Incentives Don't Correlate to Value, Says Strategic Vision

SAN DIEGO--Oct. 4, 2004--While incentives may move cars and trucks out of dealers' showrooms, they don't necessarily mean greater value to new vehicle buyers, says Strategic Vision. The San-Diego based research firm today released its 2004 Total Value Index(TM) (TVI) that measures new owners sense of value in their vehicles by factoring all economic issues against the quality of the ownership experience.

While buyers reported receiving incentives in 62 percent of new vehicle sales, the numbers for the top-scoring vehicles were much lower: Toyota Prius (815 out of 1,000 possible points) 7 percent incentives; Mini Cooper (813) 4 percent; Lexus LS 430 (799) 19 percent. At the other end of the scale, domestic manufacturers gave incentives in the majority of their vehicles sales.

"The domestics continue having an image problem," says Strategic Vision vice president Daniel Gorrell. "They trail import manufacturers on expectations of reliability, durability and resale value, suggesting buyers have a lower sense of trust in these brands that forces domestics into the incentive game to sell their vehicles."

A bright spot for the domestics was the strong showing of Fords' new F-Series pickup that won handily in its segment. New owners rated it highly in ownership experience and scored its durability and reliability superior to its Japanese competitors.

Toyota Motor Sales had the most winners, four for Lexus (one a tie) and three for Toyota. Korean imports had the second highest number--three for Hyundai (one a tie) and one for Kia. Adding to a strong product experience for both were Toyota's strong reliability, durability and resale value and Hyundai's and Kia's strong warranty.

European marques led in four segments, with two new Mercedes-Benz C-Class models at the head of their class. Domestic brands captured five first-place spots, with General Motors tying in two of its three wins.

More than 69,000 buyers rated the following vehicles the best values in their segments:

Small Car                   Hyundai Elantra(a)            780
Compact Car                 Toyota Prius                  815
Mid-Size Car                Hyundai XG 350 779/Acura TSX  778 (tie)(b)
Larger Car                  Mercury Marauder(a)           720
Near-Luxury Car             Mercedes Benz C-Class         798
Luxury Car                  Lexus LS 430                  799
Small Specialty             Mini Cooper(a)                813
 (less than $25,000)
Small Specialty             Mercedes Benz C-Class Coupe   779
 (more than $25,000)
Mid-Specialty Car           Honda Accord Coupe(a)/        755/
                             Chev. Monte Carlo            754 (tie)(b)
Convertible                 Volkswagen New Beetle         735
 (less than $30,000)         Convertible 
Convertible                 Cadillac XLR/                 784/
 (more than $30,000)         Lexus SC430                  784 (tie)
Minivan                     Kia Sedona                    731
Small SUV                   Hyundai Santa Fe              752
Medium SUV                  Toyota 4Runner                747
Large SUV                   Toyota Sequoia(a)             711
Near Luxury SUV             Lexus RX 330(a)               789
Luxury SUV                  Lexus GX 470                  746
Compact Pickup              Nissan Frontier               699
Full-Size Pickup            Ford F-150                    723
Heavy Duty Pickup           Dodge Ram 2500/3500(a)        722

(b) Differences of 1-2 points are not statistically significant
(a) 2003 Total Value Award(TM) winners

In addition to leading the most segments, Lexus repeated as the top brand in Total Value (774). Mitsubishi was the most improved. American Honda (750) was the highest full-line corporation, followed closely by Hyundai (747).

At the heart of the Total Value Index(TM) is the quality of the ownership experience -- everything involved in buying, owning and driving a new vehicle. All economics issues, both immediate (price, affordability, deal offered, warranty and standard equipment) and expected (durability, future trade-in, mileage, economical to own and reliability) are then factored against that perceived quality.

"What you get for your money," says Dr. Darrel Edwards, Strategic Vision president, "is vital in the value equation. A cheap price for a vehicle that doesn't stir the buyer's values and emotions will never be more than a cheap vehicle. One with strong perceived quality that scores well on the value factors will make a buyer feel like a real winner who made a smart choice."

"Brand building and strong Total Quality, rather than incentives, are the keys to delivering value to consumers," says Gorrell. "Until the domestics reestablish their brands and introduce hot new products, they'll need incentives to roll vehicles off dealers' lots."

Buyers participating in the study purchased their new vehicles between October 2003 and March 2004. They had at least 90 days of ownership experience before they were surveyed. All Total Value Award(TM) winners had to be 2004 models.

Research pioneer Strategic Vision measures buyer satisfaction as consumers define it: the complete ownership experience, including the emotional response. The firm has calculated its Total Quality Index(TM) annually since 1995, and Total Value Index(TM) since 1996. A Total Delight Index(TM) that calculates the dynamics that make vehicles exceptional debuted in January 2003.

Founded in 1987, the company conducts leading-edge research in consumer and constituent decision-making for diverse companies. Clients include various auto manufacturers, as well as many Fortune 100 companies and governments worldwide.