Consumers Want 'Honest' Pricing in Autos, According to New AlixPartners Survey

- Findings Could Auger Well for Automakers Moving to Get MSRPs More in Line with Actual Transaction Prices

- Results Are Sneak Peek of AlixPartners' Upcoming Consumer Brands Survey

DEARBORN, Mich., Jan. 10 -- Auto shoppers, like buyers of virtually all consumer products, no longer have the patience to sort through rebates and other incentive offers to discern the actual price they're going pay at the dealer, versus the manufacturer's suggested retail price (MSRP) -- and one big reason is the continuing, stunning rise of the Web as an auto-shopping tool. That's according to John Hoffecker, AlixPartners' leading automotive expert and co-lead of the firm's corporate performance improvement consulting unit, who today gave financial analysts attending the Detroit auto show a sneak peek into the automotive section in AlixPartners' inaugural consumer products survey, the 2007 Consumer Brands Index(TM), which will be released in full next month.

Hoffecker made his remarks here before the Auto Analysts of New York Conference, sponsored this year by Citigroup Corp. in conjunction with the North American International Auto Show now going on in Detroit.

"Though rebates and other incentives were once a powerful marketing tool in the auto industry, this new research shows that auto buyers are no longer willing to settle for anything less than totally honest and consistent pricing," said Hoffecker. "In fact, 'honest' prices had the highest mean score, 4.32, among all survey questions in that category, versus a mean score of just 2.86 for 'lowest' prices."

Hoffecker went on to note the study's findings about the breathtaking rise of the Internet as an influencer of auto-buying decisions.

"The Web has officially become a full-fledged retail channel for automotive," said Hoffecker. "According to our survey, no fewer than 41 percent of auto buyers consider the Internet to be a credible source of product information, just behind 'word-of-mouth' at 49 percent. By comparison, the survey shows that Consumer Reports magazine stands at just 2 percent.

"Along the way, the Web also has become the window through which auto shoppers compare not just vehicles but also prices," continued Hoffecker. "Therefore, manufacturers that are moving to get their MSRPs more in line with their actual transaction prices may well be taking a step in the right direction. However, of course, weaning consumers from 'deals' is no easy task, meaning that continued cost-cutting and other strategic actions should still be very much on the minds of manufacturers and suppliers alike."

The 2007 Consumer Brands Index(TM) was conducted by Fred Crawford, the other co-lead of AlixPartners' performance improvement unit and a noted consumer expert. It surveyed 5,000 U.S. consumers in the fourth quarter of 2006. Crawford also oversees an annual survey of consumer retailers for the firm.

"When this new brands survey is released in its entirety next month, we think it will shed all-new light on why, exactly, consumers like and don't like certain brands, from consumer electronics to fashion to cars," said Crawford.

Hoffecker is also author of AlixPartners' annual automotive study -- which last summer noted that 38 percent of auto suppliers in North America face "fiscal danger" within two years.

About AlixPartners

AlixPartners LLP is a global performance improvement, corporate turnaround and financial advisory services firm. The AlixPartners' "one-stop-shop" suite of services range from operational performance improvement and financial restructuring across all major corporate disciplines (manufacturing, supply chain, IT, sales and marketing, etc.), to financial advisory services (including financial reporting, corporate governance and investigations) to technology-enabled restructuring and claims management. Headquartered in Southfield, Michigan, the firm has around 600 employees, and has offices in Chicago, Dallas, Detroit, Dusseldorf, London, Los Angeles, Milan, Munich, New York, Paris, San Francisco and Tokyo. It is on the Web at www.alixpartners.com.