Posted by: engineguy | September 29, 2007

How Do Most of Us Make a Car Buying Decision?

Once car buyers decide on a an import or domestic brand, they aren’t likely to change their preference, suggests a new study by the consultancy J.D. Power & Associates.

According to the 2007 “Escaped Shopper Study,” which looks at why consumers consider one model but ultimately purchase another, about 50% of vehicles bought in the U.S. market are imports, but about 80% of new-vehicle buyers limit their considerations to include only domestic models or only import models.

Per the study–based on responses from 31,355 new-vehicle buyers surveyed between May and July–among the 20% who cross-shop both import and domestic vehicles, those who buy a domestic vehicle tend to do so because they decide they do not want an import, not because they wanted a domestic vehicle.

J.D. Power & Associates’ study finds that buyers of domestic new vehicles also tend to decide against import brands for financial reasons, such as a lack of aggressive rebates or other incentives from import brands.

By contrast–and probably to no one’s surprise–import buyers who reject domestic models do so, per the study findings, because of “perceived” deficiencies, such as concerns about reliability, gas mileage or poor resale value.

The key term may be “perceived” since J.D. Power notes that perception is a lingering problem for domestics, the quality of whose vehicles has improved dramatically in recent years.

Tom Gauer, senior director of the firm’s auto retail research, says that although domestics have made tremendous strides on inherent quality of vehicle — “Night and day from where they were years ago” — the issue when dealing with customer perception is that it is difficult and time-consuming to get consumers’ images to change.

By way of example, he says Jaguar has been ranking high in the the firm’s satisfaction studies. “But people think they still have a lot of problems. The market needs time.”

Kara Steslicki, research manager of the automotive retail practice at J.D. Power, adds that, among those consumers who look only at imports and domestics, the numbers have tended to skew toward import brands. “In 2003, there were a higher percentage of people only shopping domestics,” she says. “This year, we see it reversed.”

The study also found that nearly 40% of all new-vehicle shoppers cite price as a key reason for rejecting a model. Also, about 45% of new-vehicle shoppers took a test drive before rejecting a model. More than 60% of those who rejected a vehicle said they researched a vehicle online, with more than 20% saying the Internet influenced their decision to reject a model.

The study also found that consumers who shop for a hybrid are less likely to reject such a vehicle because of its price than those who shop for a non-hybrid, but not by much: 53% of hybrid shoppers reject such a vehicle for price, versus 59% of non-hybrid vehicle shoppers.

 

 

From an article by Karl Greenberg of Media Post

 

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