO John Akers has expressed it well:
“I am sick and tired of visiting plants to hear nothing but great things
about quality and cycle time – and then to visit customers who tell me of
problems. We hear lots of talk about quality, but as long as customers are
still complaining, we haven’t reached our goal” (Jablonski, 1992). The
following section will discuss dealerships commitment to four important
quality principles.

Table 2: Commitment to Quality Principles

Top management commitment Percentage
Dealerships in which the Dealer Principal or General Manager personally
71
addresses meetings on quality issues either ‘every time’ or ‘most times’.
Dealerships in which the Dealer Principal or General Manager personally
29
addresses meetings on quality issues either ‘sometimes’ or ‘rarely’.
Dealerships whose ‘top management’ conducts either ‘weekly’ or ‘monthly’
78
meeting concerning quality issues.
Dealerships whose Dealer Principal or General Manager is considered to be the
71
driving force behind quality within the dealership.
Service Managers that support a quality culture within the dealership by
86
discussing quality issues with staff on either a ‘weekly’ or ‘monthly’ basis.
Dealerships whose ‘top management’ supports the quality process by having a
74
designated person to maintain and manage the quality system.
Customer focus and satisfaction
Service Managers who believe quality systems helps improve the Customer
98
Satisfaction Index (CSI) rating of the dealership.
Service Managers who believe a quality system helps reduce customer
98
complaints.
Service Managers who believe a quality system improves the standard of
95
servicing and customer satisfaction within the Service department.
Service Managers who believe that a quality system is not more relevant to
the New and Used car departments than the fixed operations (Service and Parts 93
departments).
Employee involvement
Service departments whose staff are aware of the quality system and the areas
100
which relate to them.
Dealerships which conducted either ‘weekly’ or ‘monthly’ meeting concerning
78
quality issues.
Service Managers which discuss quality issues with staff on either a ‘weekly’
86
or ‘monthly’ basis.
Process management
Dealerships which have a designated person whose duties include maintaining
74
and managing the quality system.
Top Management Commitment
The study examined the regularity with which the senior management
conducts meetings regarding quality and the role played by Principals/
General Managers at those meetings. The study then explored the percep-
tion within dealerships with regard to Dealer Principals/General Managers
providing leadership, and lastly, the support senior management provides
for maintaining and controlling the system within the dealership. In ref-

erence to the meaning of ‘top management’, both Service Managers and

Dealer Principals/General Managers are included in this heading.
Fox (1991) states that, “ the most common observation expressed by
people at all levels in a company which embarks upon the TQM process
is: ‘I will believe the company is serious about quality when “they” pro-
vide some evidence that “they” are prepared to apply the TQM concepts’.
‘They’ can be anyone from a first-line supervisor to the board of direc-
tors”. Adding support Soltani (2005) also raised questions about top man-
agement commitment to TQM.
From this viewpoint, the study found that ‘top management’ held
meetings concerning quality either ‘weekly’ or ‘monthly’, 78 per cent of
the time, with ‘monthly’ the most popular at 57 per cent. To determine
if Dealer Principals or General Managers attended such quality meetings
and whether their attendance was more than a symbolic gesture, the study
found that 71 per cent of Dealer Principals/General Managers did in fact
attend and address quality meetings either ‘every time’ or ‘most times’
(see Table 2).
To determine if quality information flowed on to the lower level of car
dealership, the study found that 86 per cent of Service Managers discuss
quality related issues with the staff they manage either on a ‘weekly’ or
‘monthly’ basis, with ‘monthly’ being the most popular time period at 51
per cent.
Another measure used to determine the commitment of ‘top manage-
ment’ to quality, was to test the perception within dealerships of the Deal-
er Principals/General Mangers attitude towards building a quality philoso-
phy. The study found that 71 per cent of respondents believed that the
dealership’s most senior manager was considered to be the driving force
behind developing a quality culture within car dealerships.
To complete the evaluation of whether a quality philosophy is sup-
ported by ‘top management’ in dealerships, a question about the alloca-
tion of resources was asked in relation to supporting the quality system.
The study found that 74 per cent of dealerships have a designated person
whose duties included maintaining and managing the dealerships quality
system/s. The question is important in that it is an indication of how seri-
ous senior management are about quality within the dealership. If ‘top
management’ feel quality is important enough to incur the costs of having

a designated person to maintain and manage the system, it is therefore say-

ing that they are serious about the process and the benefits it can provide.
Customer focus and satisfaction
Many new car dealerships are placing increasing importance on Customer
Satisfaction Index (CSI) ratings (Lovelock, 1992). CSI ratings are deter-
mined from the results of surveys sent from the vehicle manufacturer to the
new car owner. Most manufacturers send out two surveys, one four weeks
after the date of delivery, and another one between nine to 15 months after
date of purchase (or after at least one service has been performed). This
allows the manufacturer to produce a customer satisfaction rating for each
dealership within its network in regards to the customers purchasing ex-
perience and after-sales service. Dealerships gain prestige from winning
CSI awards and receive financial benefits from manufactures (increased
warranty labour rates).
In regards to the issue of improving the dealerships CSI ratings and
quality systems, the study found that 98 per cent of Service Managers be-
lieved a quality system improved the CSI rating of the dealership.
The literature review identified that the average company loses as
many as 35 per cent of its customers each year, of which about two-
thirds are lost because of poor customer service. Profits can be greatly
improved if only a small percentage of these customers can be retained by
the company (Evans & Lindsay, 2002). Also identified was the fact that
most dissatisfied customers did not complain (Sabharwal et al., 2010).
Customer retention is a key factor for competitive success and is closely
tied to quality and customer satisfaction (Evans & Lindsay, 1999). In an
effort to establish if there was an understanding of the importance within
new car dealerships of the link between customer satisfaction, customer
complaints and quality systems, the study found the following. In regards
to customer complaints, 98 per cent of Service Managers believed that a
quality system helped to reduce customer complaints. When asked about
customer satisfaction, 95 per cent of Service Managers believed that a
quality system improved the standard of servicing and customer satisfac-
tion within the Service department.
In an effort to determine if Service Managers believe in a ‘total’ qual-
ity philosophy for dealerships, the question was asked if they believed a

quality system would be more relevant to the ‘front-end’ (New & Used
car departments) of a dealership than the ‘back-end’ (Service and Parts
departments). The study found 93 per cent of Service Managers indicated
that quality systems were not more relevant for one department compared
to another, therefore adding support to the results above and also showing
that Service Managers believe in the concept of quality being throughout
the whole dealership, a ‘total’ quality philosophy.
Employee Involvement
The importance of employee involvement to a total quality philosophy
is highlighted within the literature review. In regards to TQM, employee
involvement helps people understand quality principles and instils these
principles into the corporate culture (Evans & Lindsay, 1999). In TQM,
quality is everyone’s responsibility, and at a number of successful TQM
firms, quality information is communicated directly to employees during
monthly meetings. George and Weimerskirch (1994) go on to explain that
more frequent informal communication helps assure managers that eve-
ryone in the system is aware and involved. At the core of TQM also lies
the idea that all individuals play a substantial role in quality improvement
(Kelemen, 2003). This study examines three measures in relation to em-
ployee involvement within car dealerships.
To determine the level of employee awareness to quality issues within
the Service department, the study found that the entire staff (100 per cent)
was aware of the quality system and the areas which relate to them. In re-
gards to the regularity with which Service Managers have discussions with
Service department staff on quality issues, the study found that 86 per cent
of Service Managers have informal communication with staff on either a
‘weekly’ or ‘monthly’ basis. At a higher level within dealerships, manage-
ment meetings about quality were held either ‘weekly’ or ‘monthly’ in 78
per cent of dealerships.
Process management
Process management is identified as being another critical factor of TQM
(Sila & Ebrahimpour, 2002). Process management involves planning and
administering the activities necessary to achieve a high level of perfor-
mance in a process, and identifying opportunities for improving quality
and operational performance, and ultimately, customer satisfaction. In-

cluded also is the continuing process of evaluating process performance

and taking corrective action when necessary (Evans & Lindsay, 1999).
Carefully examining processes shows how much easier work can be,
which includes breaking down barriers between departments, and between
people, so they can work together more effectively. Once work on a pro-
cess is undertaken and the best way to do it decided, the new way must be
documented and become standard practice. Fox (1991) discusses the need
for most companies to appoint a co-ordinator or facilitator to administer
and control the TQM process and systems. The study found that 74 per
cent of dealerships had a facilitator to manage and control the various
process issues discussed above.
Conclusions
This study set out to determine 1), the level of commitment to service
quality and, 2), if TQM was a practised management philosophy within
new car dealerships. The anecdotal evidence paints a picture that many
dealerships still have a considerable way to go till consumers get a consist-
ent and enjoyable experience when conducting business with dealerships.
From a single state in Australia this study found that the level of com-
mitment to service quality in new car dealerships was reasonably high.
Questions still surround issues such as quality endorsement and the type
of quality systems being adopted by dealerships. The four critical suc-
cess factors used to evaluate TQM were found to be well supported in the
majority of dealerships. It was found that smaller dealership (1-20 em-
ployees) tended to have minimal to no quality systems in place. From an
overall dealerships perspective, this study indicates that automotive deal-
erships have a high level of commitment to quality and TQM.
While the findings of this study were encouraging, it would seem that
a reasonable level of negativity still persists (albeit anecdotal) about the
buying experience of new car purchasers. Clearly senior management of
dealerships need to ensure that service quality is integrated into all deal-
ership procedures and ingrained into all levels of the organisation. With
higher than normal turnover rates experienced by dealership, senior man-
agers must endeavour to develop policies which instil the quality mes-
sage on a day-to-day basis. To achieve these outcome dealerships will
be required to employ personnel dedicated to the enhancement of quality
throughout the dealership.

Further research is needed to determine the ‘quality’ of the quality

systems being used in dealerships, and the depth in which quality and
TQM is emerged and ingrained into the various levels of dealership life
and culture. While this study targeted Service Managers, future research
could focus on sales personnel and sale departments to enhance under-
standing of dealerships commitment to quality and quality systems. Fi-
nally, research should be conducted to determine the perspective of the
new car buyers in an effort to balance and validate the likely bias findings
achieved from dealerships.
END NOTES
* ISO 9002
The International Standards Organisation (ISO) 9000 Series is an internationally recognised
standard for quality management. It is essentially aimed at improving the quality management
system of an organisation and the internal auditing requirements are a foundation for continu-
ous process improvement. Independent external audits are also carried out to ensure quality
standards are maintained and for quality assurance purposes (Evans & Lindsay, 1999).
** RAA Approved
The Royal Automobile Association (RAA) Approved involves compliance with a set of
standards and a code of practice, covering equipment levels, equipment standards, employee
qualifications, service facilities, staff levels, etc. Certification requires a customer survey to
be undertaken to determine quality of service, and external audits of premises be conducted 6
monthly (Information faxed: 9 April 2010, ‘Requirements for RAA Approved’, RAA).
*** MTA Approved
The Motor Trades Association (MTA) Approved is granted through membership of the as-
sociation and compliance with a set of standards. Certification is obtained through an industry
peer review process, and once certification is granted, external audits are conducted only to
resolve disputes (Personal conversation: 8 April, 2010).
***** Franchisor requirement
Franchisor requirement involves the policies and procedures, supplied by the vehicle manu-
facturer, which dealerships must follow and carry out to maintain the franchisee licence.
These policies and procedures include areas such as new car warranty and vehicle servicing.
Further research would be necessary to identify the quality management arrangements for
dealerships that the manufacturers’ require.
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Prof. Kym Fraser, Adjunct Researcher, University of South Australia,
Australia. Email: kym.fraser@unisa.edu.au.
Prof. Chihiro Watanabe, Professor-Industrial Management, Tokyo
Seitoku University, Japan.
Prof. Hans-Henrik Hvolby, Professor-Logistics, Aalborg University,
Denmark.

RNI NO. : HARENG/2001/4615 ISSN NO. : 0972-4702
Institute for International Management and Technology

336, Udyog Vihar, Phase-IV, Gurgaon-122 001, Haryana (India)
Phone: (0124) - 4787111 Fax: (0124) - 2397288
E-mail: jsr@iimtobu.ac.in

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Journal of

Commitment to service quality in auto-

Dr. Kym Fraser

The Journal of IIMT

zational performance and customer satisfaction (Gill, 2009; Edvardsson

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

as something special, many other organisations have barely begun”. It is

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

the industry cannot be understated. Automobiles move from the manufac-

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

though the dealership was a member of the prestigious President’s Club,

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

improvements in order to gain higher customer satisfaction, ‘the challenge

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

While TQM may be view as a dated management philosophy by

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

In a study to determine the impact of TQM and organisational per-

In a project to establish quality as a strategic process at a large UK motor

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

within car dealerships. The success of a Service department relies on the

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

third of dealerships which indicated that they have a quality system in

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

Table 2: Commitment to Quality Principles

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

erence to the meaning of ‘top management’, both Service Managers and

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

a designated person to maintain and manage the system, it is therefore say-

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

cluded also is the continuing process of evaluating process performance

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

Further research is needed to determine the ‘quality’ of the quality

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

Neuman, W. (2003) Social Research Methods: Qualitative and quantitative approaches,

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

Journal of Services Research, Volume 13, Number 1 (April - September 2013)

Institute for International Management and Technology

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