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2006 Detroit NewsDomestic Vehicle Avoider Study
Conducted for The Detroit News by J.D. Power and Associates
December 11, 2006
2Source: 2006 Detroit News Domestic Vehicle Avoider Study
Background
• Detroit News commissioned J.D. Power and Associates to conduct aproprietary research survey to gather consumer opinions regarding likelihood to consider purchasing an American vehicle.
3Source: 2006 Detroit News Domestic Vehicle Avoider Study
Objectives
• Understand the reasons why consumers will not consider purchasing American vehicles
• Determine the overall perception—among avoiders—of American, Asian, and European vehicles
• Identify key areas of needed improvement for American vehicles to gain shopper consideration
• Examine demographic characteristics as they relate to above objectives
4Source: 2006 Detroit News Domestic Vehicle Avoider Study
Methodology
• Internet survey – An online survey was developed to gather consumer opinions for avoidance of
American, Asian, and European vehicles– Average survey completion time was 9:37 (min:sec)
• Sample supplied by a research panel company– Survey fielded to Opinion Outpost panel members and balanced to U.S.
census characteristics
• Target returns – 500 new vehicle shoppers that plan to purchase/lease in the next 24 months
• Fielding period– Open: Monday, Nov 27, 2006– Close: Thursday, Nov 30, 2006
5Source: 2006 Detroit News Domestic Vehicle Avoider Study
Origin of Brands Considered
83%79%
41%
0%
25%
50%
75%
100%
American Asian European
% C
onsi
dere
dAmerican vehicles lead in purchase consideration
Base: Total Industry (n = 500)
Origin of BrandMost Likely to Purchase
49%
40%
11%
American Asian European
6Source: 2006 Detroit News Domestic Vehicle Avoider Study
Origin of BrandMost Likely to Purchase
49%
40%
11%
American Asian European
2006 U.S. Light Vehicle Sales*YTD through Nov. 2006
56.6%
39.4%
4.0%
American Asian European
Actual new-vehicle sales in 2006 compared to the origin of the “most likely” brand consumers intend to purchase in the next two years
Base: Total Industry (n = 500)
* Source: Power Information Network U.S. Sales Report, November 2006
7Source: 2006 Detroit News Domestic Vehicle Avoider Study
European vehicles are avoided most frequently, primarily due to purchase and ownership costs
Avoidance By Brand Origin
4% 4%16%14% 12%
30%18% 17%
46%
0%
25%
50%
75%
100%
American Asian European
% A
void
ing
Probably Would NOT ConsiderDefinitely Would NOT Consider
n = 88 n = 83 n = 231
8Source: 2006 Detroit News Domestic Vehicle Avoider Study
American vehicle avoiders select twice as many avoidance reasons as import avoiders.
n = 88 n = 83 n = 231
Average Number of Avoidance Reasons Mentioned By Origin
7.0
3.5 3.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
American Asian European
Avg.
# o
f Avo
idan
ce R
easo
ns
9Source: 2006 Detroit News Domestic Vehicle Avoider Study
3%14%15%15%16%17%18%
20%22%22%23%
26%27%
32%33%33%
36%40%
42%42%
63%70%70%
0% 20% 40% 60% 80% 100%
Vehicles cost too much to insureNegative information from the Internet
Warranty is not good enoughDealerships are poorly managed
Negative newspaper/magazine articlesLacks certain options and features
Costs too much money (price, payment, etc.)Not environmentally friendly enough
I don't like the image the vehicles portrayConcerned about safety
Current financial problems of the 'Big 3'I don't want an American brand vehicle
Vehicle technology is not advancedI previously had a bad ownership experience
Lacks performance (power, handling, etc.)I don't like the exterior styling/design
Someone I know had a bad ownership experienceDoesn't get enough gas mileage
Vehicles are bland or boringMaintenance/upkeep too expensive (tune-ups, etc.)
Vehicle would depreciate too fast (poor resale value)Poor quality (workmanship, materials, etc.)
Concerned about reliability (breakdowns, etc.)
% of American Avoiders Mentioning ReasonBase: American Avoiders (n=88)
American vehicles are avoided by 18% of respondents. Avoidance is chiefly due to perceived quality concerns.
Avoidance Reasons – American Vehicles
10Source: 2006 Detroit News Domestic Vehicle Avoider Study
32%
33%
33%
36%
40%
42%
42%
63%
70%
70%
9%
3%
5%
0%
13%
3%
5%
8%
18%
26%
0% 20% 40% 60% 80% 100%
I previously had a bad ownership experience
Lacks performance (power, handling, etc.)
I don't like the exterior styling/design
Someone I know had a bad ownership experience
Doesn't get enough gas mileage
Vehicles are bland or boring
Maintenance/upkeep too expensive (tune-ups, etc.)
Vehicle would depreciate too fast (poor resale value)
Poor quality (workmanship, materials, etc.)
Concerned about reliability (breakdowns, etc.)
% of American Avoiders Mentioning Reason
Most Influential ReasonTotal Avoidance
Base: American Avoiders (n=88)
Reliability, Quality, and Fuel Efficiency are the most influential reasons that respondents avoid American vehicles
Top 10 Avoidance Reasons – American Vehicles
11Source: 2006 Detroit News Domestic Vehicle Avoider Study
208
270
234
0 50 100 150 200 250 300
Asian Vehicles
European Vehicles
American Vehicles
Problems Per 100 Vehicles After 3 Years of Ownership
20%
19%
70%
0% 20% 40% 60% 80% 100%
Asian Avoiders
European Avoiders
American Avoiders
% of Avoiders Due to Concerns About Reliability
Avoidance Due To Perceived Reliability, By Origin
Vehicle Dependability* By Origin
* Source: J.D. Power and Associates 2006 Vehicle Dependability Study (VDS)
American vehicles are avoided due to perceived reliability concerns much more frequently than imported vehicles. Actual reliability of American vehicles shows a more competitive outlook.
Better Worse
12Source: 2006 Detroit News Domestic Vehicle Avoider Study
114
147
128
0 20 40 60 80 100 120 140 160
Asian Vehicles
European Vehicles
American Vehicles
Problems Per 100 Vehicles After 3 Months of Ownership
14%
3%
70%
0% 20% 40% 60% 80% 100%
Asian Avoiders
European Avoiders
American Avoiders
% of Avoiders Due to Concerns About Quality
Avoidance Due To Perceived Quality, By Origin
Vehicle Quality* By Origin
American vehicles are avoided due to perceived quality concerns much more frequently than imported vehicles. Actual quality of American vehicles shows a more competitive outlook.
* Source: J.D. Power and Associates 2006 Initial Quality Study (IQS)
Better Worse
13Source: 2006 Detroit News Domestic Vehicle Avoider Study
$168
$120
$114
$41
$85
$49
$209
$205
$163
$0 $50 $100 $150 $200 $250
Asian Vehicles
European Vehicles
American Vehicles
Avg Annual Maintenance Costs (1 - 3 Years of Ownership)
Routine Maint. & Oil Changes Unscheduled Repairs
39%
60%
42%
0% 20% 40% 60% 80% 100%
Asian Avoiders
European Avoiders
American Avoiders
% of Avoiders Due to Concerns About Quality
Avoidance Due To Perceived Maintenance Costs, By Origin
Average Annual Maintenance Costs At Dealership* By Origin
* Source: J.D. Power and Associates 2006 Customer Satisfaction Index Study (CSI)
Maintenance costs are the fourth-most common reason that American vehicles are avoided, and that is likely due to the expectation of higher unscheduled repairs. Based on CSI, American vehicle owners spend slightly more on unscheduled repairs, but spend much less overall on maintenance in the first 3 years.
14Source: 2006 Detroit News Domestic Vehicle Avoider Study
704
722
629
300 400 500 600 700 800 900 1000
Asian Vehicles
European Vehicles
American Vehicles
Mean Index Score
4%
14%
40%
0% 20% 40% 60% 80% 100%
Asian Avoiders
European Avoiders
American Avoiders
% of Avoiders Due To Gas Mileage
Avoidance Due To Fuel Economy, By Origin
Rating of Fuel Economy* By Origin
American vehicles are avoided due to fuel economy much more frequently. This is in line with the low fuel economy score thatAmerican vehicle owners rate in the 2006 APEAL study.
* Source: J.D. Power and Associates 2006 Automotive Performance, Execution, and Layout Study (APEAL)
BetterWorse
15Source: 2006 Detroit News Domestic Vehicle Avoider Study
Top 2 Most Influential Avoidance Reasons:
Financial Problems of the Big 3
57%
43%
Finances of Big 3 Other
While 23% of American vehicle avoiders are discouraged by the Big 3’s financial problems, 9% of respondents plan to avoid imports seemingly in support of the Big 3 American brands
n = 88 n = 256
Avoidance Due to Financial Problems of the Big 3
23%
9%
0%
25%
50%
75%
100%
American Import
% o
f Avo
ider
s
16Source: 2006 Detroit News Domestic Vehicle Avoider Study
Verbatim Comments
• “1. Cost 2. Reliability 3. Resale value 4. fuel efficiency”
• “better quality so that cars will last beyond 100000 - also better warranties”
• “stop killing the resale value… redesign the cars give them a "new look””
• “one thing I would like to see is different looking vehicles, they all look the same”
• “Put the Costumer FIRST, and not the share holder!!!”
• “American vehicles need to have extremely better gas mileage, cost effective for maintenance & better pricing.”
What can American brands do that would encourage more people to consider buying American?
17Source: 2006 Detroit News Domestic Vehicle Avoider Study
Base: Asian Avoiders (n=83)
17% of all respondents avoid Asian branded vehicles. Most of these (61%) avoid simply because the brand is Asian (or not American).
Avoidance Reasons – Asian Vehicles
1%1%2%2%
4%5%
7%10%11%12%13%14%14%
16%16%17%18%
20%20%
23%27%
39%61%
0% 20% 40% 60% 80% 100%
Not environmentally friendly enoughNegative newspaper/magazine articles
Warranty is not good enoughNegative information from the Internet
Doesn't get enough gas mileageVehicle technology is not advanced
Dealerships are poorly managedVehicle would depreciate too fast (poor resaleI previously had a bad ownership experience
Vehicles cost too much to insureCurrent financial problems of the 'Big 3'
Poor quality (workmanship, materials, etc.)Lacks certain options and features
Someone I know had a bad ownershipI don't like the image the vehicles portray
Vehicles are bland or boringLacks performance (power, handling, etc.)
Concerned about safetyConcerned about reliability (breakdowns, etc.)
I don't like the exterior styling/designCosts too much money (price, payment, etc.)
Maintenance/upkeep too expensive (tune-ups,I don't want an Asian brand vehicle
% of Avoiders
18Source: 2006 Detroit News Domestic Vehicle Avoider Study
Base: Asian Avoiders (n=83)
Not wanting an Asian brand, for the sake of its origin, is the most influential reason that Asian vehicles are avoided
Top 10 Avoidance Reasons – Asian Vehicles
16%
16%
17%
18%
20%
20%
23%
27%
39%
61%
4%
1%
2%
5%
6%
0%
4%
8%
8%
45%
0% 20% 40% 60% 80% 100%
Someone I know had a bad ownership experience
I don't like the image the vehicles portray
Vehicles are bland or boring
Lacks performance (power, handling, etc.)
Concerned about safety
Concerned about reliability (breakdowns, etc.)
I don't like the exterior styling/design
Costs too much money (price, payment, etc.)
Maintenance/upkeep too expensive (tune-ups, etc.)
I don't want an Asian brand vehicle
% of Avoiders
Most Influential ReasonTotal Avoiders
19Source: 2006 Detroit News Domestic Vehicle Avoider Study
1%1%
3%3%3%3%4%5%6%6%7%7%7%8%9%10%
14%17%
19%35%
39%60%
80%
0% 20% 40% 60% 80% 100%
Vehicle technology is not advancedNegative information from the Internet
Poor quality (workmanship, materials, etc.)Negative newspaper/magazine articles
I previously had a bad ownership experienceWarranty is not good enough
Lacks performance (power, handling, etc.)Vehicles are bland or boring
Lacks certain options and featuresDealerships are poorly managed
Vehicle would depreciate too fast (poor resale value)Not environmentally friendly enough
Current financial problems of the 'Big 3'Concerned about safety
I don't like the exterior styling/designI don't like the image the vehicles portray
Doesn't get enough gas mileageSomeone I know had a bad ownership experience
Concerned about reliability (breakdowns, etc.)I don't want a European brand vehicle
Vehicles cost too much to insureMaintenance/upkeep too expensive (tune-ups, etc.)
Costs too much money (price, payment, etc.)
% of AvoidersBase: European Avoiders (n=231)
European vehicles are avoided by 46% of respondents. Purchase and ownership costs keep consumers away.
Avoidance Reasons – European Vehicles
20Source: 2006 Detroit News Domestic Vehicle Avoider Study
8%
9%
10%
14%
17%
19%
35%
39%
60%
80%
2%
1%
1%
1%
2%
2%
11%
1%
7%
64%
0% 20% 40% 60% 80% 100%
Concerned about safety
I don't like the exterior styling/design
I don't like the image the vehicles portray
Doesn't get enough gas mileage
Someone I know had a bad ownership experience
Concerned about reliability (breakdowns, etc.)
I don't want a European brand vehicle
Vehicles cost too much to insure
Maintenance/upkeep too expensive (tune-ups, etc.)
Costs too much money (price, payment, etc.)
% of Avoiders
Most Influential Reason
Total Avoidance
Base: European Avoiders (n=231)
Cost is the most influential reason that European vehicles are avoided
Top 10 Avoidance Reasons – European Vehicles
21Source: 2006 Detroit News Domestic Vehicle Avoider Study
Top 10 American Avoidance Reasons vs. Asian Vehicles
11%
18%
23%
16%
4%
17%
39%
10%
14%
20%
32%
33%
33%
36%
40%
42%
42%
63%
70%
70%
0% 20% 40% 60% 80% 100%
I previously had a bad ownershipexperience
Lacks performance (power, handling,etc.)
I don't like the exterior styling/design
Someone I know had a bad ownershipexperience
Doesn't get enough gas mileage
Vehicles are bland or boring
Maintenance/upkeep too expensive(tune-ups, etc.)
Vehicle would depreciate too fast(poor resale value)
Poor quality (workmanship, materials,etc.)
Concerned about reliability(breakdowns, etc.)
% of Avoiders
American Avoiders (n=88)Asian Avoiders (n=83)
22Source: 2006 Detroit News Domestic Vehicle Avoider Study
Top 10 American Avoidance Reasons vs. European Vehicles
3%
4%
9%
17%
14%
5%
60%
7%
3%
19%
32%
33%
33%
36%
40%
42%
42%
63%
70%
70%
0% 20% 40% 60% 80% 100%
I previously had a bad ownershipexperience
Lacks performance (power, handling,etc.)
I don't like the exterior styling/design
Someone I know had a bad ownershipexperience
Doesn't get enough gas mileage
Vehicles are bland or boring
Maintenance/upkeep too expensive(tune-ups, etc.)
Vehicle would depreciate too fast(poor resale value)
Poor quality (workmanship, materials,etc.)
Concerned about reliability(breakdowns, etc.)
% of Avoiders
American Avoiders (n=88)European Avoiders (n=231)
23Source: 2006 Detroit News Domestic Vehicle Avoider Study
than Asian than AsianPercentage Points (Worse)Percentage Points Better / (Worse)
Top 5 American Strengths
35%
9%
8%
Don't want American/Asian vehicle
High Insurance Cost
Expensive Price/Payment
Safety Concerns
Lacks certain options/features
(1%)
(3%)
(10%) 10% 30% 50%
Top 5 American WeaknessesVehicles are bland/boring
Not enough gas mileage
Concerned about reliability
Vehicles depreciate too fast
Poor quality
(25%)
(36%)
(50%)
(53%)
(56%)
(60%) (40%) (20%) 0%
American vs. Asian Vehicles
Performance Gap for Vehicle Avoidance Reasons
= American Top 5 Strength/Weakness vs. European
24Source: 2006 Detroit News Domestic Vehicle Avoider Study
American vs. European Vehicles
Percentage Points (Worse)Percentage Points Better / (Worse)than European than European
Top 5 American Strengths
62%
35%
18%
9%
Expensive Price/Payment
High Insurance Cost
Maintenance too expensive
Don't want American/European
vehicle
Dealerships are poorly managed (9%)
(10%) 10% 30% 50% 70%
Top 5 American Weaknesses
My previous bad ownership experience
Vehicles are bland/boring
Concerned about reliability
Vehicles depreciate too fast
Poor quality
(29%)
(37%)
(52%)
(56%)
(67%)
(80%) (60%) (40%) (20%) 0%
Performance Gap for Vehicle Avoidance Reasons
= American Top 5 Strength/Weakness vs. Asian
25Source: 2006 Detroit News Domestic Vehicle Avoider Study
Avoidance Reasons Summary
American(n=88)
Asian(n=83)
European(n=231)
Avoidance Reasons
Concerned about reliability (breakdowns, etc.) 70% 20% 19% Top 1
Poor quality (workmanship, materials, etc.) 70% 14% 3% Top 3
Vehicle would depreciate too fast (poor resale value) 63% 10% 7% Top 5
Maintenance/upkeep too expensive (tune-ups, etc.) 42% 39% 60%Vehicles are bland or boring 42% 17% 5%Doesn't get enough gas mileage 40% 4% 14%Someone I know had a bad ownership experience 36% 16% 17%I don't like the exterior styling/design 33% 23% 9%Lacks performance (power, handling, etc.) 33% 18% 4%I previously had a bad ownership experience 32% 11% 3%Vehicle technology is not advanced 27% 5% 1%I don't want an American/Asian/European brand vehicle 26% 61% 35%Current financial problems of the 'Big 3' 23% 13% 7%Concerned about safety 22% 20% 8%I don't like the image the vehicles portray 22% 16% 10%Not environmentally friendly enough 20% 1% 7%Costs too much money (price, payment, etc.) 18% 27% 80%Lacks certain options and features 17% 14% 6%Negative newspaper/magazine articles 16% 1% 3%Dealerships are poorly managed 15% 7% 6%Warranty is not good enough 15% 2% 3%Negative information from the Internet 14% 2% 1%Vehicles cost too much to insure 3% 12% 39%
Avoiders
26Source: 2006 Detroit News Domestic Vehicle Avoider Study
3%6%7%8%9%
18%20%
23%24%
26%28%
30%31%
35%36%36%
43%49%
65%69%
77%
0% 20% 40% 60% 80% 100%
Ability to obtain financingCargo capacity
Diesel engine availabilityAvailability of aftermarket accessories
Availability of partsInterior comfort
Engine performance / accelerationWarranty
Hybrid engine availabilityPricingSafety
Environmental impactImage the vehicle portrays
Maintenance costsExterior styling
Driving performanceTechnology of the vehicle
Fuel economyResale value
Quality of workmanshipReliability/Durability
% of Avoiders
American Avoiders
Base: American Avoiders (n=88)
Consumers want American vehicles that are more reliable, fuel efficient, and stylish
Needed Improvements – American Vehicles
27Source: 2006 Detroit News Domestic Vehicle Avoider Study
Verbatim Comments
What can American Brands do to earn your consideration?• “more exciting and updated body styles and engine performance/handling”
• “…re-establish the status of quality, reliability, technology and performance.”
• “quality”
• “sell for less, better gas and better style, come up with something new”
28Source: 2006 Detroit News Domestic Vehicle Avoider Study
6%7%7%7%8%
10%11%12%13%13%14%14%14%14%
16%17%18%
20%23%
29%33%
35%43%
0% 20% 40% 60% 80% 100%
Ability to obtain financingInterior comfort
Environmental impactDiesel engine availability
Fuel economyDriving performance
WarrantyTechnology of the vehicleHybrid engine availability
Engine performance / accelerationSafety
Resale valueQuality of workmanship
Image the vehicle portraysUnionize assembly plants
Reliability/DurabilityAvailability of aftermarket accessories
Exterior stylingCargo capacity
Availability of partsPricing
Maintenance costsPercent of vehicles built in U.S.A.
% of Avoiders
Asian Avoiders
Base: Asian Avoiders (n=83)
Asian vehicle avoiders want vehicles built in the USA. Asian vehicles are perceived as too expensive to buy and maintain.
Needed Improvements – Asian Vehicles
29Source: 2006 Detroit News Domestic Vehicle Avoider Study
2%3%
5%5%6%7%7%8%8%8%9%10%
12%12%13%13%13%
16%17%
24%42%
60%77%
0% 20% 40% 60% 80% 100%
Diesel engine availabilityDriving performance
Technology of the vehicleInterior comfort
Engine performance / accelerationUnionize assembly plants
Image the vehicle portraysSafety
Quality of workmanshipExterior styling
Environmental impactCargo capacity
Resale valueHybrid engine availability
WarrantyAvailability of aftermarket
Ability to obtain financingReliability/Durability
Fuel economyPercent of vehicles built in U.S.A.
Availability of partsMaintenance costs
Pricing
% of Avoiders
European Avoiders
Base: European Avoiders (n=231)
European vehicle avoiders want lower ownership costs to consider purchasing
Needed Improvements – European Vehicles
30Source: 2006 Detroit News Domestic Vehicle Avoider Study
Needed Improvements Summary
American(n=88)
Asian(n=83)
European(n=231)
Most Improvement
Needed
Reliability/Durability 77% 17% 16% Top 1
Quality of workmanship 69% 14% 8% Top 3
Resale value 65% 14% 12% Top 5
Fuel economy 49% 8% 17%Technology of the vehicle 43% 12% 5%Exterior styling 36% 20% 8%Driving performance 36% 10% 3%Maintenance costs 35% 35% 60%Image the vehicle portrays 31% 14% 7%Environmental impact 30% 7% 9%Safety 28% 14% 8%Pricing 26% 33% 77%Hybrid engine availability 24% 13% 12%Warranty 23% 11% 13%Engine performance / acceleration 20% 13% 6%Interior comfort 18% 7% 5%Availability of parts 9% 29% 42%Availability of aftermarket accessories 8% 18% 13%Diesel engine availability 7% 7% 2%Cargo capacity 6% 23% 10%Ability to obtain financing 3% 6% 13%Percent of vehicles built in U.S.A. N/A 43% 24%Unionize assembly plants N/A 16% 7%
Avoiders
31Source: 2006 Detroit News Domestic Vehicle Avoider Study
American-brand avoiders comprise a younger, more educated, and more affluent demographic
AmericanAvoiders
AsianAvoiders
EuropeanAvoiders
% Male 52% 51% 52%
42
65%
41%
$ 52.2
Age (median) 37 42
% Married 56% 67%
% College Grad 56% 37%
Income (median, 000’s) $ 66.4 $ 52.1
Demographic Profile
32Source: 2006 Detroit News Domestic Vehicle Avoider Study
Key Findings
• American vehicle avoiders select twice as many avoidance reasons as import avoiders (7 vs. 3.5 reasons).
• Surveying owners of vehicle brands from the U.S., Asia and Europe, JDPA’ssyndicated 2006 Vehicle Dependability Study shows that similar vehicle-problem levels occur after three years of ownership for domestics and imports. But respondents to this study are more than three times more likely to avoid domestic brand vehicles due to reliability concerns than they are to avoid imports. This shows that consumer perception is not in line with experience.
• Avoidance due to gas mileage concerns is cited 10 times more often for American vehicles than Asian vehicles (40% vs. 4%). JDPA’s syndicated 2006 Automotive Performance, Execution and Layout study supports that American vehicle owners are less satisfied with fuel economy than import owners.
• While gas mileage ranks 6th among the reasons mentioned to avoid American vehicles, it is the 3rd Most Influential reason.
• 23% of American-brand avoiders mention the Big 3’s financial problems. Interestingly, 9% of those avoiding import vehicles do so in support of the Big 3’s financial problems.
• 16% of Asian avoiders and 7% of European avoiders indicate that unionizing assembly plants is a needed improvement.
• American-brand avoiders comprise a younger, more educated, and more affluent demographic than Asian or European avoiders.