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Who's Buying American Vehicles

Shoppers Weigh Benefits of Domestic and Imported Vehicles

Despite imported vehicles making up nearly 49 percent of the U.S. auto market, studies show that a consumer's country of origin plays a crucial role during the vehicle purchasing process.

According to a recent J.D. Power and Associates study, nearly 80 percent of new-vehicle buyers limit their purchase consideration to either only domestic models or only import models. Additionally, among consumers who cross-shop for both import and domestic vehicles, those who ultimately buy domestic frequently do so because they simply decide they do not want an import.

The study indicates that buyers of new domestic vehicles frequently decide against import brands for financial reasons. Import models, unlike domestic brands, do not often offer aggressive purchase rebates, discounts or other consumer-driven incentives.

However, import buyers who reject domestic models more frequently point toward the vehicle's perceived attribute deficiencies as key reasons for rejection. The study listed domestic vehicle complaints such as concerns for reliability, gas mileage or poor resale value.

According to Kara Steslicki, research manager of automotive retail for J.D. Power, the study shows how import vehicles have gained a strong foothold in the U.S. auto maket.

"These findings point to continued difficulties for the Big Three in Detroit as they try to win back some of the market share they lost to the imports," Steslicki said. "It also suggests that too few U.S. consumers have caught on to the fact that cars and trucks offered by Detroit automakers are in many cases as good, if not better, than their rivals from Asia and Europe."

However, Steslicki says reliability and resale value perceptions cannot be changed overnight, and may require significant redesigns to domestic products and production processes.

"To win back market share, domestics are faced with two alternatives — either continue outspending imports on incentives, or find vehicle specific opportunities such as styling or promoting a positive dealer experience that can have an immediate impact on consumer perceptions of the brand," she said.

The J.D. Power study also showed changes in numerous new-vehicle shopper behavior patterns:

  • Nearly 40 percent of all new-vehicle shoppers cite price as a key reason for rejecting a model. Interior (10 percent), dealership experience (10 percent) and quality/reliability concerns (9 percent) follow as the most influential reasons for rejection.

  • Approximately 45 percent of new-vehicle shoppers took a test drive prior to rejecting a model, and nearly 25 percent tried to negotiate pricing before ultimately purchasing a different model.

  • More than 60 percent of consumers indicated they researched a vehicle model online. Additionally, more than 20 percent of shoppers claim the Internet influenced their decision to reject a vehicle.

  • Shoppers who researched a model online or by reading a magazine review are nearly half as likely to mention interior issues as the most influential reason for rejecting a model when compared with shoppers who actually visit a dealership (11 percent versus 5 percent, respectively).

  • While price is a key issue among both hybrid and non-hybrid purchasers, consumers who shop for a hybrid are less likely to reject for price (53 percent) than consumers who shop for a non-hybrid model (59 percent).

The 2007 study was based on responses from 31,355 new-vehicle buyers surveyed between May and July 2007.

Source — J.D. Power