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© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY

Thinking Small

in a Big Way

Mike VanNieuwkuyk Executive Director, Global Automotive

J.D. Power and Associates


2

"The bigger, the better"

Luxurious Roomy

Expensive Well-Equipped

Style Status

Grand

Best Comfortable


3

“Good things come in

small packages”


4

Why small cars are suddenly big business Get better mileage, or else! That’s the U.S. government’s mandate to automakers, who must raise the average

car’s fuel efficiency to 54.5 MPG by 2025 – a whopping 100% increase over existing standards – to curb oil

consumption.

Small engines are transforming auto industry "Americans are willing to accept smaller engines as long as there's power," IHS analyst Aaron Bragman said.

"This is where the industry is headed."

Will Detroit three excel building smaller cars High gasoline prices and changing consumer preferences are fundamentally altering the way the U.S. car

business works. The decades-old trend towards buying more pickups and sport-utility vehicles has reversed.

Mercedes-Benz gets small; but not too small “We are going aggressively into compact cars… We have to enlarge our audience. There is no chance to be

competitive in unit sales unless you do this.” - Joachim Schmidt, executive vice president Mercedes-Benz

Cars, sales and marketing

Ward’s 2012 “10 Best Interiors” List Includes Four Compact Cars WardsAuto editors “10 Best Interiors” list for 2012 includes four subcompact or compact models, suggesting

yet again that driving a cheap car doesn’t always mean settling for a cheap cabin.

“Small Talk”

http://www.forbes.com/


5 5

Market Drivers


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Getting to 2025…

2016 model year:

35.5 mpg fleet average

39 mpg for cars

30 mpg for light trucks

2012 model year:

30.1 mpg fleet average

33.8 mpg for cars

25.7 mpg for light trucks

…will require a 4.87%

annual increase in MPG

2016 35.5

2017 37.2

2018 39.0

2019 40.9

2020 42.9

2021 45.0

2022 47.2

2023 49.5

2024 51.9

2025 54.5

CAFE Standards

Market Drivers

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The peak in gas prices in summer of 2008 sparked great

activity in sale of hybrid and midsize to small vehicle

Slow steady rise in prices is keeping consumer’s focused on

fuel economy

Gas Prices

Market Drivers


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Expanding needs

Increased flexibility

Increased functionality

Weekday Weekend

Average Daily Time In Vehicle

2 hours 52 minutes* 2 hours 7 minutes*

*2009 Arbitron National In-Car Survey

18:34 per

Week

Time In Vehicle

Market Drivers


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Small Vehicle Data


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Importance of the Interior

Source: 2008-2011 J.D. Power and Associates APEAL Study – Compact and Small Vehicle Segment Owners

0%

10%

20%

30%

40%

50%

60%

70%

2008 2009 2010 2011

Percent indicating most important factors in your choice of make/model

37%

41% Interior comfort: 5th of 19

63% 60% Gas mileage: 1st of 19

33%

37% Price/payment: 7th of 19

22%

26% Advanced Tech: 13th of 19

16%

20% The “deal”: 14th of 19 18%

12% Environmental impact: 19th of 19

Small Vehicle Data


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9%

36%

31%

20%

4%

0%0%

5%

10%

15%

20%

25%

30%

35%

40%

Under -

$15,000

$15,000 -

$19,999

$20,000 -

$24,999

$25,000 -

$29,999

$30,000 -

$34,999

$35,000 -

$39,999

2008 2011

Price of Vehicle

Percent indicating range of price paid for small vehicle

Average: $20,977

Small Vehicle Data

Source: 2008 J.D. Power and Associates APEAL Study – Compact and Small Vehicle Segment Owners


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9%

36%

31%

20%

4%

0%

4%

25%

34%

27%

8%

2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Under -

$15,000

$15,000 -

$19,999

$20,000 -

$24,999

$25,000 -

$29,999

$30,000 -

$34,999

$35,000 -

$39,999

2008 2011

Price of Vehicle

Percent indicating range of price paid for small vehicle

Average: $20,977 $23,078

Small Vehicle Data



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Interior Design and Materials 2008

Ford

Dodge

Honda

Volkswagen

Small Vehicle Data


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2012 Interior Design and Material Upgrades

Ford

Dodge

Honda

Volkswagen

Small Vehicle Data


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Increase in Feature Take Rate* from 2008 to 2011

*Self-reported by owners of new 2008 and 2011 vehicle owners after 3 months of ownership


Safety Features

201% Rear View Camera

77% Telescopic Steering Wheel

52% Heated/Defrost Side Mirrors

26% Automatically Dimming Rear View Mirror

24% All-Wheel Drive (AWD)

Entertainment Features

68% Satellite Radio

19% DVD-Audio Capable Sound System

9% MP3 Capable CD Player

Information Features

121% Navigation System

71% Compass

31% Trip Computer

18% Exterior Thermometer Gauge

Convenience Features

71% Remote Engine Start-Up

59% Audio Steering Wheel Controls

46% Bottle Holders In Door Panels

25% Power Liftgate/Trunk/Hatch

Comfort Features

90% Heated Seats

70% Power Lumbar Adjustment

44% Leather Seats

42% Power Adjustable Passenger Seat

37% Adjustable Sliding Rear Seats

Climate Control Features

88% Automatic Climate Control

38% Dual-Zone Temperature Control

Small Vehicle Data


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(1.31)

(0.67)

8.15

10.46

10.58

12.48

14.62

14.87

17.03

17.57

9.49APEAL Index

Interior

Seats

Driving Dynamics

Exterior

Audio/Ent/Nav

HVAC

Visibility/Driving Safety

Storage and Space

Fuel Economy

Engine/Trans(1.31)

(0.67)

8.15

10.46

10.58

12.48

14.62

14.87

17.03

17.57

9.49APEAL Index

Interior

Seats

Driving Dynamics

Exterior

Audio/Ent/Nav

HVAC

Visibility/Driving Safety

Storage and Space

Fuel Economy

Engine/Trans

APEAL Index Points: 2011 Better / (Worse) than 2008

Small Vehicle Data

Improved Satisfaction: 2008 to 2011


Most Improved Interior Attributes

Pleasantness of audible signals

Attractiveness of interior lighting

Interior materials convey impression of high quality

Usefulness of courtesy lights

Overall interior quietness

Most Improved Seat Attributes

Comfort of driver's seat back/lumbar support

Seat material conveys impression of high quality

Styling of the seats

Ability of seat surfaces to resist soil/lint

Comfort of driver's bottom seat cushion


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Small Cars Only?...

…no, but gas prices, CAFE requirements and the integration of

automotive features and technologies will continue to position

small vehicles as a viable choice for consumers


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17.016.5 16.1

13.2

10.4

11.6

12.7

14.315.2

16.016.4

4.0 4.4 4.6 4.23.5 3.8

4.35.1 5.4 5.7 5.8

0

2

4

6

8

10

12

14

16

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US Industry Small VehiclesMillions

U.S. Market: Small Vehicle Sales

Small Vehicle Market Share 23.6% 26.6% 28.3% 32.0% 33.9% 32.6% 33.6% 35.5% 35.5% 35.4% 35.5%

Source:

LMC Automotive

In 2011, small vehicles, sub-compact and compact cars, CUVs, MPVs

and SUVs, accounted for 1 in every 3 vehicles sold in the U.S.


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Thank You!

Mike VanNieuwkuyk Executive Director, Global Automotive

J.D. Power and Associates

thinking small in a big way - insidepenton.com · small engines are transforming auto industry...

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