The Polk Blog

Brand Positioning at Chrysler - Some Brands are Already There

Wednesday, July 21, 2010 by Tom Libby

The interview with Sergio Marchionne, CEO of both Fiat and Chrysler, related in the July 3-4 edition of The Wall Street Journal, and conducted by Paul Ingrassia, includes Mr. Marchionne's plans to position Chrysler and Fiat's six brands in the U.S. new vehicle marketplace. Mr. Marchionne says that Dodge will focus on performance, Chrysler on the mainstream market, Jeep on SUVs and Ram on trucks. Several of these efforts are well along. Jeep is already pretty much where it needs to be, and will be more clearly defined when one or more of its two crossovers, Compass and Patriot, are dropped. Jeep also will benefit going forward from the recent discontinuation of Hummer, a make that could have been a direct challenge to Jeep. Dodge has been promoting performance for years.

Positioning Chrysler as a mainstream OEM brand will be a change – heretofore Chrysler had been a mid-level make, a la Buick, with dreams of even being a luxury make going up against Cadillac or Lincoln. To be re-positioned as a mainstream make, Chrysler will need a broader product portfolio and these products will need to be priced competitively with those from other mainstream brands, including Ford and Chevrolet. This certainly can be done but it will take a while as customers' perceptions of the brand will need to be changed (as opposed to reinforced as in the cases of Jeep and Dodge).

Two other thoughts come to mind. One is that the brand positioning strategy laid out by Mr. Marchionne in the Wall Street Journal article implies the company will not offer a brand in the luxury market other than the niche Alfa Romeo. This is actually in keeping with other thoughts he mentions, including that "I don't want to conquer North America. I only want a share." But one benefit of a high-end brand is its profits, which can be used to fund product programs company-wide. Without these profits, which Chrysler's competitors currently enjoy, Chrysler will need in the long-run to find other sources for funds for product programs.

Lastly, as mentioned in the same Wall Street Journal article by Mr. Ingrassia, it is no secret that Chrysler has struggled in vehicle quality as measured by both J.D. Power and Associates, and Consumer Reports. If Mr. Marchionne wants to widen the universe of shoppers for each of the six current and upcoming Chrysler brands, it might make sense to improve the company's quality image to attract some owners who currently pass by Chrysler dealerships on their way to Asian, Ford or GM stores.

Posted by Tom Libby, PolkInsight Advisor, Polk (07.21.2010)

To Err is Human...

Tuesday, July 20, 2010 by Barbara Keys

Anytime you do a direct marketing campaign, whether it's a mail or email campaign or some other kind of direct contact, quality of the targeting is a concern. This is especially true for automotive marketing campaigns that target people that own competitive vehicles – targeting Toyota owners for a Honda sales campaign for example. In this case you are likely relying on an external list provider instead of your own owner database. Inevitably you will find some people on your list who don't own a Toyota. That's bad. But there's another source of list error that might be just as bad.

In the example of targeting Toyota owners, there are two things that can go wrong:

You can contact someone who doesn't own a Toyota (a waste of marketing resources)
You can miss someone who does own a Toyota (a missed opportunity)

The science of statistics has fancy terms for these "things that can go wrong" – Type I error and Type II error. I prefer the simpler terms of accuracy and coverage.

Accuracy: If the greatest majority of people on the list really do own a Toyota, then the list is accurate.
Coverage: If a high proportion of Toyota owners can be found on the list, then this list has high coverage.

Unfortunately, accuracy and coverage are competing goals – increasing one will decrease the other. You can increase the accuracy of your list by tightening the selection criteria, but that will mean that some people who do own Toyota will drop off the list (drop in coverage). Conversely, you can increase coverage by loosening the selection criteria. This will include more Toyota owners but will also include more people who don’t own Toyota, dropping accuracy.

List selection tends to "err" on the side of accuracy, counting it worse to contact someone that doesn't own than to miss someone that does. Where that can sometimes backfire is when someone connected with the campaign owns a Toyota and wants to know why they aren’t on the list.

One situation where it might be desirable to increase coverage at the expense of accuracy is when the marketing cost is small (a postcard mailing, for example).

To err is human, but it still has a cost. How do you balance these competing goals when developing a direct marketing campaign?

Posted by Barbara Keys, Analytic Consultant, Polk (07.20.2010)

Gender Preferences for Automotive Purchase Remain Stable

Tuesday, July 20, 2010 by Tom Libby

Even though the automotive industry has experienced exceptional turbulence in the past few years, some things have not changed all that much. One of these is the propensity of males to purchase certain types of vehicles and females other types. Men, who still comprise more than half the new vehicle buying population, remain the dominant purchasers of pickups (all sizes) and high-end vehicles in the luxury market. Four of the five segments with the highest percentage of male buyers three years ago are also among the top five this year. (The data address actual purchases, and do not reflect who influenced the purchase decision.)

Woman, on the other hand, are more likely to buy a small car or sport utility vehicle than other types of cars or light trucks. Similar to the results for males, four of the five segments with the highest percent of female buyers back in 2007 reappear on the list this year. These include three small car categories and one small utility segment.

These industry trends are driven by the vehicles' functionality, basic economics and cultural norms. Regarding functionality, men are simply more likely to need pickups for their jobs than women (though there are other reasons for men to prefer pickups as well). Economically, young single women don't have unlimited financial resources, so they tend to gravitate to the more economy-minded vehicles, which are smaller. Older women are more likely to be married, in which case most of the time the actual legal purchaser in the household is the male. Similarly, households with exceptional amounts of disposable income with which they can purchase high-end sports cars tend to include a couple where, again, the purchaser will be the male. These economic and cultural patterns don't change all that much, which in turn drives the stability of the buying patterns illustrated in the attached table.

Posted by Tom Libby, PolkInsight Advisor, Polk (07.20.2010)

Lead Marketing Provides Dealers with Competitive Edge

Monday, July 19, 2010 by Guest Blogger

Everyone likes to talk about making the pie bigger and creating win/win situations - which is a great objective, whenever possible. The reality is it isn’t always possible and sometimes there is only one winner. In fact, auto dealers live in this highly competitive world each day. Because of this situation, the smart dealer is always trying to improve so he can provide a better shopping experience and overall value proposition than the store down the street. After all, the store down the street may be the same brand - in which case the product is exactly the same, or if it is a different brand, the store will still likely have a similar offering in the same segment. A dealer has to make his interaction with his prospects and customers - both online and in the store - immediate, frequent, and relevant.

Lead Marketing–which is all about using analytics to understand and drive the ideal message to the prospect before they even consider your competition–can insure that a dealer always puts his best foot forward. Rather than being a victim of all the various things that can go wrong–salespeople not following up, poor vehicle and message presentation, difficulty contacting the prospect, etc.–the dealer can take control and use lead marketing to drive the ideal message immediately to the prospect and pull him/her into the store. Lead Marketing stops short of being a silver bullet, you still need to improve your in-store process however you can, but lead marketing is highly effective and provides the competitive edge that is critical to a dealer making their monthly number or not. I understand not everyone is sold on the concept of lead marketing yet, but at the very least you need to understand it and consider it as a means to gain a competitive edge and win the race. Ward's Dealer Business provides a great overview via their online publication. Check it out and feel free to share your thoughts.

Posted by Mike Spadafore, Manager, Consumer & Commercial Portfolio, Polk (07.19.2010)

The Luxury Challenge - Balancing Exclusivity with Volume

Monday, July 19, 2010 by Tom Libby

A wise neighbor once told me, "Everyone wants to get a house in the best neighborhood, but then they don't want anyone else to get in." The same may apply to the luxury vehicle market. Everyone would like to drive a Mercedes-Benz, Lexus, BMW, or similar vehicle, but then once we have it, we would prefer that no else is able to get one. This speaks to exclusivity, a core attribute of luxury products. If a car, jewel, piece of clothing, or whatever, is commonplace, it has little inherent attraction. A Rolls-Royce is much more valuable, much more craved, than a Mercedes-Benz, in part because you rarely see a Rolls on the road but Mercedes-Benz vehicles are much more prevalent.

Managers of luxury makes are always trying to balance this need for exclusivity with the need for volume. They know that exclusivity – and the accompanying image - are hugely important, but the management teams at several luxury makes – including Lexus, BMW and Mercedes-Benz – also know that being the most popular luxury marque is a valuable talking point too.

Luxury management teams are continually making decisions about how much volume to strive for, and what impact these efforts will have on their makes' images and exclusivity. Lexus has achieved leading retail volumes in the U.S. through frequent re-designs, leadership positions in new trends such as crossovers and hybrids, and a reputation for unequalled quality and reliability. Lexus has not resorted – so far – to moving downstream in price below the RX and ES/IS products. BMW has used different methods to become one of the three luxury volume leaders. It has split the U.S. luxury market into mini-segments and offered products in each of these, including the X6 and the 5-Series Gran Turismo. BMW arguably has moved downstream in price as well, marketing the 1-Series and soon bringing in a vehicle slotted under the X3.

Mercedes-Benz has stayed close to its rivals on retail volume by offering a wide array of series and powertrains within most models. Today the C-Class is the lowest-priced car available at a Mercedes-Benz store, and the brand is viewing the lower end cautiously after struggling with the C230 hatchback several years. Other luxury brands have also put their toes in the waters of low-priced luxury, including Volvo with the Mitsubishi-designed S40, Jaguar with the X-Type, Cadillac notoriously with the Cimmaron, BMW with the 318ti, and Acura with the RSX.

We have witnessed their victories and struggles as the luxury managers deal with the challenge of balancing exclusivity and image with volume. This delicate maneuvering is likely to continue.

Posted by Tom Libby, PolkInsight Advisor, Polk (07.19.2010)

Hybrid Sales - U.S. Update

Friday, July 16, 2010 by Lonnie Miller

There are over 25 different hybrid (gas/electric) cars and trucks sold in the U.S right now (and more if you count some of the discontinued models you can still buy off of a dealer's lot). With so much talk about the forthcoming "onslaught" of electric vehicles, many have wondered what happened to the good 'ol hybrid vehicle segment. It's hanging on and actually doing better than last year.

Fact #1: For the first 5 months of this year, we saw over 106,000 new hybrid units enter the U.S. roadways. Our friends at HybridCars.com show just over 109,000 units for the same time period. Short story: the segment is up over 5 percent on a year-over-year basis based on new registrations.

Fact #2: California is still THE hybrid state. Better than 1 in 5 hybrids are registered in this state. A few years ago, California represented over 25% of the hybrid segment. Now they represent just over 20%. From a dealer network view or someone pulling together a regional automotive forecast on hybrids, you'd be a fool to ignore California. Buyers there are incented to "think green." Although one thing that really shocked me about their current legislation is that hybrids are disqualified from using high occupancy vehicle (HOV) lanes...yikes!

Fact #3: Prius is still king. Over half of all hybrids sold new are the Prius. Last year they accounted for 44% in the first five months; for the same time this year, they account for one of every two sold new. Good luck to the rest who merely want market share in this segment.

Prediction: Looking at the results for May and June of this year, our light vehicle forecast for the hybrid segment is between 254,000 to 260,000 new sales in the U.S. This would put us back at the levels we saw in 2006 (we saw 254,000 that year) and definitely below last year's 2009 total of around 290,000 units.

Go green! And if you're in California, enjoy your single occupant HOV lane privileges while they last.

Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (07.16.2010)

U.S. Car and Light Truck Industry Concentrated in Several Key States

Friday, July 16, 2010 by Tom Libby

The U.S. new vehicle industry is heavily concentrated in a small number of the United States: the 10 states with the greatest number of retail new vehicle registrations in the first four months of 2010 account for 58% of the total industry, while the 25 states with the fewest new vehicle registrations together comprise just 14% of the industry.

California remains the auto capital of the country, when this phrase is defined as the most number of new car and light truck registrations, but its share is dwindling. Five years ago 13% of all U.S. new vehicle sales occurred in California, but so far this year that metric has fallen below 10%. In 2005 California's share was almost five points greater than that of runner-up Florida, but now California is ahead of number two Texas by less than a point. California's budget problems and highly regulated business environment have driven many businesses out of the state, which has impacted the new vehicle industry.

Florida's share of the U.S. new vehicle industry retreated more than a point from 2005 through 2009 to 6.87%, but this year it has bounced back a bit. In contrast, New Jersey's position among the top ten states, and its share of the country's car business, have both grown; this year it has the sixth largest car share at 4.61%. Virginia has climbed in to the top ten in both 2009 and 2010, and Michigan’s share has remained remarkably stable despite a dwindling domestic auto industry and a declining population in Detroit.

Posted by Tom Libby, PolkInsight Advisor, Polk (07.16.2010)

2011 Ford Fiesta Arrives in North America – "A Party on Wheels"

Thursday, July 15, 2010 by Guest Blogger

The target customer for the new Ford Fiesta is described as "youthful, active and media-savvy." Who knew that would be me – an over-50 Gen X'er with two college age kids? I think Ford will find that there are many of us out here --- environmentally-friendly, economical, who no longer need room to car-pool or carry hockey or soccer gear!

When I got the chance to place an early order for a Fiesta, I jumped at the chance. Delivering 40 highway miles per gallon, offering a class-leading array of seven air bags, and well, just darn cute – I had to have one! The vehicle has been built and I am anxiously awaiting its arrival. It feels good to be excited about delivery of a new vehicle and honestly, I am counting down the days until it arrives.

The Ford Fiesta is earning rave reviews including one that described it as a "party on wheels" – I definitely knew that this was the vehicle for me when I read that one! I'll let you know when my Fiesta arrives – and hey, party on!!

Posted by Alice Miles, Regional Director, Polk Government Relations (07.15.2010)

GMAC Name Change - No Biggie to the Consumer

Thursday, July 15, 2010 by Lonnie Miller

GMAC is now Ally. For car buyers getting auto loans at their dealership, the paper their loan is written on will have a different name on it. While some dealers, particularly those in the GM network, may miss the "GM" part of "GMAC", consumers really just want the best interest rate and loan terms they can get. There's probably not a big affinity to the bank underwriting the loan, per se. I'm curious if there really is much brand equity with a captive finance company.

This last point makes me think about something our OEM customers try to figure out: what degree of customer retention does their brand get by securing repeat sales to the captive finance company? In other words, does having another sale "funded" by BMW Financial Services or Nissan Motor Acceptance Corporation really help overall loyalty to BMW or Nissan? The dilemma with this is assuming the auto buyer walks into a dealership seeking a loan with that specific captive finance organization. Which isn't the case. You and I know that we want the product at the best deal/price we can get. Let the dealer worry about (in most cases) who they use to help me secure a loan. Unless I already did the legwork and secured my loan at my personal bank or credit union, I don't really care who underwrites the auto loan.

So instead of asking whether there is "captive or non-captive finance loyalty," a better question is "do aspects of my financing process and the interactions that finance organizations have with the end-consumer help my brand?" Have you heard of the stories of unpleasant suprises when someone turns in a leased vehicle only to be shocked at the fees they get for unknown "damages"? Or the finance company continues to call the customer for payment after the vehicle was turned in months ago when the lease expired. THESE situations matter more to the consumer and THESE types of issues will erode customer loyalty.

GMAC...Ally...Bank of Joe...won't matter to the general auto buyer. Make the experience strong, relevant and ensure the customer feels they get the best deal possible.

Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (07.15.2010)

Marketing Brands Through Product Placement on the Small Screen

Thursday, July 15, 2010 by Theresa Gorman

Ever notice the brand of vehicles driven by your favorite characters on prime time television? OEMs are betting that you do. Product placement, or embedded marketing, is a veiled form of advertising. Branded goods or services are placed in a context, such as movies, television shows, or news programs. Automobile companies are working the product placement angle more than ever before.

Vehicles associated with a television series is not a new concept. Who can forget the GMC van used by the A-Team? Remember "General Lee" a 1969 Dodge Charger from The Dukes of Hazard? Or were you reminiscing about the 1984 Jaguar XJ6 as seen in The Equalizer?

In more modern times, vehicle placement usually falls into one of three categories: New model launch support, brand reinforcement through character association, or vehicle placement to reinforce the character.

A vehicle launch strategy most likely includes embedded marketing. For example, a year or so ago, Hyundai made a big push for its Genesis model to be featured in Leverage, a TNT series. In addition, Season 7 of the dramatic series 24 also featured the Hyundai Genesis as a way to show off its high tech features. The drama series Heroes featured the launch of the Nissan Versa. The show often zoomed in/out on the logo or featured vehicles, which were shown for a few seconds at the beginning of a new scene. The CW series Smallville promotes the Toyota Yaris; including promotion through character dialogue.

Here is an example from Smallville Episode "Blue" (Season 7, Episode 8):
Clark: This is why I need you to give me a ride. I need to get this ring off my finger and go to the Fortress.
Chloe: Look, Clark, my Yaris gets awesome mileage but I seriously doubt it will get us all the way to the North Pole.
Clark: How about to my barn?

The second type of placement of brand reinforcement cashes in on owner expectations. Consumers, a.k.a. car owners, have an expectation of each brand. For example, a Mazda has the heart of a sports car and should go "Zoom Zoom." The deeper the level of engagement, the more fixed the expectations. Vehicles positioned within a series play on this relationship. Dodge has placed the black Charger with Special Agent Gibbs from NCIS – a tough no nonsense power machine for a former Marine. Along the same lines is the featured 1973 Dodge Charger being driven by Michael Weston from Burn Notice, the hit cable series.

Then, there are brand placements wherein the type of vehicle being driven further defines elements of the series' characters. For example, steady and sure Marshall from the USA series In Plain Sight usually drives a black GMC, while his erratic and moody partner until recently sputtered around in a beat-up temperamental old Ford Probe. Similarly, our cool and brainy CSI investigators out in Las Vegas drive a GMC Yukon Denali.

Most agencies will measure the impact of auto placements through primary research on the ability to recall the vehicle featured. Off the top of your head, can you tell me what vehicle Evan R. Lawson sells to save Hank Med in the USA series Royal Pains? (Hint: Search here - http://www.usanetwork.com/series/royalpains/ )

Posted by Theresa Gorman, Manager, Sales & Client Services, Polk (07.15.2010)

One Characteristic of the U.S. Premium New Vehicle Marketplace: Consistency

Wednesday, July 14, 2010 by Tom Libby

The "pecking order" of the premium makes, based on retail registrations (to individual consumers), has remained remarkably consistent over the past 5+ years. From 2005 through this past April, the same five luxury market brands have occupied the top five spots every year. Further, the top three - Lexus, BMW and Mercedes-Benz - have ranked one, two and three each and every full year, and the fourth and fifth place finishers, Acura and Cadillac, have also occupied one or another of those spots every year. These five premium brands together have accounted for more than two thirds of all luxury market retail registrations every year as well.

From 2005 through 2009, Lexus, BMW and Mercedes-Benz ranked one, two and three, respectively, but through the first four months of this year, Mercedes-Benz is edging out its German rival to claim the number two spot. However, Mercedes-Benz was number two at this time a year ago as well, but finished the year in third place.

Among the top three marques, each has its own traditional area of strength, with BMW being strong in small cars, Mercedes-Benz doing well in the midsize premium sedan segment, and Lexus prevailing in the crossover market. But Lexus's superior crossover results (40% of the brand’s total April 2010 retail registrations, more than double the registrations of both X Series models combined and close to double the registrations of the ML and GLK combined) have given it a leadership position that seems unassailable. The Lexus RX benefits from having been on the market since 1998 and therefore having a large pool of potential re-purchasers, frequent styling updates, a hybrid version, and a reputation for stellar quality, reliability and customer service.

Posted by Tom Libby, PolkInsight Advisor, Polk (07.14.2010)

Is Retargeting Right for You?

Wednesday, July 14, 2010 by Therran Oliphant

I have to admit, I have recently become fascinated by the opportunities retargeting represents. If you're not familiar with it, retargeting is the process by which an advertiser can make your display ads (re)appear to a web surfer that has visited your online location but failed to make a purchase decision. For instance, if I visit the Reebok website and surf around - without leaving my info or making a purchase - then decide I want to read a blog, I might end up seeing a retargeted Reebok ad on that blog. This is all true, as long as the blog is in the retargeting ad company's network, allows targeted ads, etc.

This is happening with increasing frequency and the question of preparedness should be asked of everyone in the automotive industry, that advertises online. The reason being is, studies show Americans as 49% more likely to visit a site when previously exposed to that brand's messages, and Europeans as a whopping 72% more likely. The numbers are staggering, so you may be wondering why I'm asking the question of whether or not it is right for you. I have two main reasons:

Privacy - Many are worried about privacy issues, as they don't really understand targeting online. Education is the key to overcoming this issue, as online consumer research and targeting rarely keep any personally identifiable information. In fact, businesses should be aware that their advertisers are not violating the privacy of their traffic very much at all. Honestly, social media sites such as Facebook collect more information than retargeting companies.

The quest to help the US become a more advertising savvy society has been taken up by iab with their Privacy Matters campaign. I suggest reading through the site. It only takes about 15 minutes, but answers questions and dispels myths without using much technical language.

Patience - Even though there are positive numbers surrounding the brand affinity of "before seen" brands, the Click-Through Rate (CTR) numbers don't correlate on a 1:1 basis. This statistic occurs because not all site visits and inquiries are immediately derived from a click action on the display ad. Therefore, it is reasonable to assume that multiple exposures and a little time are necessary for the effect of the ads to cause action.

Also, it means that simple quantitative analysis won't tell the whole story. Instead, a mix of quantitative and qualitative analysis should be used to help measure the effectiveness of the campaign. Yes, this is slightly tedious, but a 49% increase in intention to visit your online location(s) should get your attention.

If you want to try something that is underutilized and has enormous potential, look toward ad retargeting. According to MarketingCharts.com, retargeting is the most underutilized online marketing technology - ahead of geotargeting, traffic source optimization, keyword targeting and category targeting.

If you do decide to try the technology, make sure that your measurement tactics include brand affinity and future purchase intention analysis, as the clicks from the display ad generally don't tell the whole story. Last but not least, make sure that you ask the ad company where your ads could potentially show up. Sometimes, people have found that their ads showed up on sites that weren't exactly representative of their business model.

Have you tried ad retargeting or any other relatively new online marketing tactic? What did you think about your experience?

Posted by Therran Oliphant, Account Representative, Commercial Vehicle Market, Polk (07.14.2010)

Customer Loyalty - Don't Burn Your Bridges

Tuesday, July 13, 2010 by Lonnie Miller

I'll spare you the details as you can see more in our latest analysis on Toyota's recall challenges from earlier this year. But if I asked you to simply vote whether the U.S. recalls significantly hurt Toyota's customer loyalty, what would you say? I'll suggest you think twice about your answer.

Overall, Toyota seems to have weathered the storm due to a long-standing and strong product reputation. This, coupled with the way they managed individual service visits when customers came in to have the acceleration problem fixed, appears to have saved some of their customer retention concerns. All of this despite the media spotlight thrown onto them in early 2010.

There is one telling fact worth noting: a higher level of first-time Toyota buyers shied away from the brand between Q3 2009 and Q1 2010 (a period of heavy international attention on this company). This tells you that newcomers to Toyota decided to delay their purchase of this brand more so than before. However, the consumer research on this one tells us their existing customer base bounced back nicely.

While part of their "owner bridge" may have had a few chunks of cement knocked out of it from the wide-spread recalls, Toyota appears to have built one tough bridge overall. Good for now.

Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (07.13.2010)

"You're Not in Detroit Anymore, Dorothy" - A Further Look at the U.S. Auto Mix

Tuesday, July 13, 2010 by Lonnie Miller

Yesterday, my colleague, Tom Libby, wrote about his personal shock of seeing very few domestic branded vehicles after moving to the New York metro area. For someone moving from Detroit to that market, he has reason to be amazed, much like Dorothy was after she landed in Oz from Kansas.

Look at the adjacent chart. While these brand group market shares represent only part of 2010, they are very typical of the annual sales mix for Asian, Domestic and European brands selling in the U.S. The shares are pretty stark as you move westward from NY to LA. And if I showed you Washington D.C. and many other "coastal" metro markets, the import brands typically have dominant shares.

From a macro view, let's look at sales trends in my friend Tom’s former local market this way:

In Detroit, for every retail unit sold by an Asian automaker, we get just over 5 Domestic sales
And for every retail unit sold by a European automaker, we get nearly 20 Domestic sales

Sobering "fun facts" if you are selling against the "D3" in the Motor City. But life changes for GM, Ford and Chrysler when they leave their home field. And the folks in Detroit know that. Over the last decade we've seen impressive changes in sales for BMW, Toyota, Hyundai and Honda, just to name a few. Why do you think this has been the case? What's your take on this dynamic battle? Can Buick embolden itself to appeal to someone in San Francisco, California? And can Hyundai capture the hearts and minds of those in Flint, Michigan? I'm pessimistic on both accounts. Regional preferences for auto brands are deep and slow to change. The fight will continue.

Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (07.13.2010)

NY vs. Detroit - The Automotive Mix

Monday, July 12, 2010 by Tom Libby

I have recently moved to the New York metropolitan area after spending 11 years in Southeastern Michigan. Although Polk market area reports have been at my disposal since I began employment with Polk, it was still a shock to witness first-hand the differences on the road. At first I was shocked, but I'm finally getting used to it.

Things I've noticed:

I can drive for 10 minutes, maybe more, and never see a domestic car.
Often when I pull up to a stop light, every vehicle in sight is either an Asian or European brand.
While driving on the interstate, every vehicle is an import.
Occasionally I will look around and every single vehicle within my sight is a Toyota-manufactured vehicle. I have even seen three or four Camrys right next to each other.
The only domestic vehicles you'll find in NY are the high-volume ones, such as the Chevrolet Malibu, Ford Fusion, and Ford F-Series. The lower-volume domestics, such as the Dodge Caliber, are non-existent. I have been here six months, and I can count on one hand the number of Calibers I have seen.

Polk's automotive marketing area reports reflect the automotive mix on paper, but the true testament for me has been driving in it daily. Seeing really is believing.

Posted by Tom Libby, PolkInsight Advisor, Polk (07.12.2010)

Fiercely Competitive Battleground - The Compact Premium Sedan Segment

Friday, July 9, 2010 by Tom Libby

The compact premium (aka small luxury) sedan segment is an important vehicle category. It's one of the largest premium segments because its vehicles are among the lowest priced, and more importantly -- it acts as a bridge between the non-luxury and luxury sections of the new vehicle market. The compact premium sedan arena is the cut-throat battlefield where the luxury marques use enticing incentives such as low APR programs, artificially high residuals, and free maintenance, among others, to lure Camry, Avalon, Maxima, Altima, Accord and Malibu buyers to move up a notch and drive (and park in their driveways) a Lexus, BMW, Mercedes-Benz, etc. The management teams of these premium makes are well aware that if they can successfully put a non-luxury driver into a small luxury sedan, eventually these new luxury owners will want to move up again, this time to a midsize or large luxury vehicle. And these larger high-end cars are the biggest money makers for the OEMs.

So, who's winning in this segment? Well, it depends. It depends from what perspective you view the segment. If you look at the individual models in the segment, there is no contest. The BMW 3-Series is the segment sales leader, and has been for many years. Registration data for the first four months of this year show nothing has changed - the 3-Series leads its nearest rival, the Infiniti G, by more than 10,000 units April 2010 CYTD, which equates to a 30,000+ unit gap through twelve months. The 3-Series has attained this leadership role through, among other things, coming in several different body types, offering a wide choice of powertrains, offering the exhilarating M3 performance version, creating over the years a huge owner base, offering attractive lease terms, and frequently being re-styled. Through all these actions, BMW has infused the 3-Series with the image and stature that are the envy of the luxury market. Many 3-Series competitors claim they are better than the 3-Series on one or more attributes (which in and of itself promotes the 3-Series), but there is only one 3-Series.

But, the story isn't that simple. If one looks at the segment at the make level, BMW actually plays the role of bridesmaid. Lexus has managed to offer three products in this segment, each of which appeals to a different buyer profile. And the combined registration total for all three Lexus products edges out the 3-Series, though by less than 900 units through 4 months (January-April 2010). Acura, Infiniti, Mercedes-Benz and Audi follow, but their volumes don't come close to those of the two leaders.

While BMW has successfully crafted an iconic model to which all others aspire, Lexus simultaneously has been able to sell more small luxury sedans than any other brand by slicing the segment into three distinct sub-categories and offering an appealing product for each one.

Posted by Tom Libby, PolkInsight Advisor, Polk (07.09.2010)

Say It Like You Mean It: A Recap

Friday, July 9, 2010 by Guest Blogger

I recently attended a communications seminar offered by Inforum and Centric Strategies called "Say It Like You Mean It!" The seminar was highly informative and there were several good take-aways for me to apply in my day-to-day personal and professional communications.

As an example, did you know that communication is 55% body language, 38% tone of voice and 7% words according to Kristina Evey, our seminar leader? Body language is especially important. Kristina spoke about the importance of keeping an open stance (ie. no arm crossing), eye contact and delivering a firm (but not crushing) handshake. We spent some time on a "mirroring" exercise for rapport building by copying the actions (in a subtle way) of the person we were listening to. She also recommended that when you have bad news to relay that you position your body sideways to the person you are communicating with.

A confident and certain voice is essential too. Which words you stress can completely change the meaning of your message. As an example, we read the aloud the sentence, "I did not make you dinner last night." and said the sentence over and over emphasizing a different word each time. Another great reminder was to smile when speaking.

Clearly, choice of words can affect the result of your communication. We learned about the use of negative versus positive statements. Saying "no problem" or "no worries" can actually be perceived as being negative. Instead use words such as "absolutely", "I'd be happy to" or one of my favorites "it's all good."

Kristina addressed communicating when you are using email or texting. With these methods, there is obviously no body language or tone of voice, so all you have to rely on are the words. Her suggestions were to re-read your message before hitting the send button, use spell check and start with a rapport building sentence. With texting, her advice was to be engaging with your words.

Lastly, how many of us use the following sentence at the end of a presentation or an email, "Do you have any questions?" Just to hear "crickets?" Replacing it with, "What questions do you have? I have the time to answer them." can make a significant difference by demonstrating that you are expecting questions, while opening up the door for feedback and productive dialogue.

Posted by Lois Yeats, Account Representative, Automotive Retail Solutions, Polk (07.09.2010)

Hyundai's "iService"

Tuesday, July 6, 2010 by Lonnie Miller

Hyundai wants you to have an iPad and to stay home if your car breaks. I love it.

When the new Equus sedan comes out, a car representing Hyundai's continued march into the luxury market, owners will receive an Apple iPad. And on this iPad you will be able to use it for its basic purpose and for scheduling service visits. Plus, Hyundai wants to give Equus owners the royal treatment with their valet service whereby they will come to your home and pick up the sedan and take it to the dealership.

I think this is a good formula. In the luxury market for autos, technology and convenience rule. Look at BMW and other luxury brands. For anyone paying north of $55k-$60k for a vehicle, convenience almost comes as an entitlement. Let's say an obliged perk. And for a Korean automaker who's done very nicely to reinvent its brand, a one-two punch of valet service supported by an iPad app will resonate with many who are considering the new Equus. Makes me wonder how many people will buy the car just to get an iPad (crazy, I know, but transferrable accessories often make a larger purchase seem reasonable).

The real test will be how many times these owners contact their Hyundai service advisor. Let's hope for some positive customer loyalty at the dealer network through these contact opportunities. And let's also hope the iPad service app doesn't get over-used beyond the need for basic maintenance.

Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (07.06.2010)

Four-Cylinder Powertrains Steadily Gain Market Share

Friday, July 2, 2010 by Tom Libby

The accompanying chart illustrates the gradual but undeniable trend toward more and more four-cylinder engines in the cars and light trucks Americans are buying. The chart also shows this trend has accelerated in the past two years.

Notes: 2Q 2010 includes April only; powertrains other than 4, 6 and 8-cylinders not included in calculations

In 2007 vehicles powered by six-cylinder engines still accounted for more than 40% of the retail U.S. new vehicle market, even though their mix was easing slightly. However, starting in the second quarter of 2008, which not coincidentally was when gas prices temporarily spiked to more than $4 a gallon, we have witnessed a more dramatic move towards the smaller engines and away from six- and eight-cylinder powertrains. This past April, the only month in the second quarter for which we have new vehicle registrations, the four-cylinder mix approached 50%, compared to a little over a third in the second quarter of 2006. Six-cylinder and eight-cylinder installation rates have both plummeted six points since 2006, with the eight-cylinder proportion now only about a sixth of the market.

As OEMs launch more and more four-cylinder (or smaller) powered vehicles to meet stringent mid-decade CAFÉ requirements, it is inevitable that the four-cylinder mix will rise even more. It also seems like a legitimate question to ask whether or not, in the long run, the eight-cylinder configuration will even survive in the U.S. automotive market.

Posted by Tom Libby, PolkInsight Advisor, Polk (07.02.2010)

Lincoln - Reinventing Itself

Thursday, July 1, 2010 by Lonnie Miller

As I head into my "mid-somethings" the Lincoln brand has caught my eye (did I really just type that? Yes!). One of my dear friends who works for Ford Motor Company does a nice job of showing me what they are doing to their vehicle line up and nudges me to look at more and more of the Ford products, especially in the luxury market. Over the last year, Lincoln has landed on my "future short list" of cars I'd consider buying. And not due to any ads or cool automotive marketing tactics.

While last week's article in the Wall Street Journal alludes to Lincoln still being a stodgy brand, they do show how the luxury marque is making progress. I'm rooting for them. Have you seen the new MKZ? Gorgeous. I never thought I'd be saying this, but this brand has something to offer.

Are you seeing what I'm seeing with some of the domestic OEM luxury brands? Cadillac...you've done great work lately and have done nicely at attracting a younger buyer base (which Lincoln still needs to work on)... but I'd keep a close eye on this cross-town rival. Something's brewing.