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Consumers Rate Vehicle Quality High Despite Industry Recalls

5 January 2001

Polk Study Shows Consumers Rate Vehicle Quality High Despite Industry Recalls    
    DETROIT, Jan. 4 Although recalls continue to increase
throughout the auto industry, consumer attitudes remain positive, according to
a study released today by Polk, the longest-standing curator of automobile
records in the United States.  In fact, nine out of 10 consumers rating their
new vehicle experiences said quality, reliability and manufacturer reputation
were meeting or exceeding their expectations.
    The study showed that it takes more than one recall to undermine customer
loyalty for a favorite vehicle brand.  However, three recalls appear to be the
limit.  The study showed that at this point, a manufacturer should take extra
measures to boost consumer loyalty.
    Recalls on new vehicles are becoming commonplace in today's fast-moving
automotive marketplace.  Almost half (43 percent) of all new vehicle buyers
reported having at least one recall on their previous vehicle during the first
half of the 2000 model year.  And as many consumers (six out of 10) are
demanding innovative products, manufacturers are attempting to decrease
product development time even more.  As time to market decreases, recall rates
may increase.
    The Polk Study found that in addition to product innovation, consumers are
placing a great deal of importance on the reputation of the manufacturer,
quality of the products delivered and reliability over time.  It's a challenge
for manufacturers to perform well in all areas.

    Factor Rated for             Critically/Very    Experience Meets/Exceeds
    New Vehicle Purchase:          Important %           Expectations %
    Reputation of Manufacturer       81.9%                   96.0%
    Quality of Products              92.8%                   92.9%
    Reliability                      94.0%                   96.3%
    Innovation of Products           59.9%                   96.6%

    Source: Polk's Manufacturer Loyalty Excelerator(TM), First Half 2000
Model Year

    "Consumers are demanding vehicles that are consistently reliable and
durable," said Melissa Schubart, Polk's loyalty research consultant.  "As
their vehicle needs change, new vehicle buyers are sometimes forced to buy or
lease different brands, particularly if their current manufacturer doesn't
have innovative new designs that fit their ever-changing expectations."

    A Positive Experience Equals Loyalty
    Trying to retain customers is a challenge for any manufacturer in the
competitive automotive environment.  The Polk study found that loyalty to a
particular vehicle brand decreases when consumers have negative experiences
with reputation, quality, reliability and innovation.  Polk found new vehicle
buyers who left or defected from their previous manufacturer rated their
experience with this manufacturer significantly lower than consumers who
remained loyal to a particular manufacturer.

               Experience Met, Exceeded or Far Exceeded Expectations
                              (Previous Vehicle Owned)

    Attribute:                    % of Loyalists          % of Defectors
    Reputation of Manufacturer          95.0%                   84.2%
    Quality of Products                 91.6%                   78.2%
    Reliability                         92.6%                   81.2%
    Innovation                          95.4%                   89.7%

    Source: Polk's Manufacturer Loyalty Excelerator(TM), First Half 2000
Model Year

    "Manufacturers need to continue to monitor loyalty rates and experience
ratings for customers experiencing recalls," said Schubart.  "If new vehicle
sales continue to slow down in the months to come, any negative perceptions of
vehicle quality, reputation or reliability may be harmful in maintaining a
manufacturer's current market share.
    Polk's Manufacturer Loyalty Excelerator(TM) report, which is the basis for
the Polk Automotive Loyalty rankings and annual awards, is the latest insight
into this type of consumer behavior.  This report was introduced to the
automotive industry in 1995 and was created to provide household loyalty
information to manufacturers at many different levels.  It is being used to
provide loyalty percentages for the entire automotive industry to allow for
cross-industry comparisons of loyalty behavior and to examine loyalty at
various levels from the industry level down to the vehicle line level.  The
report measures loyalty throughout the entire model year so that manufacturers
may keep abreast of loyalty trends as they occur in the industry.