Report Says New-Vehicle Buyers Increasingly Accepting of Import Brands

WESTLAKE VILLAGE, Calif.: 1 December 2005 —New-vehicle buyers are increasingly accepting of import brands, and those who purchase domestic vehicles are less likely to cite an aversion to imports as a reason for buying a domestic brand, according to the J.D. Power and Associates 2005 Avoider StudySM released today.

The study, which examines the reasons consumers fail to consider particular models when shopping for a new vehicle, finds that fewer new-vehicle buyers feel the need to “buy American.” As import sales increase in every region of the United States, the most notable change has taken place in the South, where only 34 percent of domestic-vehicle buyers said they specifically didn’t want a foreign/import vehicle—down from 40 percent in the 2004 study. Avoidance of Korean-made vehicles, for example, has declined considerably in the South—from 41 percent of domestic-vehicle buyers in 2004 to 31 percent in 2005.

“Kia, in particular, has publicized goals of focusing more marketing efforts on the central region of the country, and they are right in doing so, particularly in the South,” said Dennis Galbraith, senior director of digital marketing solutions at J.D. Power and Associates. “Although Kia does not build any vehicles in the United States, many vehicles from import brands are now built in the South, and attitudes there are changing rapidly.”

Some manufacturers are putting their promotions and incentives where they will do the most good, and others are not. For example, BMW offers full maintenance for four years or 50,000 miles. This is a clear response to the fact that fear of high maintenance costs are a more frequent reason for avoiding BMW, Jaguar, Maserati and Mercedes-Benz vehicles than is the case with other luxury brands.

The study also finds that while full-size pickup truck market remains a vital profit center for Ford, Chevrolet, Dodge and GMC, domestic trucks are more frequently being purchased because of incentive programs rather than perceptions of reliability.

“Domestic trucks often have a negative reputation for reliability among truck buyers, even those who buy domestic trucks,” said Galbraith. “The domestic truck market is especially vulnerable to imports. The most common reason domestic truck buyers have for avoiding imports is that they don’t want to buy an import, but many buyers are beginning to abandon that reasoning.”

The study finds that few domestic truck buyers question the quality or reliability of imports. For example, the Honda Ridgeline, a mid-size truck from a company new to the American truck market, benefits from the Honda brand’s reputation for reliability. Despite the Ridgeline’s innovative styling, 49 percent of owners cite either reliability or workmanship as the most influential reason for their purchase, while only 8 percent say vehicle styling was the most influential reason.

While domestic brands overall have improved in the quality studies conducted by J.D. Power and Associates, the frequent promotional shift toward price incentives may draw attention away from product quality messages.

“Marketing research suggests a positive correlation between price and product-quality perceptions among consumers. In other words, consumers often believe that if vehicles are high quality, automakers would be able to charge more for them,” said Galbraith. “The good news for Detroit is that the quality of domestic vehicles is higher than many people perceive it to be. The bad news is that quality perception, not reality, rules the marketplace. Quality perceptions will be slow to improve if manufacturers are constantly advertising that they are selling their vehicles for less than they initially intended.”

Asian imports also deal with misconceptions in the marketplace. The study finds that new-vehicle buyers more frequently avoid Asian imports because they perceive the vehicles to be too small than is the case for domestic vehicles of nearly identical dimensions. This is often the case for the Toyota Sequoia when compared to domestic SUVs of a similar size, and the Nissan Titan when compared to full-size domestic trucks. However, this misconception appears to be much less of a concern in the midsize van segment.

The 2005 Avoider Study is based on responses from more than 34,000 owners who registered a new vehicle in May 2005.

About J.D. Power and Associates Headquartered in Westlake Village, Calif., J.D. Power and Associates is an ISO 9001-registered global marketing information services firm operating in key business sectors including market research, forecasting, consulting, training and customer satisfaction. The firm’s quality and satisfaction measurements are based on responses from millions of consumers annually. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies Founded in 1888, The McGraw-Hill Companies is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor’s, McGraw-Hill Education and BusinessWeek. The Corporation has more than 300 offices in 40 countries. Sales in 2004 were $5.3 billion. Additional information is available at http://www.mcgraw-hill.com.