New-Vehicle Buyers Take Control of Negotiation Process
28 July 1999
J.D. Power and Associates Reports: New-Vehicle Buyers Take Control of Negotiation Process, with 60 Percent Believing They Know Dealer Invoice
Cadillac, Jaguar and Volvo Tie for Top Ranking in Sales Satisfaction
AGOURA HILLS, Calif., July 27 -- More than 60 percent of
new-vehicle buyers believe they were able to uncover the dealer invoice price
during the new-vehicle shopping process -- up from 40 percent in 1998,
according to the J.D. Power and Associates 1999 Sales Satisfaction Study 2(SM)
(SSI2) released today. Those respondents who believe they know dealer invoice
report being more satisfied with the prices they paid for their new vehicles
than those without such information. However, this has not resulted in
dramatic improvement in how customers view their automotive retailer in terms
of overall sales satisfaction.
"Consumers have been the catalyst for a paradigm shift in the control of
new-vehicle pricing," said Loretta Seymour, director of sales satisfaction
research at J.D. Power and Associates. "An increasing number of new-vehicle
buyers visit dealerships armed with what they believe is dealer invoice
derived from the Internet. As a result, consumers have increased their
influence on dealer margin and the final retail price."
According to J.D. Power and Associates research, 40 percent of new-vehicle
buyers use the Internet in some way during the new-vehicle shopping process -
up from 25 percent in 1998. The Internet is making dealer invoice disclosure
more accessible to consumers. This broad accessibility is placing more
pressure on retailers to disclose their new-vehicle invoice pricing. In fact,
more than 25 percent of new-vehicle buyers responding to the survey report
that their salesperson showed them the actual dealer invoice during their
interaction at the dealership.
The study shows that overall customer satisfaction with the new-vehicle
sales experience is essentially the same as the results of the 1998 study.
Yet, price evaluation(1) increased by seven points, with virtually every
nameplate seeing an improvement in this area. A highly competitive
new-vehicle pricing market, coupled with increasing negotiating power of
consumers, contributed to many buyers feeling satisfied with their new-vehicle
price.
After four consecutive years as the number-one ranking brand in sales
satisfaction, Saturn falls to sixth position, leaving Cadillac, Jaguar and
Volvo in an unprecedented three-way tie for the top SSI2 ranking. Land Rover
and Mercedes-Benz follow in the fourth and fifth positions, respectively.
Cadillac, Jaguar and Volvo perform well in the five factors that determine
satisfaction, which include sales presentation, purchase transaction, finance
and insurance process, delivery/aftersale and price evaluation.
The study results indicate that the percentage of Saturn's customers
feeling pressure during the new-vehicle sales process increased from 13
percent in last year's study to 18 percent, which could indicate that more
Saturn buyers feel as if they are negotiating the price of their new vehicle,
especially those who trade in a vehicle. This trend, combined with more
pressure felt during the finance and insurance process, could indicate that
margin pressures at Saturn dealerships jeopardize the "no-haggle" sales
experience on which Saturn has built its reputation. Yet, aside from these
challenges, Saturn remains the leading non-luxury make in sales satisfaction.
The SSI2 study provides the automotive industry with a comprehensive
analysis of critical information needed to satisfy today's demanding consumers
during the new-vehicle shopping process. For the past 12 years, the study has
guided automotive manufacturers in observing the trends that affect the way
consumers view sales satisfaction.
Headquartered in Agoura Hills, Calif., J.D. Power and Associates is a
global marketing information services firm operating in key business sectors
including market research, forecasting and customer satisfaction. The firm's
quality and satisfaction measurements are based on actual customer responses
from more than one million consumers annually. J.D. Power and Associates can
be accessed through the World Wide Web at http://www.jdpower.com. Media e-mail
contact: john.pepitone@jdpower.com. This press release is provided for
editorial use only.
No advertising or other promotional use can be made of the information in
this release or J.D. Power and Associates survey results without the express
prior written consent of J.D. Power and Associates.
(1) Price evaluation comprises two areas: satisfaction with the purchase
price and customer perception of the deal received.
J.D. Power and Associates 1999 Sales Satisfaction Study 2(SM)
Nameplates Ranking Above Industry Average
Cadillac 142
Jaguar 142
Volvo 142
Land Rover 140
Mercedes-Benz 139
BMW 138
Lexus 138
Saturn 138
Infiniti 136
Buick 134
Lincoln 131
Oldsmobile 131
Audi 130
Saab 129
Chrysler 127
Mercury 126
Chevrolet 125
GMC 124
Pontiac 124
Porsche 123
Plymouth 121
Industry Average 121
Finishing below industry average, in alphabetical order, are: Acura,
Dodge, Ford, Honda, Hyundai, Isuzu, Jeep, Kia, Mazda, Mitsubishi, Nissan,
Subaru, Suzuki, Toyota and Volkswagen.
Source: J.D. Power and Associates 1999 Sales Satisfaction Study 2(SM)
Note: Daewoo was not included in the 1999 SSI ranking due to small sample
size.
Charts and graphs extracted from this press release must be accompanied by
a statement identifying J.D. Power and Associates as the publisher and the
J.D. Power and Associates 1999 Sales Satisfaction Study 1(SM) as the source.
No advertising or other promotional use can be made of the information in this
release or J.D. Power and Associates survey results without the express prior
written consent of J.D. Power and Associates.