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J.D. Power Automotive Marketing and Media Annual Review 2008

By Fuel

JD Power recently hosted a webcast of their 2008 Media Annual Review from New York. The presentation covered a wide range of topics, including industry sales, customer segmentation, online shopping behavior, hybrid owners and “green customers” and the capabilities of their media analysis products. Please find the highlights below.

INDUSTRY SALES TRENDS

• Vehicle sales are expected to continue their decline in 2008; JD Power’s forecast is currently at 14.9 million for the 2008 CY. They expect OEMs to further cut fleet sales to focus on selling more profitable retail units. This is in contrast to a focus on keeping plants running in previous years that resulted in carrying costs for unsold inventory.
• JD Power predicts the market is restructuring toward smaller cars, and they expect that the compact segments will continue to be the winners in terms of sales increases for 2008.
• Toyota passed Ford in total sales in 2007 to become the second largest OEM in the US in terms of sales. Domestics will continue to suffer as their highest volume vehicles are in segments hit hardest by increasing fuel prices. Comparing brands on their ability to attract new buyers as well as increase sales year over year, import brands have a clear advantage.
• General economic conditions are driving this decline, which has cost the industry 2 million retail units between 2000 and 2007. Not only are personal financial conditions deteriorating, the availability of credit has tightened up with the increase in the federal funds rate which started in 2004 and only eased last fall. These increased financing costs have added $3000 to the average cost of a new vehicle over the length of its finance period.

MEDIA TRENDS

• JD Power has renamed their “traditional” media report the Offline Media Report and added lifestyle and attitudinal segmentation.
• The Road & Track and Car & Driver websites indexed very high among JDPA’s Auto Enthusiasts segment along with competitors Motor Trend, Cars.com and AutoTrader. As one might expect, this group indexes quite high for “buzzing” about vehicles, an average person in this group talks to nearly 9 other people about their vehicle.

ONLINE VEHICLE SHOPPING

• The percentage of vehicle buyers who use the internet continues to increase for both new (70%) and used (61%) vehicle shoppers. Trends show that buyers are starting to use the internet more for researching makes and models than simply as a source for pricing.
• Third party sites are still most likely to be the first site visited by a new car shopper online, but their margin over OEM sites has declined and they are now nearly at parity. In terms of all site visits OEM sites have led third party sites since 2003 and are increasing their lead.
• Online shoppers who seek out consumer generated content are most likely to look for consumer ratings and reviews than other types of CG information.
• Although only 1 in 5 online auto shoppers request a quote, 2 in 5 visit a dealer based on information found on the internet.
• The online shopping process takes about 3 months for the average auto shopper, commencing roughly 3 weeks after they first decide it is time to purchase a new vehicle. Some shoppers take as much as 5 months while at the other extreme one-third of buyers purchase within 1 month of making the decision to buy.
• About half of all online shoppers watch video online, although only one quarter will be looking for automotive video. The fast growing compact segments tend to have the highest percentage of shoppers who view video online.

HYBRID/GREEN OWNERS

• The hybrid owner data confirmed results of other studies which indicated they tend to attract an older, more affluent and educated buyer; the “green” buyers profiled had a propensity to purchase small, fuel efficient vehicles, but not necessarily hybrids.

The full document can be found here