Automotive Research Digest
January 8 2004
It's been a busy time for automotive research announcements. This afternoon DRNO provides summaries of four recent stories covering customer loyalty and retention, hybrid and diesel development and the Harris Interactive(r) Automotive Panel.
Ford and GM Winners in Customer Loyalty
Michigan-based R. L. Polk & Co., specialists in tracking consumer loyalty among owners of new vehicles, recently presented the eighth annual Polk Automotive Loyalty Awards at the 2004 North American International Auto Show.
The Awards recognize manufacturers for superior owner loyalty performance. A household purchasing or leasing a new vehicle of the same model or make as one it already owns (and bought new) is said to be 'loyal'.
Awards for the year ending September 30, 2003 went to BMW of North America, DaimlerChrysler, Ford Motor Co., General Motors, Subaru of America and Volkswagen of America. General Motors won in the Overall Manufacturer loyalty category for the fourth consecutive year. Ford Division won in the Overall Make loyalty category for the eighth straight year. In addition, four of Ford Division's models won in the segment-level categories and five vehicles from Ford's sister divisions, Mercury and Lincoln, also won segment-level awards.
Overall make and model level loyalty rates increased by about one percentage point in 2003, while manufacturer loyalty increased by a half-percentage point, Polk reported.
'In a time of intense competition within the automotive industry, manufacturers are doing a good job of retaining their current customer base, which significantly contributes to their bottom line', according to Stephen R. Polk, president and CEO. Polk points out a particularly successful year for Ford: 'New vehicle designs and improvements for the Expedition, Grand Marquis, Town Car and Navigator, as well as solid incentives on all winning Ford Motor Company vehicles helped secure this strong presence'.
There is fierce competition at the top of individual categories, with relatively few repeat winners this year but several previous winners returning to the number 1 spot (these are the Mercury Grand Marquis, Lincoln Town Car, BMW 7 Series, and the Subaru Forester).
Two new segment categories, Prestige Sports Car and Prestige SUV, have been added this year. These were won by the completely redesigned Dodge Viper, and the Lincoln Navigator, respectively.
Polk has operations in Australia, Brazil, Canada, China, France, Germany, Italy, Japan, Mexico, the Netherlands, Spain, the United Kingdom and the United States. The Polk Manufacturer Loyalty Excelerator Report, which is the basis for the rankings and awards, was introduced to the automotive industry in 1995 - more details are available from
www.polk.com/loyalty .
Range of Vehicles crucial to Customer Retention
Manufacturers with a small range of vehicles lose out in the customer loyalty stakes according to a recent study by J.D. Power and Associates, which finds that one of the top reasons for moving to another maker ('nameplate') is that the maker doesn't offer the type of vehicle they were looking for. If customers can't upgrade within a maker's range, they will often go elsewhere.
The 2003 Customer Retention Study
SM gives Chevrolet the highest customer retention rate in the industry, retaining 60.8 percent of its owners - some of its models achieve 70% plus (74.5% of Avalanche owners purchase another Chevrolet model, 73.8% of TrailBlazer owners and 70.1% of Impala owners). This compares with an industry average of c. one half. Chevrolet is followed in the ranking by Toyota (59.3%), Mercedes-Benz (58.7%), Ford (58.1%) and Honda (57.1%). Isuzu trails the industry, retaining only 3.5% of its customers.
Joe Ivers, partner at J.D. Power and Associates, explains that 'Chevrolet is an example of a broad product line that offers customers many options to fit their needs. While manufacturers tend not to expect each of their brands to retain customers 'for life', many have realigned themselves through mergers and acquisitions to accumulate a portfolio of brands that give customers a place to move up as they age and become more affluent'.
Ivers says that while it's possible to a great degree to predict customer retention rates based on sales and service experiences and the vehicle's quality, durability and appeal, 'a large portion of vehicle owners are up for grabs. Being able to identify defectors, both within the brand and those of the competition, can help a brand to develop and implement remedies'.
The 2003 Customer Retention Study is based on responses from 177,000 new-vehicle buyers, out of which 106,418 replaced a previous vehicle that was originally purchased new.
European Hybrids Trailing due to Concentration on Diesel
European automakers have started talking more about hybrid electric vehicles, but their programs trail those from the rest of the world by several years, according to claims by technology research firm ABI. Japanese hybrids are way ahead of European and ahead of American, with Toyota's Prius and Honda's Insight and Civic Hybrid leading the way.
The price of fuel is a major factor in this - fuel is much cheaper in the US. Diesel engines offering greater economy are therefore more popular in Europe, even when performance is compromised, and sales of diesels in some European nations have actually exceeded 50% of new cars. ABI point out that hybrids have the potential to boost performance and economy at the same time.
'Over the course of the last 15 years, European automakers have been preoccupied with improving their diesel technology', says ABI analyst Dan Benjamin. 'Modern diesel engines sold in Europe are better than they ever were. This development effort that has created such great diesels may not have left enough resources to seriously investigate hybrids. By comparison, GM, Ford, and Chrysler are still selling pushrod-based gasoline engines in the US, whose ancestry dates back 25 years. The Big 3 have not had similar breakthroughs in engine R&D as the Europeans, yet hold only a moderate lead over the Europeans in hybrid development. Unfortunately, all trail Toyota and Honda by a great margin'.
According to the findings of ABI's hybrid electric vehicle study, the global hybrid vehicle market will remain very small through the end of this decade, with fewer than 500,000 vehicles produced in 2007, although it could reach 1 million units by 2010. The current generation of hybrids may not sell in large quantities, but makers who fall behind in developing the technology may miss out in the long run.
More information about NY-based ABI and the report, 'Hybrid Electric Vehicles: Global Market Assessment, Key Technologies, and Forecasts' can be found at
www.abiresearch.com Harris Interactive(r) Automotive Panel
Harris Interactive(r) has announced that it has developed the world's largest consumer panel to be used exclusively for automotive market research, the Automotive Insights Panel, consisting of respondents identified from among its multi-million-member panel of online survey respondents. Through it the company will offer enhanced, Internet-based MR capabilities for vehicle manufacturers and Tier 1-2-3 suppliers.
Harris Interactive's Automotive & Transportation Research capabilities include:
- Migration of Paper and Phone Based Research to Online Methodologies
- Customer Satisfaction, Retention & Loyalty Testing
- Virtual, Online Consumer Clinics
- Interior & Exterior Product Appearance Testing
- Product Feature/Price Testing
- Brand Awareness
- Consumer Tracking Studies
- Product Image Testing
- Prototype/Concept Testing
- Copy & Advertising Testing
In addition Scott D. Upham, previously of J.D. Power and Associates, has been appointed as a Senior VP with responsibility for directing automotive research efforts for the company (see separate story).
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.
