analyst note may 2013
DESCRIPTION
JD Power Analyst Note for may 2013TRANSCRIPT
1 J.D. Power and Associates does not guarantee the accuracy, adequacy, or completeness of any information contained in this pub lication and is not responsible for any errors or omissions or for the results obtained from use of such information. Advertising claims cannot be based on information published in this publication. Reproduction of any material contained in this publication, including photocopying in part or in whole, is prohibited without the express written permission of J.D. Power and Associates. Any material quoted from this publication must be attributed to J.D. Power and Associates.
©2013 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.
Canada May 1, 2013
The gap between the highest and lowest-performing
non-luxury brands on the Quality Index has
diminished significantly between 2009 (113 index
point gap) and 2012 (66 index point gap)
respectively, on a 1000 point scale.
Moreover, the quality ceiling may also be in sight.
With the highest-performing brand achieving a score
of nearly 900 points, increasing customer
satisfaction with product quality is becoming
difficult to achieve. So, while continuous product
development is a mainstay, as a competitive
advantage, vehicle quality is quickly becoming a
price of entry.
While the index is a measure of perceived quality, the
number of vehicle defects as reported by the
customer is decreasing as well, reflecting a
concurrent improvement in actual quality as
measured by PP100 (problems per 100 vehicles). In
2010, the highest performing non-luxury brand had
71 reported defects per 100 vehicles and the lowest
performing had 146. In 2012, the gap narrowed to
54 PP100 (60 PP100 and 114 PP100, respectively).
When leveraging the service environment as your
differentiator, there are two significant obstacles to
earning a top service experience rating: a dealer’s
inability to provide a service appointment on the day
desired, and customers who leave with the
perception that they were not given helpful advice.
Given the above, service differentiation is no longer
simply about the quality of the repair either. On
average, 92% of non-luxury service work is done
right the first time. To truly excel, dealers must
educate their customers and demonstrate the value
of the work completed, not just that it was done
correctly.
A service experience rating of 10 out of 10 also has
the potential to retain that customer, with more than
half (52%) indicating they “definitely will”
repurchase the same make, with only 14% of those
who rate their experience an 8 saying the same. In
fact, service experience is equally impactful in
driving re-purchase intent as vehicle quality, where
a 10 out of 10 score yields 51% who say they will
definitely repurchase the same make.
(416) 507-3247
A remarkable shift has occurred in the automotive market
that squarely hands the advantage to consumers, with
dealers that either can’t or won’t acknowledge the new
environment, left standing offside.
Particularly looking at the non-luxury space, increased
focus on product quality is having a homogenizing effect
across the marketplace.
While product quality is becoming increasingly uniform
across the board, dealers still have the opportunity to put
distance between themselves and their competitors in the
quality of the service experience they provide. Given that
the average service index score on a 1000 point scale is
comparable to the lowest quality index score, it’s clear the
service environment holds the most significant upside.
Source: J.D. Power and Associates 2012 Canadian Vehicle Ownership Satisfaction Study
Vehicle quality is an increasingly weak differentiator in the non-luxury market
805 824 822 828
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700
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800
850
900
950
2009 2010 2011 2012
Inde
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core
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Service Index Highest Quality Index Score
Lowest Quality Index Score
2 J.D. Power and Associates does not guarantee the accuracy, adequacy, or completeness of any information contained in this publication and is not responsible for any errors or omissions or for the results obtained from use of such information. Advertising claims cannot be based on informati on published in this publication. Reproduction of any material contained in this publication, including photocopying in part or in whole, is prohibited without the express written permission of J.D. Power and Associates. Any material quoted from this publication must be attributed to J.D. Power and Associates.
©2013 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.
Brian Murphy
416-507-3253 ▪ [email protected] May 1, 2013
61 21
18
48 50
2
New Vehicles Used Vehicles
Cash Lease Loan
45
49
53
57
61
65
69
Ma
r-1
2
Ap
r-12
Ma
y-1
2
Jun
-12
Jul-
12
Au
g-1
2
Se
p-1
2
Oct-
12
Nov-1
2
Dec-1
2
Jan
-13
Fe
b-1
3
Ma
r-1
3
New Used
$480
$500
$520
$540
$560
Ma
r-1
2
Ap
r-12
Ma
y-1
2
Jun
-12
Jul-
12
Au
g-1
2
Se
p-1
2
Oct-
12
Nov-1
2
Dec-1
2
Jan
-13
Fe
b-1
3
Ma
r-1
3
New Lease New Loan
Percent of Total Transactions (Past 12 Months)
Average per Customer
72 Months and Greater
63%
0%
10%
20%
30%
40%
50%
60%
70%
200
8
200
9
201
0
201
1
201
2
201
3
Data from JDPA PIN Incentive Spending Report (ISR)
20%
30%
40%
50%
Ma
r-1
2
Ap
r-12
Ma
y-1
2
Jun
-12
Jul-
12
Au
g-1
2
Se
p-1
2
Oct-
12
Nov-1
2
Dec-1
2
Jan
-13
Fe
b-1
3
Ma
r-1
3
% Negative Equity Trade-In %
Percentage of negative equity vehicles at trade-in
$27,000
$28,000
$29,000
$30,000
$31,000
$32,000
Ma
r-1
2
Ap
r-12
Ma
y-1
2
Jun
-12
Jul-
12
Au
g-1
2
Se
p-1
2
Oct-
12
Nov-1
2
De
c-1
2
Jan
-13
Fe
b-1
3
Ma
r-1
3
Vehicle Price Transaction Price