Desire to 'Buy American' Drives Many New-Vehicle Shoppers

[Bruce Nunnally]

J.D. Power and Associates Reports:

The Desire to 'Buy American' Drives Many New-Vehicle Shoppers to Purchase Domestic Rather Than Import Nameplates

WESTLAKE VILLAGE, Calif., Sept. 26 /PRNewswire/ -- Despite the fact

that import vehicles make up nearly 49 percent of the U.S. auto market, the

country of origin still plays a crucial role in consumer choice of which

make and model to purchase, according to the J.D. Power and Associates 2007

Escaped Shopper Study(SM) released today. The study provides a

comprehensive evaluation of why consumers may consider one model, but

ultimately purchase another.

Nearly 80 percent of new-vehicle buyers limit their consideration set

to include only domestic models or only import models. Among those who

cross-shop for both import and domestic models, consumers who ultimately

buy a domestic frequently do so because they simply decide they do not want

an import. Buyers of domestic new-vehicles also frequently decide against

import brands for financial reasons, most often citing that the import

didn't offer aggressive rebates or other incentives.

Conversely, import buyers who reject a domestic model more frequently

point to perceived vehicle attribute deficiencies as key reasons for

rejection, such as concerns for reliability, gas mileage or poor resale

value.

"These findings point to continued difficulties for the Big Three in

Detroit as they try to win back some of the market share they lost to the

imports," said Kara Steslicki, research manager of the automotive retail

practice at J.D. Power and Associates. "It also suggests that too few U.S.

consumers have caught on to the fact that cars and trucks offered by

Detroit automakers are in many cases as good, if not better, than their

rivals from Asia and Europe. Reliability and resale value perceptions are

difficult to change overnight, especially considering that people are

already rejecting domestic vehicles because of this. To win back market

share, domestics are faced with two alternatives: either continue

outspending imports on incentives, or find vehicle specific opportunities,

such as styling or promoting a positive dealer experience, that can have an

immediate impact on consumer perceptions of the brand."

The study also finds the following new-vehicle shopper behavior patterns:

-- Nearly 40 percent of all new-vehicle shoppers cite price as a key

reason for rejecting a model. Interior (10%), the dealer experience

(10%) and quality/reliability concerns (9%) follow as the most

influential reasons for rejection.

-- Approximately 45 percent of new-vehicle shoppers took a test drive

prior to rejecting a model, and nearly 25 percent of consumers tried

to negotiate pricing before ultimately purchasing a different model.

-- More than 60 percent of rejecters indicate they researched a model on

the Internet. Additionally, more than 20 percent of shoppers claim the

Internet influenced their decision to reject a model.

-- Shoppers who researched a model by using the Internet or by reading a

magazine review are nearly half as likely to mention interior issues

as the most influential reason for rejecting a model when compared

with shoppers who actually visit a dealership (11% versus 5%,

respectively).

-- While price is a key issue among both hybrid and non-hybrid rejecters,

consumers who shop for a hybrid are less likely to reject for price

(53%) than consumers who shop for a non-hybrid model (59%).

"Consumers who shop for a hybrid essentially go into the dealership

expecting to pay a higher price for their vehicle, so it's not surprising

that the gap between hybrid and non-hybrid shoppers rejecting models due to

price is minimal," said Steslicki.

The 2007 Escaped Shopper Study is based on responses from 31,355

new-vehicle buyers surveyed between May and July 2007.