Executive Summary

Executive Summary


Vehicle Buying and Ownership Expectations Survey

October 2007


Survey Design and Purpose

This executive summary provides a brief overview of the key findings from a recent survey of buyer attitudes and expectations. The survey, conducted electronically in September 2007, explored impressions of the ownership and service experience, preferences in the buying process, and the impact of advertising and other influences on the buying decision.


This survey was commissioned by PowerHouse USA, Inc.


Profile of Survey Participants

Over 130 people took part in the online survey, with the vast majority residing in the Southeast region of the United States. The participants were selected as a random cross-section of the consumer audience, all of whom either own or lease at least one vehicle. The majority of participants expressed a preference for Ford vehicles, followed by Lexus, Honda, Toyota and BMW.


Price is the most important consideration for many buyers, rivaled only by vehicle quality and reliability. The target price range that the majority of this group is willing to spend for their next vehicle ranges from $20,000 – $39,999. They are replacing their vehicles every three to five years, and nearly half are open-minded about purchasing a new or pre-owned vehicle. A quarter of the respondents indicated that they would only consider a new vehicle, and less than 10 percent will only consider a used vehicle. And when it comes to choosing a domestic or import vehicle, nearly 60 percent would consider either one, while the preference for import vehicles beat out domestic two to one.


Service is a very important element of the vehicle ownership experience, and the survey indicates a strong bias toward dealership service. Consumers want a straight-forward sales and do not want high-pressure tactics. Word of mouth plays a significant role in the selection of a dealership, more so than advertising on radio and direct mail combined. Reputation of the dealership also factors into the decision, but surprisingly the location of the dealership plays a much less significant role. What the data show is that people are willing to travel farther to get a good deal from a reputable dealership that has a strong emphasis on customer service.  


Key Findings: Past Experience

When asked to reflect on their most recent purchase or lease of a vehicle, 60 percent of the respondents indicated that vehicle price was the most important influence on their decision. Not surprisingly, price was also the “hot button” for future purchasing expectations, with 64 percent identifying it as the most important factor, and 95 percent rating it at least “very important” if not most important. This was closely followed by vehicle type, brand and dealer reputation.


Following are the top five items that were rated as either most important or very important:


1. Vehicle price                                                                         92.0%

2. Vehicle type                                                                          90.0%

3. Vehicle brand                                                                       83.0%

4. Dealer reputation                                                                  87.0%

5. Promotions, sales and discounts                                           70.0%


(*) The percentage shown reflects the aggregate score of respondents rating this item “most important” and “very important,” weighted by the number of respondents who indicated this was the most important item.


Dealer location was ranked least important, followed by financing options. Nearly 20% indicated that the location of the dealership was not important at all, and only 5% indicated that it was the most important factor in their decision.


Key Findings: Dealership Staff Expectations

When it comes to car buying, consumers are looking for a straightforward approach and they do not want to be put under pressure when evaluating their automotive options. They know that they have options when it comes to shopping, and won’t think twice about driving away if they are not treated with courtesy and respect. Dealerships need to emphasize responsiveness before, during and after the sale if they want to get the business and have a shot at a repeat customer.


The following three items emerged as the most important factors, with weighted scores included, in dealing with dealership staff:


1. Low pressure sales                                                                94.0%

2. Straightforward approach                                                     94.0%

3. Responsiveness (phone calls, emails)                                    94.0%


(*) The percentage shown reflects the aggregate score of respondents rating this item “most important” and “very important,” weighted by the number of respondents who indicated this was the most important item.


Friendliness, attentiveness and product knowledge rounded out the list of important factors.

Key Findings: Dealership Expectations

When considering a dealership for the next vehicle purchase or lease, reputation and selection were the emerging issues of most importance, followed by on-site service availability and cleanliness of the dealership.


Following are the weighted scores of the top five criteria for selecting a dealership:


1. Reputation                                                                            92.0%

2. Selection                                                                              92.0%

3. On-site service                                                                     86.0%

4. Cleanliness                                                                           81.0%

5. Web site up-to-date                                                              70.0%


(*) The percentage shown reflects the aggregate score of respondents rating this item “most important” and “very important,” weighted by the number of respondents who indicated this was the most important item.


Once again, the dealership location ranked lowest in the overall consideration, with nearly 60 percent indicating that it was “somewhat important” or not important at all.


As participants in the survey considered the criteria for making their next purchase, they made it clear that vehicle quality and reliability are absolutely essential and are key drivers for the purchase or lease – 99 percent rated these factors as either the most important or very important factors, ranking ahead of price in level of importance.

Following are the top five factors that were identified as “most” or “very” important in making the next buying or leasing decision:


1. Vehicle quality and reliability                                                99.0%

2. Vehicle price                                                                         95.0%

3. Vehicle brand and type                                                                   94.0%

4. Dealer reputation                                                                  84.0%

5. Special promotions/discounts – tied with financing options   63.0%


Again, dealer location was rated lowest in importance, with more than half of the respondents indicating that this was only somewhat important (42 percent) or not important at all (14 percent).


When it comes to the brands that people are considering, given only one choice per participant, these are the top-rated brands in order of ranking in the survey: Ford, Lexus, Honda, Toyota and BMW. Brands which received no votes include: Audi, Buick, Chrysler, Isuzu, Kia, Land Rover, Mercury, Porsche, Saab, Subaru and Suzuki.


Key Findings: Advertising

As consumers consider their options about their next vehicle purchase or lease, television and the Internet are the clear leaders in helping to form that decision, followed by radio, newspapers and direct mail.

When it comes time to select a dealership, this shifts a bit and consumers rely more heavily on word of mouth over any other source. More than 80 percent of respondents cited word of mouth as the most influential “advertising” when selecting a dealership, over television, radio and the Internet. Here is a breakdown of the top five:


1. Word of mouth                                                                     81.0%

2. Television                                                                                       56.0%

3. Radio                                                                                    45.0%

4. Internet                                                                                43.0%

5. Direct mail                                                                            26.0%


(*) The percentage shown reflects the aggregate score of respondents rating this item “most important” and “very important,” weighted by the number of respondents who indicated this was the most important item.


It is important to recognize that each element of the media mix has an influence on the overall consideration, but these are the types which made the biggest impact in driving consumers to a dealership. It can be assumed that the cognitive effect of the television and Internet advertising on the front end (e.g., at the manufacturer level) aids the consumer in identifying a preference for brand and vehicle type. The local advertising efforts serve to guide that decision-making process and to bring traffic to dealerships that have effectively managed this media mix.


One additional note of interest: while only a third of respondents indicated that they had ever selected a dealership based on advertising, nearly half of the respondents (47 percent) stated that they have decided against a dealership because of their advertising.


Key Findings: Internet

Use of the Internet is increasingly factoring into the consumer’s shopping strategy, and the bar has been raised for dealerships to upgrade their technology and capabilities beyond the mere existence of a Web site. Dealerships should be prepared to have the following on their sites, where the vast majority of initial decisions are being made, or risk being ruled out of consideration:


1. Pricing of vehicles available online                                        89.0%

2. Easy to use site navigation features                                               87.0%

3. Up-to-date information, including inventory and specials      85.0%


(*) The percentage shown reflects the aggregate score of respondents rating this item “most important” and “very important,” weighted by the number of respondents who indicated this was the most important item.


The ability to purchase vehicles online for home or office delivery ranked last among all Internet services, with a third (33 percent) stating that it was not important, and only 30 percent rating it as “very” or “most” important.


Participants in the survey consider the manufacturer’s Web site one of the most important resources, very closely followed by the dealership Web site, for selecting a vehicle for purchase or lease. Overall, Edmunds.com was rated “most useful” behind the manufacturer and dealer sites, and KBB.com (Kelley Blue Book) ranked fourth. In the overall consideration of sites, where respondents were not limited to a single response, these five resources emerged as “most likely to use.”


1. Dealership Web site                                                              75.0%

2. Manufacturer Web site                                                          71.0%

3. KBB.com – Kelley Blue Book                                                 39.0%

4. Edmunds.com                                                                      31.0%

5. AutoTrader.com                                                                   28.0%


Key Findings: Service

Encouraging news for the dealerships that have built a strong linkage between their sales and service departments and have built customer loyalty: about half of the respondents take their vehicles to the dealership where they bought or leased to have services completed, and another 21 percent opt for another dealership. Essentially, 70 percent of vehicle owners gravitate toward dealer service. Why? Here is a quick breakdown of the top five reasons:


1. Service staff is customer focused                                          87.0%

2. Scheduling is convenient                                                      86.0%

3. Convenience of the location                                                  79.0%

4. Dealership service reputation, technical capabilities               77.0%

5. Dealership service is superior                                                         75.0%