GM Advances Position Over Ford With Recent Zero-percent Financing Initiatives

    BOSTON--July 30, 2002--Compete, Inc. has identified that automakers using zero-percent financing incentives to boost sales and market share have seen mixed results in changes in online shopping interest. Specifically, GM has faired better than Ford in generating online interest with its July incentive program. Compete quantified the impact of these incentives on 250,000 in-market auto shoppers between June and mid-July and has demonstrated that gains in online interest for domestic OEM models correlate directly to sales increases at dealer lots.
    According to Compete's analysis, GM brands using zero-percent financing showed a larger gain compared to Ford brands from June to the first weeks of July, posting a 5% increase in overall share of shopping interest. Furthermore, GM brands without zero-percent financing also realized similar increases, suggesting that incentives for some GM brands were not necessary. In contrast, Ford brands using zero-percent incentives did not experience change in online shopping interest, and only marginally outperformed Ford brands that were not covered by incentives. This implies that Ford's incentives were not as financially productive as GM's, and will not lead to desired sales gains. Compete's analysis suggests that the adverse impacts of using zero-percent incentives will be greater for Ford than for GM as the expense associated with the incentives will not be accompanied by higher sales.
    Incentive programs cost the auto industry nearly $25 billion per year and misapplied incentives can erode unit profits and often have longer-term adverse financial implications Compete's analysis further suggests that Ford and GM have the opportunity to intelligently avoid an undirected approach by applying incentives in a more fortuitous, cost-effective and focused manner.
    Commenting on consumer response to Ford and GM incentives, Compete's Automotive Practice Leader, Lincoln Merrihew added, "We believe online interest changes are an early indicator of the success of incentive programs. Given Ford's weak results online from zero-percent incentives, Ford may have garnered more sales momentum using a different and perhaps less expensive inducement, such as increased warranty programs. To this end, Ford may benefit from leveraging consumer demand information to plan future incentive programs and focusing its attack at the model, segment and regional levels."
    According to Compete's data, GM routed Ford in the pivotal full-size pickup and luxury segments. GM's interest in the pickup segment was up 10%, while Ford's dropped nearly 10%, clearly indicating that in the pickup segment Ford needs a different approach. Notably, neither GM nor Ford has been able to gain share in online interest in the SUV segments overall despite incentives. In the high-volume midsize SUV segment, GM actually lost ground nationally, but gained share in some regions. Through June, interest in the Ford Explorer outpaced that of the Chevrolet TrailBlazer in the Mountain Region peaking at 17.9% in April. However, TrailBlazer shoppers in the Mountain Region responded more strongly to zero-percent incentives in July, helping GM pull ahead of Ford (GM captured 16.2% share of mid-SUV interest compared with a 15.4% interest for Ford). In contrast, in the South Atlantic region, the Explorer consistently outperformed the TrailBlazer, and maintained its lead in the intense zero-percent battles. In July to date, the Explorer came in at 15.7% and TrailBlazer at 11.7% interest. Ford's use of zero-percent incentives for this model, in this region yielded better results but underscores the need for more precise incentive design and targeting.
    "The clear implication is that online interest can be used by automakers to gain a preview of the effectiveness of incentive programs future demand," said Man Jit Singh, CEO, Compete, Inc. "While the automotive industry has always used a wealth of post purchase and survey information, they have never had access to the real-time shopping trends of in-market car buyers and the ability to use this automotive intelligence to modify market strategies. The opportunities for a more cost-effective use of resources to influence the marketplace are tremendous and Compete's analysis clearly demonstrates the benefits of using consumer pre-purchase insights."

    Data Collection and Analysis Methodology

    For the purposes of this analysis, Compete analyzed the behavior of 250,000 in-market auto consumers from June to mid-July across automotive information sites such as Kelley Blue Book, Edmunds, MSN CarPoint, and Autobytel.com. This analysis focused on changes in consumer interest in specific automotive makes, models, and segments as a result of recently introduced zero-percent incentive campaigns from GM and Ford.
    Compete's Automotive data aggregation and analysis system monitors the behavior of more than one million online car shoppers annually and translates page-level data from all major automotive sites into consumers' explicit make/model interests. An historical profile is created for each consumer evaluated that includes every model shopped along with recency, frequency, and duration variables to accurately qualify purchase intent. Compete's system evaluates buy-cycle patterns and model positioning, and overlays demographics and geographic location to enable more precise demographic and regional segmentation.

    About Compete's Automotive Practice

    Compete's automotive practice provides OEMs with profiles of consumers' automotive preferences and buying behavior garnered by modeling shoppers' explicit make/model interests as they research and option cars across the leading automotive sites. Automakers can leverage Compete's automotive intelligence to hone their marketing strategies, optimize incentive programs, and make better inventory allocation decisions at both a national and regional level. Since launching its automotive practice earlier this year, Compete has worked with leading automakers including Toyota and Lexus to translate its automotive intelligence into actionable business strategies to help OEMs capitalize on new market opportunities and stem competitive threats.

    About Compete

    Compete, Inc. (www.compete.com) is a premier business intelligence firm that provides industry-leading companies with competitive insights and strategies to optimize their key business decisions. Built upon the industry's foremost pool of consumer behavior data, representing over 10 million Internet users, Compete provides an unprecedented understanding of customer and competitor dynamics, plus performance metrics and business recommendations to isolate businesses challenges and opportunities. Based on a patent-pending approach to data management, Compete translates consumers' online behavior into highly actionable information that targets companies' strategic business issues including demand forecasting, pricing and promotions, marketing programs and product optimization. Compete offers its solutions to financial services, automotive, media & entertainment, and retail & consumer products companies. Compete licenses detailed clickstream data representing the online behavior of Internet users, and strongly supports individual privacy and does not license personally identifiable information.