Consumer Attitude On PricingPresented by

Rick WainschelKelley Blue Book

VP, Marketing Research & Brand Communications

October 18, 2007

BIG RELEVANT REPRESENTATIVE

12%

14%

17%

17%

20%

23%

26%

29%

33%

46%

AutoTrader.com

Yahoo! Autos

Nissan

ConsumerReports.org

Chevrolet

Ford

Honda

Edmunds.com

Toyota

Kelley Blue Book

Source: J.D Power and Associates 2006 New Autoshopper .com (NAS) Study

§ Age

§ Gender

§ Ethnicity

§ Geography

§ Make

§ Segment

Top 15 Independent and Manufacturer Web Sites Visited

85% In-market shoppers

87% Planning to purchase in

6 mos.

of which

Source: Recruited From Kbb.com New Car Pricing Reports

Why Kelley Blue Book?

Consumers Are Split Regarding Best Price/Dealer Relationship

Source: Kelley Blue Book Survey (October 2007)Q: Which statement below best describes your feelings about the vehicle purchase process?

I am seeking the absolute lowest price and will buy my next vehicle from any dealer who can give me

the best deal

52%

I am seeking a dealer who I can trust and have a relationship

with, even if it means paying a little more than the absolute

lowest price for my next vehicle

48%

Less important…

Trustworthiness, good customer service, and honest repair people / service are important factors to shoppers.

Important Drivers & Attitudes In Choosing A Dealer

Trustworthiness83%

Good Customer Service

81%

Good reputation 72%

Source: Dealer Evaluation Study (February 2007)Q: Assuming that prices were the same at all dealerships, how important are each of the following factors in your decision to purchase a vehicle from a particular dealership?[4-point scale: very important, somewhat important, somewhat unimportant, very unimportant]

What Factors Are Important?-- % Very Important --

Proximity from dealership location 33%

Discounts on future purchases 32%

Number of different services offered 27%

Honest repair people/service

80%

Friendliness of employees

67%

Selection of vehicles available

60%

Majority Of Consumers Prefer A Single Set Price

Single set price, 65%

Negotiating Price, 35%

2-out-of-3 in-market shoppers prefer having a single-set price.

Easy processes and price predictability are key factors.

Source: Dealer Evaluation Study (February 2007)Q: Which statement below best describes your feelings about the vehicle purchase process? Q: You mentioned that you prefer to have a single set price for a vehicle, how important are the following factors to ensure a haggle-free / negotiation free buying experience? [4-Point Scale: Very important, Somewhat important, Somewhat unimportant, Very unimportant]

Ease in obtaining price quote

Ease of obtaining pre-

approval

Quicker buying process

Clear costs, no surprises

Single set price, 65%

Negotiating Price, 35%

Factors Important In Negotiating Price

1-out-of-3 prefer negotiating.

Key reasons are control in negotiating a better price.

Source: Dealer Evaluation Study (February 2007)Q: Which statement below best describes your feelings about the vehicle purchase process? Q: How important are the following factors to help you negotiate the best deal?[4-point scale: very important, somewhat important, somewhat unimportant, very unimportant]

Being incontrol

Better price

Consumers Prefer to Work Their Way Up From Invoice Price

Source: Automotive Purchasing and Pricing Attitude Study (September 2006)Q: When you purchase or lease your next new vehicle, are you more likely to negotiate...?

When negotiating, consumers prefer to know the invoice price and work their way up

Negotiation Preference

56%

23%16%

5%

0%

20%

40%

60%

80%

Start withinvoicePrice

Start withMSRP

Start withmonthly

payments

Someother way

Consumers Acknowledge Need for Dealer Profits

Source: Automotive Purchasing and Pricing Attitude Study (September 2006)Q: Recognizing that dealers have to make money to stay in business, what do you feel is a fair profit for them to make per vehicle?

Almost half of consumers believe dealers should make between $500 and $1,000 of profit per (new) vehicle

Fair Dealer Profit (According to Consumers)

22%

47%

17%

9%5%

0%

25%

50%

Less than$500

$500-$1,000

$1001-$1,500

$1,501-$2,000

More than$2,000

Consumer Decisions Go Beyond Pure Price

Source: Automotive Purchasing and Pricing Attitude Study (September 2006)Q: When you purchase or lease your next new vehicle, which of the following offers is most appealing to you?

The largest percentage of consumers are driven by financing offers rather than pure price.

Preferred Dealer Offers

37%

19% 19%14%

10%

0%

25%

50%

0%Financing

CashRebate(10%)

Lowmonthly

payments

$500 overinvoice

Employeepricing

programs

Types of Online Information Sought

Source: Dealer Best Practices Survey (August 2007)Q: While shopping for your vehicle online, please select which of the following you used in your research?

Information most sought by consumers: pricing

Other important information: photos/360s, ratings/reviews, comparisons Expected

selling price81%

Price with options83%

Vehicle photos/360s70%

Consumer reviews/ratings

70%

Expert reviews69%%

Side-by-sidecomparisons

63%

• Price is important, but consumers also want:

– A relationship with a dealer they can trust– An easy process with a minimum of surprises– Other information (e.g., reviews/ratings, photos/360s) to help make a

decision

• Other aspects of purchasing process (e.g., financing) are also taken into consideration

• Consumers are realistic about need for dealer profits

Key Takeaways

Thank you!