Buyers See More Value in Brand Than Incentives, Says Strategic Vision

Business Wire, Oct 10, 2005

SAN DIEGO -- Strong anticipated resale value, reliability and durability helped propel Japanese brands to top spots on 12 of 23 segments on Strategic Vision's 2005 Total Value Index(TM) (TVI). The San-Diego based research firm today announced results of its value calculations that factor economic issues against the quality of the complete ownership experience.

Toyota Motor Sales repeated as the corporation with the most winners, four for Lexus (one a tie), one for Toyota and two for upstart Scion, which was the top-rated brand. General Motors won four segments, as did Honda/Acura (one a tie) and BMW/Mini. Nissan scored two wins, while Audi, Ford, Kia and Subaru had one apiece.

"A strong brand reputation equates in owners' minds to value," says Strategic Vision CEO Darrel Edwards, Ph.D. "The expected economic issues of reliability, durability and resale value can carry more weight than incentives since buyers define value not just by price paid, but what they get for their money."

"For 2005," continues Strategic Vision Vice-President Daniel Gorrell, "we're seeing brands, such as Honda, Lexus and BMW, winning many segments on the strength of their reputations in long-term economic issues. In some cases they offered attractive leases on soon-to-be replaced models, and those soared to the head of their class. Incentives on less respected brands do not have the same effect."

Scion showed major gains for 2005, unseating sister brand Lexus as highest scoring in Total Value. Two of its three models (xA and xB) led their segments, scoring well in value for the money, economical to own, extremely affordable, standard equipment and fuel economy.

Mini Cooper was the highest scoring model (803), followed by its convertible versions (793), Scion xA and Nissan Altima (tied at 791) and the BMW-3-Series (790). Segment leaders, based on ratings of more than 69,000 buyers, were:

Small Car                   Scion xA              791

Small Multi-Function        Scion xB              770

Medium Car                  Nissan Altima         791

Medium Multi-Function       Chevrolet Malibu Maxx 742

Larger Car                  Kia Amanti            773

Near-Luxury Car             BMW 3-Series          790

Luxury Car                  Lexus GS, Acura RL,   778/777/777 (tie)(b)
                            Lexus LS 430(a)

Luxury Multi-Function       Audi A4/S4 Avant      743

Small Specialty             Mini Cooper(a)        803
(less than $25,000)

Small Specialty             BMW 3-Series Coupe    767
(greater than $25,000)

Mid-Specialty Car           Honda Accord Coupe(a) 785

Convertible                 Mini Cooper           793
(less than $30,000)          Convertible

Convertible                 Cadillac XLR(a)       774
(greater than $30,000)

Minivan                     Honda Odyssey         719

Small SUV                   Honda Element         763

Medium SUV                  Toyota 4Runner(a)     721

Medium Crossover            Nissan Murano         733

Large SUV                   Chevrolet Tahoe       716

Near Luxury SUV             Lexus RX 330(a)       763

Luxury SUV                  Lexus GX 470(a)       772

Compact Pickup              Subaru Baja           753

Full-Size Pickup            Ford F-150(a)         721

Heavy Duty Pickup           GMC Sierra 2500/3500  708


(a) 2004 Total Value Award(TM) winners
(b) Differences of 1-2 points are not statistically significant

Survey respondents purchased their new vehicles between October 2004 and March 2005 and had owned them at least 90 days before they were surveyed. Only models designated 2005 were eligible for Total Value Awards(TM). Since this timeframe preceded manufacturers' "employee discount" promotions, its effect on buyers' perceptions and percent incentives is unknown.

Industry-wide, buyers reported the use of incentives in 60 percent of sales. Scion, at 8 percent, used them the least, while Pontiac at 84 percent had the most frequent use. Overall, use of incentives fell for domestics from 82 to 78 percent, but increased for Japanese and European brands from 38 to 40 percent, and 32 to 33 percent, respectively.

At the heart of the Total Value Index(TM) is the quality of the ownership experience -- everything involved in buying, owning and driving a new vehicle. All economics issues, both immediate (price, affordability, deal offered, warranty and standard equipment) and expected (durability, future trade-in, mileage, economical to own, reliability and durability) are then factored against that perceived quality.

Strategic Vision is a pioneer is researching buyer satisfaction as consumers define it: the complete ownership experience, including the emotional response. This information is used in calculating several annual indices: Total Quality Index(TM) (since 1995), Total Value Index(TM) (since 1996), Problem Impact Index (since 1989) and Total Delight Index(TM) (since 2000).

Founded in 1987, the company conducts leading-edge research in consumer and constituent decision-making for diverse companies. Clients include various auto manufacturers, as well as many Fortune 100 companies and governments worldwide.