Tag Archive | "J.D. Power and Associates"

Embracing Tech Results in Higher Customer Satisfaction, J.D. Power Finds

WESTLAKE VILLAGE, Calif. — Dealerships that use technology like tablets and computer displays during the sales process can substantially improve customer satisfaction among new-vehicle buyers, according to the J.D. Power 2015 U.S. Sales Satisfaction Index (SSI) Study.

Released on Thursday, the study measures satisfaction with the sales experience among new-vehicle buyers and rejecters — those who shop a dealership and purchase elsewhere. Buyer satisfaction is based on four factors: working out the deal (17%); salesperson (13%); delivery process (11%); and facility (10%). Rejecter satisfaction is based on five factors: salesperson (21%); fairness of price (8%); experience negotiating (8%); facility (7%); and variety of inventory (7%). Satisfaction is calculated on a 1,000-point scale.

In the study’s 29th year, overall sales satisfaction improved to 688 in 2015, up slightly from 686 in 2014. It concluded that dealerships that integrate technology tools into their sales process deliver a superior customer experience, while dealerships that fail to invest in consumer-facing technologies risk being trumped by competitors.

According to the study, among both non-premium and premium buyers, use of tablets by sales personnel to perform such tasks as record customer vehicle needs, demonstrate vehicle features and display pricing information yields higher satisfaction with technology usage than when a tablet is not used (8.12 vs. 7.02 and 8.63 vs. 7.52, respectively, on a 10-point scale). Notably, handwritten price quotes have a negative impact on buyer satisfaction with technology usage, with a -0.55 point gap in satisfaction between non-premium buyers when this method is used and when it is not and a -0.45 gap between premium buyers.

As for F&I products, satisfaction was higher among customers who were offered these options. Among non-premium owners, satisfaction was 46 points higher when a dealer offered them a pre-paid maintenance contract vs. when they do not (788 vs. 742, respectively). And among premium buyers, the gap is 26 points (827 vs. 801). Moreover, when F&I product and pricing/payment options are presented on a computer or tablet screen, satisfaction is higher than when any other method is used, including printed materials, verbal quotes/descriptions and handwritten figures.

“With retail vehicle sales in the United States in 2015 forecast to reach 14.2 million units and this positive momentum expected to carry into 2016, dealers face challenges in properly servicing a high volume of new-vehicle buyers who are increasingly tech savvy,” said Chris Sutton, vice president of the automotive retail practice at J.D. Power. “Dealerships should understand that customers want and trust technology and that it can enhance efficiencies. Dealers that disregard it may risk being left behind in three to five years. Customers are experiencing interesting uses of technology in many of their other retail transactions—and now expect this in auto.”

The study showed that Porsche ranked highest in sales satisfaction among luxury brands with a score of 752, improving by 14 points from 2014. For a sixth consecutive year, MINI ranks highest among mass market brands with a score of 762, a 35-point increase from 2014.

The 2015 U.S. Sales Satisfaction Index (SSI) Study is based on responses from 27,831 buyers who purchased or leased their new vehicle in April or May 2015.

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J.D. Power: Tech-Focused Car Buyers Consume Media at High Rates

WESTLAKE VILLAGE, Calif. — Consumers who shop for and purchase a vehicle based on its in-vehicle technology consume media — Internet, television and magazines — at high rates, according to the summer edition of J.D. Power 2015 U.S. Automotive Media and Marketing Report.

The report provides a comprehensive view on the factors that influence consumers’ new-vehicle purchases, as well as attitudinal, lifestyle, recreational and media consumption behaviors.

More than four in 10 (43%) premium brand drivers and 28% of non-premium brand drivers cite their vehicle’s latest technology features as one of the reasons they purchased their vehicle. These new-vehicle drivers embrace technology not only in their vehicles, but also as part of their lifestyle. More new-vehicle drivers who purchase based on technological features access the Internet on tablets (54%) and smartphones (69%) than those who don’t buy for advanced technology (46% and 63%, respectively).

New-vehicle drivers who seek technology also consume media at high rates, spending more time on the Internet for personal use, watch more television and read more magazines than those who don’t seek technology. In fact, technology-seeking drivers are more likely to read a magazine through an app than those who don’t buy for advanced technology (33% vs. 27%, respectively).

“It’s important that auto manufacturers promote the technological virtues of their vehicles to consumers via the media they consume,” said Arianne Walker, senior director, automotive media and marketing at J.D. Power. “Targeting these technology seekers with the right messaging is critical to using marketing dollars efficiently to reach consumers who will actually buy new vehicles because of new technology.”

In-vehicle technology has become the new battleground for attracting, satisfying and retaining customers. While advanced technology in vehicles is often thought of in terms of smartphone connectivity, voice commands and navigation, many recent technological innovations help improve vehicle fuel economy, driving assistance, collision avoidance and safety.

The report finds that vehicles with advanced technology features are purchased at similar rates across gender and age demographics. By gender, 31% of men and 28% of women indicate one of the reasons they purchased their new vehicle was because it had the latest technology features. New-vehicle drivers who purchase based on the latest technology are also similar across age groups: 34 years and younger (31%); 35 to 54 years old (28%); and 55 years and older (31%). Notably, technology is now incorporated in so many aspects of a vehicle that it appeals not only to premium brand drivers or males, but also to the entire spectrum of new-vehicle buyers; therefore demographics are not sufficient to target technology seeking buyers.

Among premium brands, Lincoln, Infiniti, Cadillac and Audi have the highest proportions of buyers who cite “latest technology features” as a reason for purchasing their vehicle. As for non-premium brands, Mazda, Buick and Chrysler have the highest rates of buyers who purchase for the latest technology.

The study also found that drivers who cited advanced technology as a purchase reason spend an average of 33 hours a week watching television and list “The Walking Dead,” “The Big Bang Theory” and “The Voice” among their favorite shows. Younger new-vehicle drivers watch less television than older drivers on a weekly basis: buyers 34 years and younger (20 hours); 35 to 54 years old (24 hours); and 55 years and older (35 hours). Boomers (born 1946 to 1964) spend 32 hours weekly, on average, watching TV, and account for a large portion of the automotive market. Favored cable channels among Boomers (listed in alphabetical order) are the Golf Channel, Hallmark Channel, Oxygen, Syfy and TV Land.

Technology-seeking drivers also read an average of nine magazines, with high rates of reading magazines focused on wealth, science/technology and travel. Magazine readership has increased year over year, as new-vehicle buyers read an average of eight magazines in 2015 vs. seven in 2014. But the greatest increase in magazine readership year over year is for titles with content related to business/personal finance; wealth; men’s lifestyle/fitness/outdoor; travel; and women’s lifestyle.

J.D. Power also looked at drivers’ social media habits. Nearly 70% of new-vehicle drivers access social media websites or apps. Facebook is the most popular social media site accessed by new-vehicle drivers, followed by LinkedIn and Pinterest.

The 2015 U.S. Automotive Media and Marketing Report—Summer is based on a nationwide survey of 28,983 principal drivers of recently purchased or leased new vehicles. The report is based on drivers who acquired their vehicle between November 2013 and October 2014.

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J.D. Power to Acquire NADA Used Car Guide

WESTLAKE VILLAGE, Calif. — J.D. Power and the National Automobile Dealers Association (NADA) have announced an agreement under which J.D. Power will acquire NADA’s Used Car Guide business, a well-known source of used-vehicle values. The transaction is expected to close early in the third quarter of 2015 and is subject to Hart–Scott–Rodino Act review.

Established by NADA in 1933, NADA Used Car Guide is a provider of U.S. retail, loan, trade-in and auction used-vehicle values, and is widely recognized in the industry as the authority for accurate and comprehensive used-vehicle valuation information. The company will remain based in the McLean, Va., vicinity where it serves more than 100,000 subscribing clients, including retailers, financial institutions, insurers and software providers.

“This deal is a perfect fit for dealers and NADA Used Car Guide customers. Under terms of the deal, NADA members will continue to receive a subscription to the Guide as a membership benefit,” said Peter Welch, president of NADA. “NADA and J.D. Power will continue to build upon our longstanding alliance by sharing data and insights, and bringing together retailers and leaders from the automakers, suppliers and the media at co-hosted conferences and events, offering thought leadership and solutions directly benefiting the retailer network and overall automotive industry.”

J.D. Power is a global marketing information services company known for using the voice of the customer to create reviews and ratings which measure the shopping, purchase and ownership experience across a wide range of brands and products. The Power Information Network (PIN) from J.D. Power provides real-time automotive information and decision-support tools based on the collection of daily new- and used-vehicle retail transactions.

“We are thrilled to add the NADA Used Car Guide and its vehicle valuation capabilities to J.D. Power,” said Finbarr O’Neill, president of J.D. Power. “NADA Used Car Guide analytical solutions will perfectly complement PIN’s expertise in new- and used- vehicle retail and pricing services, and we will gain an impressive array of integrated vehicle valuation solutions. The Guide’s high integrity and unbiased approach to used-vehicle values, analytics and insights fits perfectly with J.D. Power’s reputation as a trusted advisor to the automotive industry.”

The agreement brings together PIN, which combines advanced analytics of new- and used-vehicle retail sales and pricing data, with the complementary and extensive knowledge, expertise and market presence of the NADA Used Car Guide, thereby expanding J.D. Power’s analytical and modeling capabilities into new product offerings, deepening its presence in auto finance and auto insurance, and enriching retail solutions, officials said.

The NADA Used Car Guide name will be used by J.D. Power for a period of time before transitioning to the J.D. Power brand.

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Avg. New-Vehicle Transaction Price Up $3,900 Since 2009

WESTLAKE VILLAGE, Calif. — Rising transaction prices for new vehicles have been a big contributor to the health of the auto industry this year, J.D. Power analysts reported this week. They noted that the average new-vehicle transaction price has risen $3,900 since 2009 to $29,600.

Current transaction prices for new vehicle and the rise in sales could push up the value of vehicles purchased to the highest level ever at $407 billion, J.D. Power noted.

“When defining success in the auto industry, whether it is for a specific segment, manufacturer or model, it’s important to look beyond basic sales figures,” said Thomas King, vice president of J.D. Power’s Power Information Network.

King noted that not all vehicle segments have performed equally, with some delivering stronger volumes and lower price growth while others realized greater price growth but weaker sales. Retail sales in the large pickup segment, King pointed out, have increased 4.6% this year, which is below the overall industry sales increase of 5.7%. However, the average price of a pickup has risen by $2,700 over that same period, a gain of 7.5% compared to the industry average of 2.3%.

“From a sales perspective, large pickups have grown slightly slower than the industry overall, but from a price perspective, they have significantly outperformed the industry,” said King.

By contrast, compact SUVs have demonstrated exception retail volume growth of 22.1% so far this year. The average transaction price for models in this segment, however, have changed only slightly by an average of 0.6%. It is these statistical differences that is driving J.D. Power’s belief that sales numbers alone do not provide the best overall picture of industry success.

“With the rapid growth of average transaction prices over the past few years, success needs to be defined more broadly to include overall revenues in addition to sales volumes,” said King.

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Quality and Space a Concern in Third-Row Seating, J.D. Power Reports

WESTLAKE VILLAGE, Calif. — Automakers are responding to consumer demand for third-row seating, but in doing so are compromising quality and cargo space, according to the J.D. Power 2014 Seat Quality and Satisfaction Study.

While overall the percentage of new vehicles that offer third-row seats remains stable, some segments have experienced year-over-year increases, such as mass market truck/van (23% vs. 19%, respectively) and mass market compact SUV/MPV (1.7% vs. 0.3 %, respectively), which is relatively new in the third-row seat market.

Although the addition of a third-row seat provides more options for passenger seating, it also creates opportunities for something to go wrong, officials said. The mass market compact SUV/MPV segment — the smallest segment in the third-row market — averages 13.0 seat-related problems per 100 vehicles (PP100), compared with the industry average of 11.5 PP100 for vehicles with third-row seating.

In contrast, the larger vehicles in the mass market truck/van segment have the fewest seat-related problems (8.6 PP100) among those offering third-row seating. In comparison, the industry average for seat-related problems among vehicles that do not have third-row seating is 8.7 PP100.

The study found that owners who use their third-row seats for passengers more than once a month experience 0.6 more problems with their seats than those who do not use their third row seats for passengers. The difference in scores is driven primarily by one problem area — seat materials scuffs/soil easily — with owners who use their third-row seat more than once a month experiencing 0.8 PP100 more in this area.

Despite this increase in problems, vehicle owners whose third-row seats are occupied by passengers more than once a month are also significantly more likely to indicate that the comfort and head/leg/foot room of their second and third rows are more appealing than owners who do not use their third-row seats. The downside is that satisfaction with the amount of trunk/cargo area space among these owners is lower than among those who do not use their third-row seats for passengers, as the latter group of owners can more often keep the third row folded down, maximizing the cargo space.

“There is demand on third-row seats and automakers are trying to meet that demand,” said Mike VanNieuwkuyk, executive director of global automotive at J.D. Power. “The challenge is to provide a functional third-row seat that meets customer needs and expectations without compromising quality, comfort and space. It’s easier to do that in a larger vehicle, but automakers and seat suppliers need to find a way to also meet consumer expectations in the growth area, which is smaller SUVs and MPVs.”

Owners who use their third-row seating for passengers are more satisfied with the comfort and roominess of the third row than owners who don’t. VanNieuwkuyk noted that the greater issues are the process of getting into and out of third-row seats; the additional wear, soiling and scuffing that usage creates; and the need to provide options to better manage cargo to offset the smaller cargo space when the third-row seating is in use.

The study also found that the overall industry average for seat-related problems is 9.1 PP100 in 2014, an improvement of 0.4 PP100 from 2013. Among owners of vehicles with third-row seating, 54% indicated the third row is used by passengers at least once a month, with 41% of these owners using the third row at least once a week.

Additionally, when owners experience a problem with a manual seat control, the most common reason cited is that the controls are physically hard to operate. In contrast, owners who experience problems with power seat controls very rarely indicated that the controls are hard to operate. Instead, they experience more issues with the placement of the controls.

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J.D. Power Acquires Korrelate

WESTLAKE VILLAGE, Calif. — J.D. Power, a business unit of McGraw Hill Financial, today announced the acquisition of Korrelate, an Orlando-based company that measures consumers’ online behaviors and links them to offline sales activity.

Korrelate’s unique method of matching anonymous online behaviors combined with new- and used-vehicle data collected by J.D. Power’s Power Information Network (PIN) will enable a unique level of timeliness, depth and transparency in measuring the effectiveness of digital marketing, according to officials. This capability allows J.D. Power to help automakers, dealers, third-party automotive websites and advertising agencies to quickly and accurately evaluate their websites and online marketing efforts. It will also help ad networks and online publishers accurately report the effectiveness of those online ads.

“We are delighted to add Korrelate and its cutting-edge capabilities to J.D. Power,” said Finbarr O’Neill, president of J.D. Power. “Consumer behavior is changing dramatically in today’s Internet-powered world. The auto industry spends billions of dollars annually on digital marketing. Measuring online activity and linking it to actual vehicle sales will enable marketers to measure and optimize their digital strategy.”

Using Korrelate’s insights on consumer online shopping behaviors and PIN data on actual new- and used-vehicle retail transactions, J.D. Power will be able to identify which websites and ad campaigns shoppers are exposed to before they buy their vehicle. By linking online shopping behaviors to actual retail sales, J.D. Power will be able to measure and enhance the effectiveness of automaker, dealer and third-party websites and ad campaigns.

“Offline sales measurement is the future of the automotive industry’s efforts to measure the success of online campaigns,” said Christian Kugel, vice president of consumer research and analytics at AOL, a Korrelate client. “This metric, combined with traditional key performance indicator (KPI) measurement, creates a more complete, 360-degree view of how to evaluate campaign success.

“J.D. Power’s acquisition of Korrelate is a smart move, and once again shows their commitment to bring scalable, accurate vehicle sales measurement to the forefront of digital automotive metrics. We look forward to working with J.D. Power to redefine how the automotive industry measures the success of online campaigns.”

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