The Polk Blog

What were the top 10 questions from the OEM and OES delegates attending the Polk EuroCar Seminar in the UK on 20 January 2010?

1. If you could only do one thing with respect to marketing in this environment, what would it be or in what area would you focus?
2. You have covered a great deal of ground, what type of marketing has been most effective / impactful?
3. Are there any other challenges that 'keep you awake at night'?
4. Can you share with us where or from whom dealer network planning can be most improved?
5. Do you have a view about the demise of block exemption and the impact this will have?
6. Is the decrease in the Japan dealer network an indication of the direction European dealer networks are going?
7. With regard to CO2 emissions, hybrids and zero emission vehicles, do you have any insight into vehicle whole life costs?
8. Is the development of fuel efficient vehicles dependant on the oil price going to $600 a barrel?
9. What is the difference between plug-in hybrids, pure full hybrids and mild hybrids?
10. Do you have any evidence that customers are driving shorter distances as a result of economic conditions?

These questions are an indication of the themes foremost in delegate's minds. Watch the blog for answers to these questions.

Posted by Marcus Richardson, PolkConnect Programme Manager, Polk's Europe Operations (01.21.2010)

2009 will forever be remembered as an extremely turbulent year—filled with global automotive industry challenges. Global Light Vehicle sales for 2009 were approximately 61.9 million, down 5.1% from 2008. However, from a purely statistical point of view, the Global Automotive market demand seemed to be far more robust than expected at the beginning of 2009. November '09 sales were up 25% from the year before, and December '09 sales were up by about 22%! All together, fourth quarter sales were up about 17% over the final quarter of 2008, when sales bore the full brunt of the financial crisis.

Looking back we have to realize that demand was inflated by numerous government programs enacted to stimulate the automotive markets and as a result impact sales trends. On the other hand, it is astonishing how different the results were in most of the developed saturated automotive markets (e.g. the U.S.) compared to the upcoming "emerging markets" (e.g. China) which are still characterized by a very low density of vehicles on the road.

Stimulated by energetic government intervention, the global economy has stabilized in recent months so the basic economic outlook for 2010 is clearly better compared to the economic framework in 2009. Will the Global Automotive market follow this positive industry trend?

The latest Polk global light vehicle forecast report is available free for your download. This automotive forecast analyzes 2009 sales, Polk's economic outlook and light vehicle forecast for the year ahead. Take a look and let us know your expectations for 2010.

Global Light Vehicle Sales Forecast

Posted by Uwe Biastoch, Director Global Forecasting, Polk's Europe Operations (01.20.2010)

Last week we recognized winners of Polk's annual Automotive Loyalty Awards. One category that gets a lot of attention by our customers is the overall "Make Loyalty" category which basically recognizes superior customer loyalty to an OEM's brand. Since many of the automakers have multiple divisions (i.e., makes or brands), they like to see how consumers react to these separate entities due to the unique position they try to create in the marketplace. This year, Honda won for the U.S. market. But by how much? And how many more repeat sales would have been needed by other brands to beat this year's winner? The point of these questions is an estimation process can be used by automotive marketing managers to figure out what the sales mix needs to be in order to help them predict how they'll help their companies reach their overall sales targets.

How Close Was Each Brand to Beating Honda's Make Loyalty Rate in 2009?

For the 2009 model year, the average make loyalty rate was 44.53%. Honda's make loyalty rate was 54.86%. Toyota missed beating this rate by 0.15 percentage points and Ford missed it by 0.74 percentage points. If I look at the brands, including Honda, that had an above average industry make loyalty rate, there are a total of 10 of them.

But here's what's intriguing to me: is there an "efficiency thing" going on for some brands? Meaning, what dynamic allows a relatively few more sales from past customers to make some brands "win" while other brands need far more sales from past customers to get the same outcome?

Take Subaru, for instance. They missed beating Honda by 6.03 percentage points. But they only needed another 3,914 sales from past customers to exceed Honda's make loyalty of 54.86%. Now if you're Subaru and you only sell just north of 200,000 units in the U.S., yielding another 3,900 units isn't an easy task. But it's worth noting what sales volume deficits exist in order to possibly reach a loyalty target. Now a brand like Chevrolet needed 27,781 additional past customer sales to make them win, yet Chevrolet's overall gap (5.10 percentage points) from beating Honda was smaller than Subaru's (6.03 percentage points). Cross-town rival, Toyota, missed getting the top spot by 849 sales from past customers. In these examples, we have two large volume OEMs and one relatively small volume OEM. So it's not always a size issue that creates the disparities I'm highlighting.

The point is that when companies set targets for sales, much of this will come from past customers. And if there are specific loyalty targets established, managers can conduct a sensitivity analysis to estimate "what's needed" to hit the number. Awards are something to be proud of, but more importantly, hitting sales targets that are built on a bit of science with the use of consumer research and knowing industry trends can make hitting targets a more plausible effort. Here's to 2010... may the best, and most efficient, brand win.

Posted by Lonnie Miller, Director, Industry Analysis, Polk (01.18.2010)

It was my honor to present the 14th Annual Polk Automotive Loyalty Awards at the Automotive News World Congress this week. We’ve discovered over the years that the more you know about customer loyalty, and the more you focus on it, the better. And I can tell you first-hand that we’re seeing more and more of our customers taking their loyalty objectives very seriously. Our 2009 Model Year winners are no exception!

Every year Polk recognizes automotive manufacturers for their superior performance in customer retention. Our Loyalty Awards are based on actual model year purchase and lease activity. This year, we analyzed over 4.5 million household records to determine our winners. In these days of struggling sales and overall automotive industry challenges, the winners this year are a testimony to those OEMs who recognized the importance of spending their resources wisely, and focusing on areas with bottom-line impact like customer retention; which we view as a “must” for automakers hoping to compete.

In our white paper, "Managing Customer Loyalty in the Auto Industry," we share three strategic tips automakers should consider when developing their plans to manage and build their owner loyalty. I hope you find it interesting.

In closing, and on behalf of R. L. Polk & Co., I want to congratulate all of the 2009 model year winners. I hope to see you all again next year at the 15th Annual Polk Automotive Loyalty Awards. Until then, continued success in your customer loyalty efforts!

Posted by Stephen Polk, Chairman/CEO, Polk (01.14.2010)

There has been much recent news and comment with respect to Europe and the sales environment looking ahead. We know from our own experience that the introduction of scrappage incentives can have positive influence whilst in effect, but can also have negative impacts on future vehicle sales. Further, our own analysis has identified unforeseen side effects relative to these programmes with reductions in loyalty rates. Once these programmes ended the loyalty rates returned to normal – demonstrating just how sensitive repeat buyers can be to these types of programmes.

With scrappage programmes coming to an end in Europe, and market-specific influences such as the VAT increase in the UK – it begs the question as to what we can expect in the years ahead.

We will be reviewing our most recent global automotive forecasts, with a detailed view on European Car Demand at a Polk EuroCar Seminar in the UK upcoming on 20 January 2010. For those attending, we look forward to reviewing these forecasts with you, and for those who cannot attend – we hope you will follow Polk’s Forecasting Dashboards or engage with us directly.

The current and projected sales trends have caused many vehicle manufacturers and dealers to increase their focus and attention on customer retention and related programmes. Customer loyalty and optimal aftersales programmes drive positive customer behaviours, and ultimately dealer and manufacturer profitability – key in the difficult sales environment. We will explore some of the best practices we have seen at the seminar, including such areas as predictive targeting and multi-channel integrated communications. Aftersales and service matter, and there are opportunities to succeed and drive results.

And whilst there is no doubting the impact of customer loyalty and retention, no brand can excel in these times without converting the highest percentage of active prospects. There are proven approaches to prioritising focus that generate demonstrable results in increasing conversion rates – and particularly with respect to internet leads. We will discuss our experience in this area at the seminar, and the broader effects the internet and social media are having on the industry.

These are indeed interesting times, but there remain opportunities for the taking.

Posted by Norm Marks, Vice President & Managing Director, Northern Europe, Polk (01.13.2010)

Are you curious what impact the Cash for Clunkers program had on customer loyalty to OEMs? Are you interested in some strategic tips for managing customer loyalty? Do you think that understanding what drives customers' decision to repurchase is critical to building loyalty? Have you ever wondered about the financial impact of loyalty on the OEM bottom line?

If your answer to any of these questions is yes, then you may be interested in the white paper that Lonnie Miller and I have put together and released this week. Click here to get your own copy of the white paper.

Posted by Dan Zetu, Analytic Consultant, Polk (01.13.2010)

My major take-away from last night's World Congress presentation was the sharp role reversal between guest speakers Yoshimi Inaba, President and COO of Toyota Motor North America, Inc., and Mark Reuss, President of GM North America.

Mr. Inaba spoke first about Toyota's recent successes and challenges. He calmly and confidently highlighted their current and future products, large R & D investment and employee charitable volunteer activities. The audience was left with an impression of a bright future for Toyota in North America.

Mr. Reuss then took the podium and explained the sense of urgency and renewed customer focus at GM. He noted the irony that the same government once concerned about GM controlling too much of the U.S. automotive market, now controls GM. Mr. Reuss covered current and future product and outlined the recovery steps already in place at GM.

It was interesting that GM, who once enjoyed over 50% of the U.S. market, is now behaving like a new entrant OEM by actions such as encouraging engineers to drive parts to stranded customers and having its president interface with the public via Facebook. Through various reasons such as insular management, quality issues and complacent dealers, GM basically handed their market share dominance to the imports over the years.

I was impressed with the passion and commitment of Mr. Reuss, but can't help but wonder if it's too little, too late for GM. They have some great new products and the new, customer focused attitude is refreshing; but will the North American consumer be drawn from their imports back into Chevy, Buick, Cadillac or GMC vehicles going forward? As you ponder that question, consider the fact that of the 16 Polk Automotive Loyalty Awards presented last night, import OEMs captured 13 categories, Ford 2, Chrysler 1 and General Motors 0.

Posted by James Dimond, Vice President of Global Network Planning, Polk (01.13.2010)

Light vehicle sales for 2009 were 10.4 million, the lowest level in 27 years and 21.2% lower than 2008. Polk predicts the light vehicle market will be 11.5 million units in 2010, according to its most recent U.S. automotive forecast. We believe wealth accumulation and improving consumer confidence added to GDP growth in the 4th quarter of 2009. We feel GDP growth in 2010 will be slow but steady at 2.9%.

It is clear that we are in a recovery; however, risks to the pace of economic growth remain. As Government stimulus programs end, consumers must have confidence to continue spending and businesses need to invest and hire, otherwise the economic recovery could slow in 2010.

We are encouraged by a light vehicle industry SAAR above 10 million for three consecutive months and record low inventories at dealerships. While industry levels remain far below their normal levels, there seems to be some momentum out there.

The latest Polk light vehicle forecast is available free for your download. This month's forecast discusses December 2009 sales, our economic outlook and our light vehicle forecast for the year ahead. I invite you to read the January edition of the forecast report available on Polk's forecasting dashboard. For a full copy of Polk’s U.S. Light Vehicle Forecast Report,  please visit Polk's Forecasting Dashboards today.

U.S. Light Vehicle Sales Forecast

Posted by Dave Goebel, North American Forecast Consultant, Polk (01.08.2010)

If you're like me, you're probably wondering why Ford has come out with a new product in the Medium Duty Commercial Vehicle Market segment this fiscal year, when industry sales are expected to be weaker than original forecasts. If you did wonder, then you haven't seen the Ford Transit Connect. An unabashed, small (don't dare call it mini) van that promises to be the vehicle version of a multi-tasking child that is watching television, playing a computer game, and text messaging their friends all at the same time.

The six-foot six-inch height is surprising and creates a roomy, if not downright capacious space for whatever application the owner can imagine. Plus, Edmunds lists the vehicle with a 23 mpg fuel rating and 135 cu. ft. of cargo space all at a price tag of $20.8K - welcome specs for the small business owner looking to save, in all areas of their business, without sacrificing quality. If you need power, though, then this vehicle may not be for you. The 4 cylinder engine is only putting out 128 lbs. ft. of torque at 4750 rpm. The horsepower story isn't much better with 136 hp at 6300 rpm.

I still think this vehicle has the opportunity to be a game-changing crossover in the commercial and consumer vehicle markets alike. The large space gives contractors, small business owners and shuttle services the opportunity to use a smaller, more fuel efficient vehicle with enough room to handle all of their needs. For the consumer, the Transit Connect has an optional three-across bench style second row seat. This could mean a multitude of uses for drivers with wheelchairs, families with an active lifestyle, small bands and folks who simply dig the quirkiness of the vehicle.

Ford has also reached out to the earth friendly crowd - they will be happy to know that Consumer Reports mentioned Ford's plans to come out with a battery-electric hybrid version this year. It seems as though the hits just keep on coming for Ford as they add to the ever-popular Mustang muscle car and F-Series trucks with the Connect, redesigned Fusion and Taurus. Suddenly Ford's vehicle lineup is looking quite strong and attractive. They may even prompt me to take the, "Have you driven a Ford lately" challenge to heart, and actually drive one instead of simply answering, "No."

I am excited to start seeing these vehicles on the road here in the U.S. instead of pictures from Europe but I'm even more excited to see what effect the vehicle will have on the industry trend to produce larger - more powerful and roomy - but less efficient vehicles. What effect do you think the new Ford Transit Connect will have on the market?

Posted by Therran Oliphant, Account Representative, Commercial Vehicle Truck Group, Polk (01.05.2010)

For years, auto companies have worked hard to be relevant to their customers. For example, OEM marketers chase the "youth market." Why? It plants the seed for future buyers; it gives auto designers insight into cool and popular trends. Plus, youth are very mobile and socially connected, which helps spread word-of-mouth about products they endorse to each other, to name just a few reasons. I suppose this is why some of the auto brands you and I read about hook up with popular video games - to connect the same audience to two product sets: autos and entertainment. Both business categories have the same basic goal: sell more stuff.

So this got me thinking about what auto companies could learn from the video game moguls of the planet. Certainly something can be learned from companies like Activision, which sold half a billion units of their Modern Warfare 2 game in its first week when it was released this October. While $60 a unit for this game is a big price gap compared to the price of a new vehicle, both the video game and auto sectors would like to build hype, interest, enthusiasm, heck, simply raw adrenaline, when their new product hits the stores.

Some tips to consider:

Make the Purchase INSTANTLY Gratifying
Here's reality:  If I buy a game, I'm back on my couch in less than an hour flying, driving, shooting, whatever with my new fantasy. Can OEMs and dealers make something similar happen more often? Volkswagen's "Sign Then Drive" event is a nice attempt at this. Their ads depict wanna-be owners of a new VW simply signing a sheet of paper and zipping off to a fun, new experience. There's something to be said for a speedy delivery.

Nostalgia is a Powerful Pill
One trick to being relevant is playing on the psychology of nostalgia. How many 40+ year olds are out there who melt when they are able to fly a Star Wars Tie Fighter on their 42" television? These are the same folks who saw the first Star Wars when it released in 1977. The lion "roar" of that speedy ship flying across the big screen is now in their own living room blasting away rebels. I'm sure Dodge, Ford and Chevrolet brand folks play on this same tenet when they strive to get grown-ups jazzed about the Charger, Mustang and Camaro. But these iconic cars are an exception and most models you and I can buy don't do much to connect a past experience to the new one. They should.

Tease, Tease, Tease...and Don't Let the Competition Make You Hide
Video game companies promote forthcoming titles very effectively. And they don't worry if the competition sees their stuff. There are entire sites dedicated to showcasing upcoming game releases. But auto companies pay top dollar to mask their product, so most people don't see their new release in live form (which puts several freelance photographers in business to catch a peek at a new model when it's buzzing around for a test drive). The end-buyers should see and feel more of what's coming in the product. And I don't believe car review magazines do the job compared to what we can see online.

Note: While they are not a gaming company, Apple's strategy of being morgue-like quiet with any new releases plays to their benefit. But their cult-like following wants to be surprised at the last minute because most of what Apple puts out there tends to get rave reviews for design, simplicity and integration, so it's a satisfying result. Yet even so, Apple does play off the tech-rumor mill which builds hype leading up to the unveiling of the iWhatever. Most auto companies don't have that intense of a rabid fan-base. Perhaps more for another discussion.

So if you had the reins to promote and deliver cars and trucks, what would you do? "Game on!"

Posted by Lonnie Miller, Director of Industry Analysis, Polk (12.22.2009)