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Got this news report at work. Detroit news published it and i found it really interesting:
What can the big three do to win back customers?
They are dramatically changing the way they do business by cutting costs, restructuring operations and pouring resources into new products.
But Detroit's troubled Big Three automakers have an equally tough task ahead in changing the minds and attitudes of American consumers.
Concerns about quality and reliability are the prime reasons that consumers avoid vehicles built by General Motors Corp., Ford Motor Co. and the Chrysler Group of DaimlerChrysler AG, according to an exclusive study conducted for The Detroit News by J.D. Power and Associates.
The News study found that despite making significant improvements in quality, the Big Three still suffer from the perception that their products are inferior to those made by Asian competitors.
While 83 percent of the 500 consumers polled said they will consider buying or leasing an American-branded car or truck in the next 24 months, only 49 percent said they would "most likely" purchase a vehicle built by GM, Ford or Chrysler.
And of the 18 percent polled who avoid American brands entirely, the most influential concerns were about reliability, poor quality, resale value and fuel economy.
"People are just so many times more likely to avoid a domestic brand vehicle because of these issues than they are to avoid an Asian brand," said Todd Wilson, director of automotive research for J.D. Power in Westlake Village, Calif.
Despite the fact that the quality gap between Japanese rivals Toyota Motor Corp. and Honda Motor Co. has narrowed considerably, the Big Three U.S. automakers still suffer from a legacy of shoddy workmanship in the past.
"I just stay away from American cars," said Leona Drolet, an Ocala, Fla., resident and owner of a Korean-made Kia Sephia sedan. "I've had nothing but problems with them."
With GM, Ford and Chrysler gearing up for new-model introductions at the 2007 North American International Auto Show in Detroit, company executives are acutely aware that consumers demand superior quality in every segment of the market.
"There was a point in our history when the domestics could put an average product on the market and be very successful," said Mark LaNeve, head of GM's North American sales and marketing. "If you're not world class today, you get crushed."
Twenty years ago, GM, Ford and Chrysler collectively had 70 percent of the U.S. market for new vehicles. But in 2006, their combined share had fallen to 54 percent through November.
The downward spiral spurred huge restructurings at GM and Ford as both struggled to bring their manufacturing capacities in line with shrinking volumes.
A similar downsizing is expected to be announced soon at Chrysler.
But slashing blue-collar jobs and closing factories won't win back the hearts and minds of some American consumers who increasingly see Japanese, European and even Korean automakers as more capable manufacturers.
According to the Detroit News study by J.D. Power, 70 percent of consumers who avoid American brands cite "concerned about reliability" as their chief reason.
By comparison, only 20 percent of those who avoid Asian brands say reliability is a concern, and just 19 percent of European brand avoiders express concerns about vehicle reliability.
The perception, however, does not match the reality.
In J.D. Power's 2006 benchmark study of vehicle dependability, American vehicles registered 234 problems per 100 vehicles after three years of ownership. European vehicles had 270 reported problems, and Asian brands had 208.
In its study for The News, J.D. Power concluded that the perception gap is definitely dragging the Big Three down in the marketplace.
"American vehicles are avoided due to perceived quality concerns much more frequently than imported vehicles," the study said. "Actual quality of American vehicles shows a much more competitive outlook."
GM takes action
GM, in particular, has moved aggressively to improve the perception of its quality. The automaker's introduction last year of a 100,000-mile warranty on its engines and transmissions was a direct response to consumer concerns about dependability.
"Marketing-wise, we've taken it head-on," said Paul Ballew, GM's head of Global Marketing and Industry Analysis. "We have the best (warranty) coverage program in America to take the concerns out of buyers' minds."
But improving quality and backing it with extended warranties only goes so far, said Mark Fields, president of Ford's Americas division.
"It is frustrating, but we can't go out there and say, 'Look at us, aren't we great?' " Fields said. "We have to doggedly improve quality and get the message out."
The message, said J.D. Power's Wilson, is colored by past experiences that American consumers have had with less-than-reliable Big Three vehicles.
"The perception of quality is the point," Wilson said. "The Asians just have a better image of building a better product, that they're on the cutting edge of technology."
Consumers also have their pet reasons for avoiding Asian and European brands.
Of the poll respondents who said they avoid Asian vehicles, 61 percent simply don't want to own a brand that originates in the Far East. As far as European vehicle avoiders, 80 percent said the brands are too expensive.
But J.D. Power's study for The News indicates that American consumers are far more opinionated when it comes to vehicles designed and built by GM, Ford and Chrysler.
In the poll, respondents cited seven separate reasons, on average, to avoid American brands. That was double the number of avoidance reasons expressed for Asian and European vehicles.
"When someone comes up with seven different reasons, it's a much more active pattern of avoidance," Wilson said. "To have that many reasons shows a high correlation between perception and past experience."
Besides reliability, quality and vehicle depreciation, American brand avoiders had a high level of concern about maintenance costs, bland designs, inadequate gas mileage and lack of performance.
Sprucing up design
The issue of vehicle design is one that Big Three executives are taking seriously. Ford has vowed to spice up its designs after conservative styling helped sink sales of its Ford Five Hundred sedan and mainstream sport utility vehicles.
GM also has unleashed its designers after years of turning out cookie-cutter cars and styling gaffes such as the Pontiac Aztek SUV. Two of GM's sleekest new vehicle designs, the Chevrolet Malibu and Cadillac CTS passenger cars, will be unveiled at the upcoming auto show in Detroit.
Putting the sizzle back in styling could lure back consumers who have confidence in the improved quality of Big Three vehicles, but are put off by the appearance.
"Quality-wise, I have no problem with GM cars or Fords," said Gene Wingo of Keller, Texas. "But we just bought a new Suzuki XL-7 midsize SUV, instead of a Chevrolet Equinox, because of its really attractive styling."
Fuel economy is another area that American avoiders cite as a principle reason to buy Asian models. Even though GM boasts industry-leading fuel economy in some vehicle segments, consumers often perceive Toyota and Honda as more fuel-efficient brands.
What can the big three do to win back customers?
They are dramatically changing the way they do business by cutting costs, restructuring operations and pouring resources into new products.
But Detroit's troubled Big Three automakers have an equally tough task ahead in changing the minds and attitudes of American consumers.
Concerns about quality and reliability are the prime reasons that consumers avoid vehicles built by General Motors Corp., Ford Motor Co. and the Chrysler Group of DaimlerChrysler AG, according to an exclusive study conducted for The Detroit News by J.D. Power and Associates.
The News study found that despite making significant improvements in quality, the Big Three still suffer from the perception that their products are inferior to those made by Asian competitors.
While 83 percent of the 500 consumers polled said they will consider buying or leasing an American-branded car or truck in the next 24 months, only 49 percent said they would "most likely" purchase a vehicle built by GM, Ford or Chrysler.
And of the 18 percent polled who avoid American brands entirely, the most influential concerns were about reliability, poor quality, resale value and fuel economy.
"People are just so many times more likely to avoid a domestic brand vehicle because of these issues than they are to avoid an Asian brand," said Todd Wilson, director of automotive research for J.D. Power in Westlake Village, Calif.
Despite the fact that the quality gap between Japanese rivals Toyota Motor Corp. and Honda Motor Co. has narrowed considerably, the Big Three U.S. automakers still suffer from a legacy of shoddy workmanship in the past.
"I just stay away from American cars," said Leona Drolet, an Ocala, Fla., resident and owner of a Korean-made Kia Sephia sedan. "I've had nothing but problems with them."
With GM, Ford and Chrysler gearing up for new-model introductions at the 2007 North American International Auto Show in Detroit, company executives are acutely aware that consumers demand superior quality in every segment of the market.
"There was a point in our history when the domestics could put an average product on the market and be very successful," said Mark LaNeve, head of GM's North American sales and marketing. "If you're not world class today, you get crushed."
Twenty years ago, GM, Ford and Chrysler collectively had 70 percent of the U.S. market for new vehicles. But in 2006, their combined share had fallen to 54 percent through November.
The downward spiral spurred huge restructurings at GM and Ford as both struggled to bring their manufacturing capacities in line with shrinking volumes.
A similar downsizing is expected to be announced soon at Chrysler.
But slashing blue-collar jobs and closing factories won't win back the hearts and minds of some American consumers who increasingly see Japanese, European and even Korean automakers as more capable manufacturers.
According to the Detroit News study by J.D. Power, 70 percent of consumers who avoid American brands cite "concerned about reliability" as their chief reason.
By comparison, only 20 percent of those who avoid Asian brands say reliability is a concern, and just 19 percent of European brand avoiders express concerns about vehicle reliability.
The perception, however, does not match the reality.
In J.D. Power's 2006 benchmark study of vehicle dependability, American vehicles registered 234 problems per 100 vehicles after three years of ownership. European vehicles had 270 reported problems, and Asian brands had 208.
In its study for The News, J.D. Power concluded that the perception gap is definitely dragging the Big Three down in the marketplace.
"American vehicles are avoided due to perceived quality concerns much more frequently than imported vehicles," the study said. "Actual quality of American vehicles shows a much more competitive outlook."
GM takes action
GM, in particular, has moved aggressively to improve the perception of its quality. The automaker's introduction last year of a 100,000-mile warranty on its engines and transmissions was a direct response to consumer concerns about dependability.
"Marketing-wise, we've taken it head-on," said Paul Ballew, GM's head of Global Marketing and Industry Analysis. "We have the best (warranty) coverage program in America to take the concerns out of buyers' minds."
But improving quality and backing it with extended warranties only goes so far, said Mark Fields, president of Ford's Americas division.
"It is frustrating, but we can't go out there and say, 'Look at us, aren't we great?' " Fields said. "We have to doggedly improve quality and get the message out."
The message, said J.D. Power's Wilson, is colored by past experiences that American consumers have had with less-than-reliable Big Three vehicles.
"The perception of quality is the point," Wilson said. "The Asians just have a better image of building a better product, that they're on the cutting edge of technology."
Consumers also have their pet reasons for avoiding Asian and European brands.
Of the poll respondents who said they avoid Asian vehicles, 61 percent simply don't want to own a brand that originates in the Far East. As far as European vehicle avoiders, 80 percent said the brands are too expensive.
But J.D. Power's study for The News indicates that American consumers are far more opinionated when it comes to vehicles designed and built by GM, Ford and Chrysler.
In the poll, respondents cited seven separate reasons, on average, to avoid American brands. That was double the number of avoidance reasons expressed for Asian and European vehicles.
"When someone comes up with seven different reasons, it's a much more active pattern of avoidance," Wilson said. "To have that many reasons shows a high correlation between perception and past experience."
Besides reliability, quality and vehicle depreciation, American brand avoiders had a high level of concern about maintenance costs, bland designs, inadequate gas mileage and lack of performance.
Sprucing up design
The issue of vehicle design is one that Big Three executives are taking seriously. Ford has vowed to spice up its designs after conservative styling helped sink sales of its Ford Five Hundred sedan and mainstream sport utility vehicles.
GM also has unleashed its designers after years of turning out cookie-cutter cars and styling gaffes such as the Pontiac Aztek SUV. Two of GM's sleekest new vehicle designs, the Chevrolet Malibu and Cadillac CTS passenger cars, will be unveiled at the upcoming auto show in Detroit.
Putting the sizzle back in styling could lure back consumers who have confidence in the improved quality of Big Three vehicles, but are put off by the appearance.
"Quality-wise, I have no problem with GM cars or Fords," said Gene Wingo of Keller, Texas. "But we just bought a new Suzuki XL-7 midsize SUV, instead of a Chevrolet Equinox, because of its really attractive styling."
Fuel economy is another area that American avoiders cite as a principle reason to buy Asian models. Even though GM boasts industry-leading fuel economy in some vehicle segments, consumers often perceive Toyota and Honda as more fuel-efficient brands.
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