German luxury automakers pride themselves on incorporating the latest technologies into their flagship models. Models like the Mercedes-Benz S-Class, the BMW 7 Series, and the Audi A8 each feature leading-edge automotive technologies. These direct competitors are similar, and each offers massive power and performance, a beautiful interior with the look of hand craftsmanship, and the capability to cruise cross-country or to the mall in effortless comfort. Relax with audiophile sound systems, heated and cooled seats, and a suspension that filters jarring road impact. For successful business people and entrepreneurs who can afford them, these automobiles provide a seamless integration of creature comforts and technology.

Mercedes’ flagship, the S-Class, represents style, class, and sophistication. The "entry level" model S550 ($86,525) features a 5.5-liter V-8 that routes nearly 400 horsepower (382) through a 7-speed automatic transmission. Move up to the substantially more expensive ($140,675) S600, and you get a standard V-12 engine, as well as Mercedes' Night View night vision system and Distronic radar-based cruise control system. If money is no concern, select the $182,275 S65 AMG. With 604 horsepower, a semi-active suspension (Mercedes' Active Body Control), and 20-inch wheels, this is a serious cruiser.

For BMW, the 7 Series represents the automaker's latest and greatest thinking. Technology and features that debut on the 7 Series typically filter down to BMW's other, less expensive models over time as efficiencies improve and costs decrease. Marketed by BMW as "the driver's luxury car," the 7 Series is offered in three levels: 750i, 750Li, and 760Li. The 7 Series is also available through BMW's Individual program, which offers customized models.

For $75,800, 750i buyers get a 4.8-liter V-8 engine with 360 horsepower; radar-based Active Cruise Control; and Active Roll Stabilization, which manipulates the suspension to reduce body lean when cornering. For $3,100 more, the 750Li provides added space in the rear of the vehicle interior, courtesy of five extra inches added to the wheelbase. Above and beyond the features on the 750i, this long-wheelbase model provides more rear-seat legroom, standard 20-way comfort front seats, and chrome roof moldings.

The V-12 powered 760Li offers ash wood interior trim, additional helpings of premium leather throughout the cabin, and an increase in horsepower to 438. For cost-is-no-object types, BMW Individual models are customized to each buyer's unique personality. Buyers can choose from a host of options, including five-layer, light-shifting paint; extra soft and supple Full Merino Leather; illuminated doorsills (very cool); and unique 20-inch wheels.

For Audi, the A8 is the technology leader. Mirroring the Mercedes and BMW lineup, Audi offers its flagship in three variations: A8, S8, and A8 L W12—all featuring Audi's proprietary ASF (aluminum space frame) design. The result of a partnership between Audi and Alcoa, Audi was one of the pioneers of all-aluminum design for automobiles. At $68,900, the A8 provides a V-8 engine, 350 horsepower, Quattro permanent all-wheel drive, and what is arguably a class-leading interior design.

For an additional $23,100, buyers can move up to the S8, which features a V-10 engine that shares its architecture with some Lamborghini models. With 450 horsepower, this large luxury car moves to 60 mph in under 5 seconds—serious sports car territory. And for only $119,350, the top-line W12 provides all of the aforementioned features in a long-wheelbase format.

Also available on the A8 and S8 is a Bang and Olufsen sound system designed specifically for Audi. It features 14 speakers and tweeters that rise up from the dashboard when the ignition is turned on. For $6,300, buyers can listen to 1,000 watts of audiophile-quality music as they go about their daily business.

If you have $75,000 or more to spend, each of these models represents the latest and greatest in the automotive world. With massive performance, all are super luxurious and extra capable. It's just too bad that many of them will be used for the daily grind—commuting, shopping, and driving around town—rather than on the autobahn in Germany where they belong and for which they were designed.

11:04 | Permalink | Comments (0)

Do you remember The Pepsi Challenge? In the early 1980s, Pepsi challenged consumers to take the test to determine which soft drink was preferred, Pepsi or Coca-Cola. Several months ago, I took part in the automotive version of this challenge—the Fusion Challenge. As a subscriber to Car and Driver, I was invited to a racetrack to evaluate the Ford Fusion, Honda Accord, and Toyota Camry on a course set up by the magazine, which sponsored the test on behalf of Ford Motor Company.

Early one Saturday, I arrived at the track to test these fully loaded, $30,000 family sedans. First, magazine representatives explained the purpose of the event and logistics. Then, professional driving instructors told us about basic car control techniques. Notepads were provided so we could write down our thoughts about the interior, exterior, and ride/handling characteristics of each vehicle.

Two autocross courses, which are mini racetracks with numerous twists and turns and typically placed in the parking lot of a very large racectrack, were set up with orange cones to mark the route. While half of the group was driving, the other half was evaluating static display vehicles and documenting observations about seat comfort, controls, interior design, and fit and finish. Each car was optioned so that prices were within a few hundred dollars of each other.

First up was the Ford Fusion. Nice vehicle, nice design, and solid-looking. The only drawback was the interior. The color and texture of various trim pieces was inconsistent, although the seat comfort, controls, and ergonomics were great. Next up was the Honda Accord. Similar in size to the Fusion, the Accord had a nice interior design, and the materials appeared to be consistent in texture and appearance. The surprise was the Camry. The interior of the Camry was almost Lexus-like. It seems that the Lexus Division has positively influenced the design and engineering of mainstream Toyota products. Before arriving for the challenge, I expected all vehicles to be similar; maybe the design, functionality, and ergonomics would differ, but material quality and appearance would be very close. This was not the case.

Then came the fun part—driving. With professional racing instructors alongside, things remained relatively safe. The Camry didn't roll onto its fenders under aggressive driving, the Accord didn't understeer off course, and the Fusion—with all-wheel drive (AWD)—didn’t embarrass the others on the road course. In fact, the driving experience near the limits of tire adhesion was remarkably similar in each vehicle, which begs the question: What can the average person learn about driving an autocross course at 50 to 60 mph?

First, they would learn that driving this way makes all-season tires squeal loudly, and second, that tires can accumulate thousands of miles worth of wear under hard use—even for a short time. After driving the cars, most participants came to the realization that cars can actually be driven like this without much harm. During the four-hour event, not one car spun off course, fell apart, or overheated. A few interior trim pieces came loose on one vehicle, but other than that, nothing unusual happened.

Given the competitive nature of the auto industry today, automakers must perform a great deal of due diligence before engineering and developing a new model. They ride and drive competitive models, measure every dimension, and sometimes "tear down" competitive models to see what makes them tick. It's not surprising that all these mid-size sedans have similar driving dynamics. Maybe a professional driver could discern the difference, but with screaming tires, a talkative co-pilot, and rear-seat passengers, it was hard for me to tell the difference.

For Ford, the Fusion Challenge gets consumers to consider Fusion if they are looking at an Accord or Camry. The event gives new-car buyers a chance to examine and drive each vehicle in a no-pressure environment—something that's rare in most new-vehicle dealerships. It also allows consumers to experience Ford vehicles in a fun, energy-charged environment, which may lead to positive statements about the vehicle or referrals to friends and family.

As the number of models offered by automakers increases each year—all vying for the attention of consumers—manufacturers must invest in massive advertising budgets to differentiate their products from the competition and communicate their advantages. Events like the Fusion Challenge serve that purpose at a lower price point compared to mass marketing. As for the Coke versus Pepsi issue, I prefer Pepsi.

12:38 | Permalink | Comments (0)

In high school, while most students were busy memorizing mathematical formulas and periodic tables, I spent most of my free time in the school library studying the latest editions of Car and Driver, Road & Track, and Motor Trend Magazine. Since then, I have remained an avid car enthusiast.

When I was barely 18, I went to the local Chevy dealer to test drive the 1984 Corvette. As I approached the sales office, I tried to look "older" by messing my hair and walking with increased self confidence. I thought my deception had worked, but as the salesman approached the car, keys in hand, he informed me that the dealership's policy only allowed me to sit in the new Corvette, not drive it.

I took him up on his offer. Although we had keys, they were only used to open the door; I wasn't even allowed to start the engine. I turned the key to the accessory position and adjusted the power seat. As the salesman continued talking, asking me how I could afford this car and who would be paying for it, I imagined myself driving down the freeway at supra-legal speeds.

When I pushed on the brake pedal, I was surprised to hear mechanical noise as the calipers engaged and disengaged. I tried it again, just to be sure that it wasn't an anomaly. This car featured leading-edge technology: a fiberglass body, aerodynamic design, a sophisticated suspension, and 50-series tires on 16-inch wheels. Why couldn't the engineers mask the noise of calipers clamping on rotors, I thought to myself?

With age comes enlightenment, and now I understand. Corvette buyers aren't looking for smoothness, refinement, sophistication, or poise; they crave raw power, race car-like handling, and pure speed. Now the Corvette makes perfect sense. A 3,000-pound curb weight, 400 horsepower, and race track-tuned reflexes make for a very exciting package—especially considering the relatively low $42,000 price of entry.

The current C6 Corvette is seriously fast, and if that were not enough, Chevy also offers the $65,000 Corvette Z06—a 7.0-liter, 505-horsepower mechanical monster capable of mischievous mayhem. It weighs only slightly more than the C6 and can sprint to 60 mph in 3.5 seconds—on par with much more expensive cars such as the Porsche 911 Turbo and the Ford GT. When you hear the C6 drive by, it's quiet until the driver accelerates. But when you hear a Z06, you can tell right away it's a race-bred machine.

One recent Sunday afternoon, as I was driving to the mall, I spotted a Corvette in the distance. I knew there was something unusual about it—the tires were larger, the fender wells exaggerated, and there were large vents behind the front wheels. As I approached, I heard a lot of mechanical noise and noticed the Z06 badge. Suddenly, the driver accelerated and his car jumped forward with an explosion of noise and violence that I have never seen before on the street. The car was loud, fast, and raw—the essence of Corvette.

09:01 | Permalink | Comments (3)

If you read Part 1 of this blog, you know that Cadillac recently announced its intention to develop a V-12-powered, top-of-the-line luxury model based on the Cadillac Sixteen concept car of 2003. In Part 1, I discussed Cadillac′s ability to compete on the world stage in quality, styling, performance and technology. Is that enough to ensure the success of this future flagship?

Vehicle Dynamics: BMW has a lock on handling and dynamics. It is widely acknowledged by the enthusiast press that every BMW, including the 7 Series, demonstrates poise in hard cornering and extreme driving maneuvers. Does Cadillac plan to match the dynamics of the 7 Series to attract BMW intenders? That will be hard to match.

Fit and Finish: Lexus is the innovator in this area. For the past several years, the LS has been the model with the fewest number of initial quality defects in the industry (based on the annual J.D. Power and Associates Initial Quality Study^SM). According to lexus.com, the 2007 LS features hand sanding, which is "a labor-intensive process usually reserved for custom vehicles. This step adds incredible luster and depth to the paint′s finish." This kind of attention to detail further raises the benchmark.

Craftsmanship and Technology Integration: Can Cadillac equal the integration of technology, massive performance, and interior craftsmanship that the latest Mercedes flagship offers? According to mbusa.com, the S-Class features "hand-polished wood trim throughout the cabin [that] is finished and set by hand, and butter-soft front leather seats feature 15 pneumatic chambers to deliver four different levels of massage." In addition, options include a semi-active suspension system (Active Body Control) and radar-based cruise control (Distronic) that maintains a preset distance behind the vehicle in front. This level of luxury and technology sets a high standard.

The bottom line? I think Cadillac has a shot. One big test will be whether Cadillac can launch the new model with high levels of quality from day one. Equally as important, Cadillac must ensure that dealership sales staff are properly trained and have sufficient product knowledge to educate buyers who are cross-shopping other brands. Lastly, the sales and service experiences must be top-notch. If these criteria are met, I think this forthcoming flagship may signal that Cadillac can regain credibility in the upper end of the luxury segment.

11:54 | Permalink | Comments (0)

In a bid to compete against the Lexus LS, BMW 7 Series and Mercedes S-Class, Cadillac recently announced its intention to build a V-12-powered luxury flagship. I′m not surprised at this development, but the real question is whether Cadillac can successfully compete on this level. The brand was once considered "The Standard of the World." Can it reclaim its former title?

Each of Cadillac′s main competitors has an established reputation for excellence in a specific area. In the eyes of many buyers, Lexus stands for quality; BMW equals superior driving dynamics; and Mercedes-Benz represents the seamless integration of luxury and technology. Although buyers may cross shop these brands, I think that each appeals to a slightly different audience.

I doubt that many LS buyers plan to speed down a winding road to test the handling capabilities of their car. They′re looking for peace and quiet, not screaming tires and exhaust noise. I′ll bet that 7 Series buyers aren′t inclined to isolate themselves from the driving experience. They enjoy the feel of the road through the steering wheel and suspension, and they relish hearing the engine roar when moving at a quick pace. And it′s unlikely that you′ll find Mercedes S-Class owners at the local drag strip. So, if each of these brands stands for something unique, where does that leave Cadillac?

Quality: Cadillac is typically among the top five brands in the annual J.D. Power and Associates Initial Quality Study (IQS) and Vehicle Dependability Study^SM (VDS), which measure manufacturing quality after three months of ownership and after three years, respectively. Buyers who consider quality and dependability to be of primary importance will be reassured by the brand′s consistency in this regard.

Styling: Cadillac′s new design language, consisting of sharp creases and angles, has found an audience and is one factor in the brand′s recent sales resurgence. The inspiration for the forthcoming flagship is the Cadillac Sixteen concept car of 2003, as well as the V-12 Cien concept before that—both well received by the media. Buyers who are focused on design and styling may consider this future Caddy.

Performance: By joining two 3.6-liter V-6 engines, Cadillac aims to create a 7.2-liter V-12 with around 600 horsepower—enough to compete with some Mercedes models that offer 600 horsepower and 738 lb.-ft. of torque. However, even if the flagship were approved today, it might be three years before it appears on the road. By that time, top-line models from Lexus and BMW may also feature 600 horsepower—or more. As the Corvette Z06 demonstrates, GM can compete with any automaker on performance, often at a lower price point than the competition, but the competitive environment three years in the future is something that is not easily predicted.

Technology: Cadillac has shown that it can compete on the technology front with innovations such as Night Vision, head-up displays, and leading-edge technologies. The key will be integrating these features seamlessly into the driving experience—something that has been a challenge for BMW and Mercedes-Benz (i.e., BMW iDrive and Mercedes Comand).

Cadillac can compete with Lexus, BMW, and Mercedes-Benz on quality, styling, performance, and technology, but will that be enough? Even though it isn′t yet clear, there are other critical areas where Cadillac′s performance is more difficult to predict. To read more about this, see Part 2 of this blog: Can Cadillac Reclaim Its Title as "The Standard of the World"?

10:27 | Permalink | Comments (0)

Many vehicle shoppers struggle with the question: Should I buy new, or should I buy used? While there are benefits and drawbacks to each, ultimately it's a personal decision, and for many buyers, non-economic factors play a large role.

Are you the type that likes to drive (and be seen in) the latest automotive design? Is having the latest and greatest safety or high-tech features a concern? Is there a part of you that just doesn't want anything that someone else has already owned? If so, a new vehicle may be right for you. Further benefits of purchasing a new vehicle include getting a full factory warranty (up to 100,000 miles on some models), not having to worry about expensive repairs for at least the first couple of years, and, for some models, free scheduled maintenance for the duration of the initial warranty.

On the flip side, if the trend toward bigger, more powerful engines and larger wheels is not to your liking, or if you prefer not to see your investment depreciate by 40% or 50% during the first two or three years of ownership, then perhaps a used vehicle is a better fit. With the average price of a new vehicle now in excess of $26,000, many consider used vehicles a better value - more "bang for your buck." Used vehicles are also cheaper to register and insure. And, with improved vehicle quality and vehicle history reports that can alert potential buyers to a variety of problems, buying a used vehicle is safer than ever.

If you're still undecided, perhaps you should consider a certified used vehicle. These "not new, not used" vehicles are typically late-model, low-mileage vehicles that have been inspected by the dealer and are backed by a factory warranty. Any major (and most minor) issues with the vehicle are resolved in a detailed inspection process at the dealership, and the vehicle is offered with, at the very minimum, a limited warranty (typically 3 months or 3,000 miles, whichever comes first). On low-mileage vehicles, the balance of the full original factory warranty is honored, making them even more attractive. An increasing number of buyers are turning to certified used vehicles, as manufacturers continue to report record sales of these vehicles.

10:11 | Permalink | Comments (0)

Many new-vehicle buyers, when researching the latest pricing, specifications, and safety and quality ratings, overlook one very important factor: How much fun is the vehicle to drive?

Sure, a large portion of the buying public is just looking for basic transportation - something to get them from Point A to Point B. But what about the rest of us? There's a wealth of information available today on vehicle quality, safety, and residual values, but where do enthusiasts go to get the skinny on which vehicles are fun to drive?

Some models have their own, dedicated enthusiast publications or Web sites, which is great if you want to read about only one model in great detail. You can also check out automotive "buff books" for comparison tests of a few models that are aimed at the same demographic group, as well as in-depth, single-model road tests. But where do you go to get unbiased, independent, third-party information using standardized evaluation criteria on new models available for sale in the U.S.? Each year, J.D. Power and Associates surveys millions of owners about their new vehicles; much of this information is now available to consumers on the J.D. Power Consumer Center (www.jdpower.com) Web site.

One of the studies that J.D. Power and Associates conducts annually - the Automotive Performance, Execution and Layout (APEAL) Study - measures owners' delight with the performance of their new vehicles, among other things. This study has been conducted since 1996, and for 2006, more than 63,000 new-vehicle buyers in the U.S. were surveyed. So which models, according to these owners, are the most fun to drive?

For the answer, we examined the driving dynamics factor, one of 10 study factors designed to help measure overall vehicle appeal. This factor measures ride smoothness in normal driving, quietness over harsh bumps, responsiveness/effort of the steering system, braking responsiveness and effort, handling/stability on curves or winding roads, and handling/stability in adverse conditions.

Not surprisingly, eight of the top 10 models with regard to driving dynamics are premium brands from European manufacturers - Germany, in particular. Of the top 10, four are from BMW (3, 5, 6, 7 Series), three from Porsche (911, Boxster, Cayman), and one from Mercedes-Benz, the SL-Class. One other premium model - the Lexus LS 430 - also ranks among the top 10. The only non-premium model to crack the top 10? The Chevrolet Corvette.

So, what if you can't afford a premium brand but still want to have some serious fun in your new vehicle? Filtering the results of the driving dynamics factor to only include non-premium brands netted the following results: one European model (VW Touareg), two Japanese models (the Nissan 350Z and the Honda Ridgeline), and seven domestic-branded models (including, you guessed it, the Corvette) - the other domestics in the top 10 are the Dodge Charger and Magnum, Pontiac GTO and Solstice, Chrysler 300, and Chevrolet Monte Carlo.

Not surprised by any of these results? Well, consider the following:

• Toyota, as a nameplate, outperformed Chevrolet with regard to the driving dynamics factor, perhaps due to Chevy's high percentage of truck models


• Lincoln, a domestic brand known more for its understated luxury than its performance, outperformed foreign makes MINI, Acura, and Saab


• And, in perhaps the biggest shocker, Buick outperformed Pontiac and Mazda, a nameplate considered by many to have some of the best-handling vehicles on the market.

For many new-vehicle buyers, there are a multitude of vehicles that will probably meet their basic needs, and the fun factor doesn't figure into the buying process. But if you're willing to dig a little deeper, you can find a vehicle that both satisfies your practical side and lets you have a little fun at the same time.

10:09 | Permalink | Comments (0)

With brand image playing such a major role in automotive marketing these days, it's not surprising that automakers are continually looking for ways to enhance how their brand is perceived by the buying public. One popular method is through co-branding, effectively leveraging the success and positive image of a partner to enhance its own brand. Nowhere is this more evident than in the new-vehicle audio business. Sure, some manufacturers still develop and equip their vehicles with in-house audio systems. But many are employing a co-branding strategy, equipping their vehicles with audio systems from well-known brands that complement the automaker's brand to effectively enhance their image and, more importantly, boost sales.

So, who is using this strategy most effectively? A recent study by J.D. Power and Associates finds that, for a fourth consecutive year, Bose has the strongest audio brand power in the United States, followed by Sony and Pioneer. The J.D. Power and Associates 2006 Global Automotive Component Branding Study^SM reveals that, with a combination of high consumer awareness and favorability, Bose ranks highest among 35 brands ranked in the study. Brand strength in the market is measured by assessing consumers' top-of-mind awareness (unaided awareness), brand name/logo recognition (aided awareness) and favorability (impression). High brand power scores indicate positive impressions and strong awareness among consumers.

As manufacturers continue to introduce new technologies and equip more of their product lines with existing technologies to gain shoppers' attention and connect with consumers in general, co-branding will increasingly become part of the overall automotive marketing strategy.

10:07 | Permalink | Comments (0)

Side-impact air bags, run-flat tires, stability control, night vision systems, blind spot detection, and backup assist - all safety-related features - are the vehicle technologies most desired among vehicle buyers these days. The recently released J.D. Power and Associates 2006 U.S. Automotive Emerging Technologies Study,^SM which measures buyer familiarity, interest and purchase intent for emerging automotive technologies both before and after an estimated market value is revealed, reports that side-impact air bags are the most desired feature before and after the average market price is revealed. In fact, at an average market price of $600, 72% of new-vehicle buyers who responded say they "probably" or "definitely" would like to have their next new vehicle equipped with side-impact air bags.

Other than safety, what else is high on buyers' lists? Audio and entertainment, of course. Items such as the ability to play non-standard audio files (MP3s), using a USB-memory key to listen to different audio formats, and having a computer hard drive built into the vehicle (allowing owners to burn and store music files in the vehicle's audio system) are all features for which a large number of buyers have a high level of interest. Also, satellite and HD radio are of high interest to buyers.

The study also finds that premium surround sound continues to be the most desired entertainment feature after the estimated market price ($400) is revealed. Prior to the introduction of price, 61% of buyers express high interest in the feature. Additionally, more than 75% of those interested in a premium surround sound system at $400 say they would pay double that figure ($800) for a branded premium surround sound system.

As auto manufacturers increasingly target younger buyers, consumers can expect to see the number and type of vehicle audio and entertainment options increase. And in an industry where technology typically filters down from expensive, luxury nameplates to the more economical brands, the "youth" brands in this instance will most likely be the trendsetters with regard to in-vehicle audio and entertainment features.

07:49 | Permalink | Comments (4)

Quality means different things to different consumers. To some, quality means a problem-free experience with a product or service. To others, quality means value, or a perception of getting what you paid for ("bang for the buck"). To yet another group of consumers, quality has more to do with aesthetics, in which things are judged on their design, visual appeal, or tactile characteristics ("look and feel").

For 20 years, the J.D. Power and Associates Initial Quality Study^SM (IQS) has been reporting on new-vehicle quality, primarily focusing on defects and malfunctions ("things gone wrong") experienced by owners during the first 90 days after purchase. In those 20 years, new-vehicle quality gains have been remarkable, both in terms of the industry as a whole and in the differences between luxury and non-luxury nameplates. But as the traditional "things gone wrong" quality gap has continued to narrow, and the manner in which consumers perceive quality constantly changes, J.D. Power and Associates determined last year that a new measure of quality was needed.

To keep pace with the dynamic nature of quality, the IQS was redesigned in 2006 to address the "other" side of quality - design quality - as well as continuing to address manufacturing quality. Results of the 2006 study show that the way in which technology is integrated into new-vehicle design, particularly interior features and controls, is considered by consumers to be as important to quality as are defects and malfunctions.

Based on both design quality and production quality considerations, the 2006 study finds that automakers can vary widely in their performance on these two components. Brands with the fewest defects and malfunctions include BMW, Chrysler, Hyundai, Lexus, Porsche and Toyota. Brands with the fewest design problems include GMC, Hyundai, Jaguar, Lexus, Nissan and Porsche. Porsche, Lexus, and Hyundai are the top three performers, respectively, as they achieved the right balance between building vehicles with few defects and malfunctions while at the same time producing vehicles that consumers judged to be designed well.

As the definition of quality and how it is measured continues to evolve, one thing is certain: manufacturers that focus on integrating new technology in a user-friendly and visually appealing manner - not just building defect-free vehicles - will be viewed by consumers as providing a "quality" product.

07:47 | Permalink | Comments (0)

Not surprisingly, as overall Internet usage in the United States continues to increase, the percentage of new-vehicle buyers who use the Internet in their vehicle shopping process continues to grow, as well - a record 67.5% in 2006. What may be surprising to some, however, is that there is a clear shift away from independent Web sites and toward manufacturer and dealer Web sites.

The J.D Power and Associates 2006 New Autoshopper.com Study^SM reveals that a record high of 87% of automotive Internet users (AIUs) are visiting at least one manufacturer site. Not only are these online shoppers viewing manufacturer sites in record numbers, but they are also visiting a greater number of different manufacturer sites than in the past. As recently as 2004, independent Web sites enjoyed the highest usage rates (80%) by online shoppers. Currently, however, only 77% of AIUs visit an independent automotive Web site during their shopping process.

The study, which measures the shopping habits of 28,989 actual new-vehicle buyers, has shown a shift in the focus of online vehicle shopping over the years from finding the right vehicle price to finding the right vehicle, a clear strength of the manufacturer Web sites. The automotive sections of large portals, which have traditionally focused on price and offering consumers quotes on specific vehicles from dealers, have all experienced significant declines in site visitation since 2005, according to the study. At the same time, some of the most visited shopping sites that help shoppers find the right vehicle are attracting as many or more new-vehicle buyers than ever before.

Being the first to get the customer's attention is the goal of virtually all online vehicle shopping sites. That being said, the sites that can help consumers find the right vehicle - not just the right price - will ultimately achieve higher customer satisfaction and usage.

07:45 | Permalink | Comments (0)

Most new-vehicle shoppers have a pretty strong sense of what they are looking for before they set foot on a dealer's lot. They typically know which brand and type of vehicle they're looking for, along with a preferred color, engine or transmission choice, and which comfort and safety options they want, as well as a certain price range, of course. New-vehicle shoppers are equally discerning when it comes to crossing models off their shopping list and cite a variety of reasons for rejecting certain vehicles.

The J.D. Power and Associates 2006 Escaped Shopper Study^SM provides insight into the specific reasons why shoppers consider a particular model, but ultimately purchase a different make or model. Price is the reason cited most frequently by consumers - 36% of survey respondents say they rejected a model because the "total price is too high," followed by "total monthly payment is too high." Interestingly, buyers in the premium segment, where the perception is that price is not as important, rejected premium brands at roughly the same rate as those in the non-premium segment.

New-vehicle shoppers are increasingly citing gas mileage as a reason for rejecting a vehicle. Nearly 17% of survey respondents (third-highest reason in the study) cite gas mileage as a reason for vehicle rejection - up from 13% in 2002. In particular, sport utility vehicles and pickup trucks have the highest rejection levels due to gas mileage. Many buyers in those segments, citing gas mileage as a reason, will opt for a smaller, lighter vehicle that will still meet their needs.

As consumers continue to focus on price and fuel economy as reasons for buying - and rejecting - vehicles, auto manufacturers that offer affordable, fuel-conscious models that still provide the functionality that consumers demand will have a clear advantage when it comes to appearing - and remaining - on buyers' shopping lists.

07:33 | Permalink | Comments (0)

Wearability continues to be the most important factor in overall original equipment tire satisfaction, according to the J.D. Power and Associates 2006 Original Equipment Tire Satisfaction Study,^SM yet it has the lowest satisfaction ratings of any of the five satisfaction factors in the study. The study, which measures owners' satisfaction with the original tires that came equipped on their new vehicles, suggests that manufacturers can benefit the most by improving the wearability of their tires. In addition to wearability, appearance, handling, ride, and traction help determine overall satisfaction. Issues such as poor traction on dry roads and fast tread wear can have a significant impact on owners' overall impressions of a tire brand.

The study also finds that among owners who had to replace one or more of their original tires, only 7% would recommend and 11% would repurchase the same tire brand. Among owners who did not have to replace any tires, the results were significantly better - 93% report they "definitely will" give a recommendation and 89% intend to repurchase the same brand.

Michelin and Pirelli both performed well across all five satisfaction factors and were the highest-ranked brands overall in the study, leading all four of the vehicle-based tire segments. Michelin ranked highest in the luxury/sport and SUV segments for a third consecutive year and highest in the pickup/full-size van segment for a second consecutive year. Owners in the mass market/non-luxury segment ranked Pirelli highest.

07:30 | Permalink | Comments (0)

There's an automotive evolution occurring. Way back when, there was the promise of a car in every driveway. There is now a car for every driver. Going forward, there may be a car for every function. The good news is that there's a variety of models with varying functionality available for today's consumers. The important thing for consumers is to identify what functionality is important to them. Forget about the segment or marketing descriptor - just pay attention to what is important to you.

Here at J.D. Power and Associates we study the very complex automotive industry. In our market research world, we try to simplify the industry by dividing it into different segments. Over time, these segments have come to define certain models for consumers. Unfortunately, certain segments have evolved to the point that the segment name is not necessarily an accurate or complete description of the model. All of this becomes more difficult as vehicles share functionality. Terms such as "car," "truck," "SUV" and the more recent "crossover" are not completely clear explanations of a model's functions.

The important thing to point out is that segments are strictly for the benefit of the industry - manufacturers, government agencies and companies such as J.D. Power and Associates that study the market. The objective is to identify the important attributes of the model. When the segment names are used to advertise and sell certainmodels, often this just confuses consumers. Consumers shouldn't fixate on a segment name - for them, it's about functionality.

When a consumer shops for an SUV, the real need may be for a vehicle that has 4WD or a large interior, or high ground clearance. These attributes are shared across many models and segments. What's more important to that consumer is not whether it's called an SUV, car, truck or crossover, but does it meet their needs - does it have enough doors, does it have enough seats, does it have enough room?

This gets more convoluted with the term "crossover" - what does it mean? The term is overused. Some appear to be an SUV, others a minivan and some appear to be a wagon or hatchback. The term was coined to apply to new vehicles that share multiple attributes of the current descriptions. So who really cares what it's called? The important thing to ask is, does it do what I need it to do? Oh, and let's not forget, do I like the way it looks?

14:22 | Permalink | Comments (4)

In my MBA marketing classes I learned that first movers gain a sustainable competitive advantage. That is, companies that are first to market with a new product or service can create a lasting advantage. In 1998, Lexus introduced one of the first crossover models. The RX crossover inspired an entire category and still remains the volume leader. Today, the Lexus RX 350 leads the midsize premium crossover segment with a 24% share of sales. The next-best-sellers are the Acura MDX, BMW X5, Volvo XC90, and Mercedes-Benz M-Class. Sure, the RX is the sales leader, but these other crossovers also provide a smooth ride, competent handling, good fit and finish, and acceptable fuel economy. However, being first to market is a key reason why the RX continues to lead the segment.

Chrysler occupies a similar position with its class-leading minivans, which have just been redesigned. Chrysler/Dodge introduced an innovative product for the 1984 model year that defined a new category: the minivan. Since that time, numerous competitors have tried to build a better "mousetrap," but the Dodge Caravan is still the volume leader in the midsize van segment (and is followed by the Honda Odyssey, Chrysler Town & Country, and Toyota Sienna). All told, Chrysler Group minivans capture 42% of segment sales, based on calendar year 2006 results.

Due to the highly competitive nature of the minivan segment and the increasing expectations of buyers, some manufacturers have chosen to exit the segment altogether rather than make the investment required to compete with the Chrysler/Dodge, Toyota (Sienna), and Honda (Odyssey) trifecta. It's unfortunate that companies leave the segment rather than compete. With a little creativity, these companies might be able to develop innovative entries in existing segments or develop new segments altogether, as Chrysler did with the minivan. All it takes is some unconventional thinking, the ability to throw caution to the wind, and a little creativity. It's that easy.

14:21 | Permalink | Comments (0)

My first experience with fast cars was in 1988. My sister told me that her friend's father had recently purchased a fast new sports car. I offered a few guesses, but nothing sounded familiar. Was it a Porsche? No. How about a Corvette? "Yes, that's it. It's some kind of special Corvette," she said.

The ZR-1, powered by a 400-horsepower engine, was a super-fast edition of the regular Corvette. I spent many late nights reading reviews and road tests of this machine, and I couldn't get it out of my head. Something compelled me to drive it. My sister pleaded with her friend for many weeks, and soon I was behind the wheel of her father's bright yellow ZR-1. I climbed in and turned the power switch to full to release all 400 horsepower. When the road cleared, I floored his brand new - yet-to-be-broken-in and soon to be improperly broken-in - car. OK, I thought, "fast, but not that fast." Because it didn't feel fast, I knew I had a problem. Maybe my 1988 Mustang GT - with 300 ft. lbs of torque - had dulled my speed-sensing abilities.

My next fast encounter was in 1991. I came to work one morning as the owner was parking his new Porsche Turbo. I asked him if the car was really that fast. He replied, "Go find out," tossed me the keys, and went into the building. Maybe his challenge was too much, but I politely declined his offer - a decision I still regret.

In 1993, fast was redefined by the McLaren F1 - one of the fastest road cars ever made. From 1993 to 2005, the McLaren F1 was the world's fastest street car. For $1.1 million, buyers got a 6.1-liter, BMW-sourced V-12 engine with 627 horsepower. With its unique three-person layout (center-mounted driver's seat and two passenger seats mounted behind the driver, partially off to each side) you could drive to a top speed of 241 mph. In the interim, there was the 200-plus mph Ferrari F40, a barely-disguised race car that could move to 60 mph in 3.7 seconds; its big brother, the F50, which could do the same in 3.6 seconds; and, in 1998, the very limited-edition Mercedes-Benz CLK-GTR (0-60 in 2.74 seconds), which was not so much a race car masquerading as a street car, but was an actual race car.

More recently, the road car speed stakes were raised yet again. Bugatti, a brand resurrected and now owned by the VW group, developed the Veyron - a 16-cylinder, 1001-horsepower supercar that costs $1,440,800. With a top speed of 253 mph, Veyron owners now have bragging rights over McLaren F1 owners. Bugatti took a different approach to speed - massive horsepower. With 374 horsepower more than the McLaren, Bugatti exceeded the F1's top speed, but only by 12 mph. This extra horsepower was required for two reasons. Because aerodynamic forces on a car are tremendous at over 200 mph, serious horsepower is required to overcome aerodynamic drag. In addition, the Bugatti weighs 1,649 pounds more than the F1, and extra horsepower is needed to overcome that extra weight.

For now, fast is defined by the Bugatti Veyron. However, one interesting bit of trivia is that although the Veyron has a higher top speed than the McLaren F1, it's slower to 60 mph by .02 seconds (2.65 vs. 2.63). So technically, it's faster - but not quicker.

14:19 | Permalink | Comments (0)

Have you ever seen a TV commercial and wondered who came up with the tag line at the end of the spot? With as few words as possible or with a short, memorable phrase, advertising tag lines are supposed to convey the essence of a brand or product. Sometimes they're clever, sometimes they're confusing or nonsensical, and every so often they connect with the intended target audience. Contrived tag lines may have an opposite effect to what was intended, and they can actually turn away prospective buyers.

One of the most appropriate tag lines was used by Ford in the 1980s: Quality is Job One. In four simple words, this tag conveys the essence of the brand's focus on quality and its importance within their organization. It implies that their mission is to build the highest quality products, and it demonstrates their commitment to their customers. I have no idea why Ford dropped it. Who wouldn't want to be associated with quality? They should consider bringing it back. Although quality is not the competitive differentiator it once was in the auto industry, Ford is still facing a negative quality perception problem relative to Asian brands - especially Toyota and Honda. The reality is that many Ford products are on par with the competition in terms of initial quality.

Lexus, one of the highest-quality brands in the industry, began life with the tagline: The Relentless Pursuit of Perfection. More recently, they substituted the word "passionate" to become known as: The Passionate Pursuit of Perfection. They made the change to counter criticism by buff books (Car and Driver, Automobile, et al) that considered Lexus vehicles pleasing to drive but ultimately boring to their enthusiast audience, who prefer lurid tail slides over a smooth, comfortable ride. I wonder if this change made a difference to their target audience. I wonder how many customers, if any, noticed. Were their cars really more passionate, more exciting, or more fun to drive? Maybe, to some small degree, but for consistency, I think they should have stayed with the original.

Porsche, the maker of true sports cars (and one overly competent and very powerful SUV model) uses the tag: Porsche, There is No Substitute. I like this because it clearly conveys their market position. When it comes to sports cars that are extremely responsive and handle any road or combination of turns, Porsche has this market segment nailed. For true dedicated driving enthusiasts, there likely is no substitute.

BMW has used the same tag line for many years: The Ultimate Driving Machine. Consistency is key. Ask anyone what brand uses this line and I'm sure most people will be able to tell you. However, ask someone what brand is represented by the tag line, New Doors Opened, and I'm sure you'll be on the receiving end of a lot of blank stares. From what I understand, BMW tests each and every one of their new models at the Nürburgring racetrack in Germany. Not only their 3 Series and 5 Series sport sedans, but also their 7 Series luxury liner and SUVs, the X3 and the X5. BMW has been running a commercial lately featuring the X5 pounding around this very same track. BMW's tag line is clearly backed up by the performance of their vehicles.

Although they got off to a slow start and failed to capitalize on the introductions of Acura and Lexus around the same time, Infiniti sales continue to grow steadily. So steadily, in fact, that the G35 now challenges the BMW 3 Series for the hearts and minds of buyers in the premium sport sedan segment. Each year, the G35 improves and gets closer to the segment benchmark BMW 3 Series.

Sometimes I wonder if advertising agencies are talking to themselves when they encourage their clients to use irrelevant or inappropriate tag lines in their advertising. Or maybe, after sitting around a conference room for days on end, when they couldn't come up with anything meaningful, they settled on something clever but not particularly relevant. When you hear one, you wonder who they're talking to.

14:18 | Permalink | Comments (0)

Leasing frequently makes sense for luxury vehicles because the monthly payments are lower and consumers get a lot more vehicle for their investment, according to a review of recent transaction data from U.S. dealerships collected by the Power Information Network (PIN), a division of J.D. Power and Associates. At the model level, the data also helps explain why the BMW X3 compact premium crossover is outperforming its competition, the newer Acura RDX.

For example, in January 2007, most RDX customers took out a loan, and the most popular loan term was 60 months. These RDX buyers purchased a vehicle with an average transaction price of $35,185, which included a down payment of $9,317 and a monthly payment of $571. The monthly payments were calculated using an interest rate of 5.92%.

BMW, on the other hand, offered attractive lease terms on the X3. A customer was able to lease a $40,000-plus X3 for 36 months with a down payment of $3,019 and a monthly outlay of $521. All BMW leasing transactions went through the brand's captive finance source, which was offering an internal money rate of 4.82%, more than one full point below the APR for the RDX.

So, X3 customers got vehicles valued at $5,500 more than the RDX, on average, yet X3 customers put down one-third less and will pay $50 less per month. No wonder the X3 retail turn rate in January was 25 days, while the typical RDX only turned every 50 days (the retail turn rate is the average number of days a vehicle remains on a dealer's lot until it is sold).

In the near term, X3 buyers getting more value than are RDX buyers. Also, both BMW Corporation and BMW dealers benefit because the X3's faster turn rate translates into higher production for the corporation and higher gross profits, as well as lower inventory and carrying costs for dealers.

14:14 | Permalink | Comments (4)

A higher percentage of females purchase less-expensive vehicles - compacts and smaller crossovers, for example - mainly because younger, single females sign the sales contract, while there is a greater likelihood for older females to be married, and sales records may only show the husband's name, according to Tom Libby, senior director of industry analysis for the Power Information Network (PIN), a division of J.D. Power and Associates. Purchase trends in 2006 reflect these factors.

As in previous years, female buyers in 2006 purchased smaller vehicles. These included less expensive car, sport utility or crossover models, according to transaction data collected by PIN. Top choices with female buyers were foreign-brand models, and most of them were compact cars or crossovers. Only one of the top 10 models was a premium compact car - the Volvo S40 - and just one domestic model, the Pontiac G6 midsize car, had a higher percentage of female buyers.

The Volkswagen Beetle compact conventional car had the highest percentage of female buyers (55.4%), followed by two compact crossovers - the Hyundai Tucson (53.4 %) and the Kia Sportage (53.0%). In their latest incarnations, the Tucson and Sportage, which are produced by the same South Korean manufacturer, share the platform of another Hyundai model - the Elantra.

Four more models with female buyer percentages above 51% were compacts. Two were among the best-selling models in the compact crossover segment - the Toyota RAV4 and Honda CR-V. Both recently were redesigned. The other two top models among female purchasers were the second-generation Volvo S40, with a host of new safety features, and the new Jeep Compass, which is the first crossover for Jeep. Compass is built on the same platform as the Dodge Caliber.

Rounding out the list of the top 10 models with the highest percentage of female buyers in 2006 were the tiny Scion xA (which is being replaced with the xD this spring) and the Elantra. The model that ranks 10th in terms of female buyer percentage was the only midsize car model - the Pontiac G6. Readers may recall that the G6 was the car model that TV talk show host Oprah Winfrey gave away to show audience members in 2004.

14:06 | Permalink | Comments (0)

As someone who works in the car business and likes cars, I love this time of year because of all the auto shows. Every year, we all get excited by the concept cars and all-new models that make the headlines at each show. But I also like to check out the less glamorous changes that are often made to existing models - things like new taillights, a revised front spoiler, or new wheels. The problem is that while I notice these "improvements," and obviously the folks at the carmakers also notice them, most consumers probably don't.

Based on some recent consumer ratings in J.D. Power and Associates' automotive studies, many of what the industry calls "mid-cycle refreshes" simply don't register with most consumers. We examined customer satisfaction ratings for a group of about 50 models that received exterior styling updates between 2000 and 2006. Of these, only five generated better ratings than their predecessor. Overall, "new and improved" usually wasn't, according to verified vehicle owners. Some of the examples of this are startling, especially to industry insiders. Consider the 2006 BMW 7 Series. Even though the press coverage was generally positive about BMW's efforts to improve the look of the controversial 7 Series design, most buyers didn't notice much difference. Customer satisfaction ratings for exterior styling for the 2006 7 Series are virtually identical to those for the 2005 model. Sales numbers haven't changed much, either.

The 7 Series is not alone. The 2006 versions of the Chevrolet Malibu, Chrysler PT Cruiser and Toyota Sienna are a few more examples of "freshened" styling that didn't move the needle with consumers. As with the 7 Series, exterior styling ratings are no better than the predecessor, and sales volume hasn't improved.

While auto manufacturers casually refer to these updates as "refreshes" or "enhancements," these changes are not cheap - carmakers spend millions of dollars to make them. I suppose these changes can give the carmakers something new to tell the dealers so they get more excited about selling these vehicles, but is that really enough? Perhaps the carmakers should consider making fewer changes and concentrate on making more dramatic changes. That way, I won't be alone when I get all wound up about the new front-end on my favorite dream car.

13:19 | Permalink | Comments (0)

The past couple of years have been times of change in the auto industry. Skyrocketing fuel prices, increasing concerns about global warming, and continued unrest in the Middle East have helped fuel demand for improved fuel efficiency. For some consumers, hybrid vehicles have become the "poster child" solution. Perhaps nobody has benefited more from this than Toyota, especially given the almost cult-like success of the Prius. Toyota's devotion to hybrids notwithstanding, other automakers are also getting into the game. But with an increasing number of hybrids on the market and even more being planned for the future, where are the fuel-efficient luxury hybrid models?

Fuel efficiency has traditionally been synonymous with inexpensive vehicles marketed to consumers in the low-income and budget-conscious categories, but J.D. Power and Associates' data shows that buyers of the Prius and other gas-sipping hybrids are more educated and make a lot more money than the average new-vehicle buyer. Frankly, they look more like luxury buyers, and many already own (or have previously owned) a luxury car. This phenomenon seems to suggest that fuel efficiency is in demand among the more well-to-do crowd not because it represents cheap transportation, but because it helps them do their part to address major environmental concerns. Many of these consumers are taking the discussion of global climate change very seriously and are willing to reach into their often-deep pockets, as well as sacrifice vehicle performance, to help positively impact the environment.

Usually, it's heresy to suggest a small, fuel-efficient model for a luxury brand. But should affluent consumers have to sacrifice the features and options common in luxury models in favor of fuel efficiency? Do they need to sacrifice the superior service and ownership experience provided by premium-brand dealerships? If fuel-efficient hybrid vehicles are attracting high-end consumers and are gaining a hip image while doing it, why can't a luxury brand entice these same affluent consumers with a comfortable and well-contented vehicle that still gets 45 mpg (and in some circumstances allows them to use the carpool lane)? Why couldn't a luxury brand offer a small but luxuriously equipped hybrid? Hybrid fuel economy, the peace of mind that you're helping to save the planet, AND the luxury amenities, badge and dealer treatment you're already used to - what's not to like?

13:18 | Permalink | Comments (1)

Today, the Internet is everywhere, and it's easy to forget that five to 10 years ago, many people wondered if the World Wide Web was simply a fad or if it was here to stay. But while the tech industry has made huge progress in creating Web connectivity in plenty of other products, the connected car remains an unfulfilled promise.

In-car connectivity is coming, no question about it. The question is, exactly how? While it could be through a grand, built-in system based on something like the recently announced collaboration between Ford and Microsoft, perhaps the best solution is for somebody to figure out how to make your car simply act as another input/output device for your phone, PDA or laptop.

Let's face it, the amount of computing power you can hold in your hand has become truly amazing - for example, making cell phone calls today is almost an afterthought. Handheld devices can now help you surf the Web, check e-mail, pay for purchases, listen to music and get directions. In the future, why not just throw your handheld device in the glove box where it wirelessly connects to a large display screen in your car, and then is voice-activated for whatever you need? No need to learn another interface that's unique to your car, no need to sync music files, no need to have redundant navigation systems. Just put your life on your handheld and go.

This could happen, but I'm betting on some serious speed bumps along the way to true in-car connectivity, no matter how it happens. That's because, while the future always sounds great, the reality is that today's efforts (such as Bluetooth connectivity and voice-activation) still have issues that need to be addressed. In fact, one of the most common problems reported by new-vehicle owners relates to Bluetooth connectivity, according to J.D. Power and Associates automotive research. It just doesn't work very well and can be a huge distraction. The devil is in the details, and those details are still devilishly difficult.

13:12 | Permalink | Comments (0)