Branding Substantially Increases the Prices Consumers Are Willing to Pay

WESTLAKE VILLAGE, Calif. August 16, 2007; Among consumers who indicate they are highly interested in having a premium surround sound system in their next vehicle, more than 80 percent are willing to pay twice the average market price for a branded system, according to the J.D. Power and Associates 2007 U.S. Automotive Emerging Technologies StudySM released today.

The study is designed to measure consumer familiarity, interest and purchase intent for emerging automotive technologies both before and after an estimated market value is revealed.

The study finds that the majority of consumers who are highly interested in premium surround sound are willing to pay an average of $1,000 for a branded system, which is twice the suggested market price of $500. In general, interest in audio-related features is high among consumers, with 60 percent saying they are interested in a system capable of playing multiple audio formats. Additionally, at a market price of $100, 50 percent of consumers are interested in a USB interface, and 43 percent are interested in an iPod interface at a slightly higher market price of $150.

“It’s interesting to note that while interest in premium surround sound is somewhat higher among younger consumers, the feature still garners relatively high interest among consumers of all ages,” said Mike Marshall, director of automotive emerging technologies at J.D. Power and Associates. “With some other features, there is a considerable gap in interest between younger and older consumers, and the gap for premium surround sound is notably smaller. Given its universal appeal, auto manufacturers are well positioned to offer premium surround sound systems across all of their vehicle models, as opposed to targeting a specific vehicle segment or model line.”

Among the features examined in the study, rear-seat entertainment system, in-vehicle Internet and wireless connectivity yield the largest gaps in interest—prior to the introduction of price—between younger consumers and older consumers.

The study also finds that many safety-related technologies continue to garner higher interest levels from consumers. After the introduction of price, new-vehicle owners are most interested in two-stage smart airbags, which inflate in multiple stages, with less pressure and help to protect passengers from potential injuries associated with traditional (one-stage) airbags. Following two-stage smart airbags are backup assist and run-flat tires, which are also safety-related technologies.

“Safety-related technologies have traditionally garnered the highest interest levels prior to the introduction of price among consumers, and the same holds true for the 2007 study,” said Marshall. “However, entertainment features are slowly gaining ground in the consumer interest ratings, particularly with features such as navigation systems and premium surround sound garnering high levels of interest from consumers before the price is revealed.”

Once average market prices are revealed, the study finds that rear-seat entertainment systems ($1,500) and collision mitigation systems ($1,750) receive the lowest interest levels from consumers of all emerging technologies examined in the study. These features are also among the most expensive features examined in the study. Other technologies with low interest after the price is revealed are lane departure warning system and in-vehicle Internet.

The 2007 U.S. Automotive Emerging Technologies Study is based on responses from more than 17,000 U.S. consumers. The study was fielded in July 2007.

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is an ISO 9001-registered global marketing information services firm operating in key business sectors including market research, forecasting, performance improvement, training and customer satisfaction. The firm’s quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies

Founded in 1888, The McGraw-Hill Companies is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor’s, McGraw-Hill Education, BusinessWeek and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2006 were $6.3 billion. Additional information is available at http://www.mcgraw-hill.com.