Ownership Costs Most Important in 2013 Brazil VOSS

Jon Sederstrom-Final

Jon Sederstrom

Overall vehicle ownership satisfaction in Brazil averages 733 (on a 1,000-point scale), according to our 2013 Brazil Vehicle Ownership Satisfaction Study (VOSS), and ownership cost satisfaction—which accounts for the highest importance weight in the study’s overall satisfaction index—receives the lowest average score among the four measures that are examined.

The 2013 study, based on evaluations of 8,387 online interviews with new-vehicle owners in the country after 12 to 36 months of ownership, evaluates four measures of satisfaction across the new-vehicle ownership experience. In order of importance, these measures are: ownership costs (42%); service satisfaction (23%); vehicle appeal (19%); and vehicle quality/reliability (16%).

Among all countries in which J.D. Power publishes the Vehicle Ownership Satisfaction Study, owners in Brazil place the most importance on the cost of owning a vehicle. In part, this is due to spending a larger percentage of their income on vehicle service and repairs, fuel, taxes, and insurance. Continue reading ›

Internet Plays a Major Role in Brazil’s New-Vehicle Sales Process

Jon Sederstrom-Final

Jon Sederstrom

New-vehicle shoppers in Brazil rely the most on information from their friends and relatives (45%), followed by research on the Internet (43%), to help them decide which make and model of vehicle to purchase, according to our 2013 Brazil Sales Satisfaction Index (SSI) Study.* These two sources are cited more often than traditional information sources such as owners of the same vehicle (27%) or the salesperson or dealership owners (23%), based on our study, which evaluates more than 3,000 online interviews with Brazil’s new-vehicle owners one to seven months after their purchase.

A Little Background about Brazil as an Auto Market

Brazil is the fourth-largest new-vehicle market in the world, behind China, the United States and Japan. The country’s auto market is expected to grow by 3% in 2013 from 2012, when 3.6 million new light vehicles were sold in the country.

In addition to experiencing strong sales and growth, nearly one-half of consumers in Brazil have access to the Internet and nearly 55 million smartphones are in use in the country, which means that information gathered online is becoming a powerful and influential resource for new-vehicle shoppers. Continue reading ›

J.D. Power International Roundtable Provides Future Industry Outlook

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John Humphrey

After a successful 2012, the outlook in 2013 for the automotive markets in the United States and China remains optimistic, according to John Humphrey, senior vice president of global automotive at J.D. Power and Associates. He gave projections for the global auto industry during a presentation at the recent J.D. Power 2013 International Automotive Roundtable in Orlando, FL. Some 500 auto industry members—including dealers, marketers and executives from automakers—attended the one-day conference that was co-sponsored with the NADA. Some highlights from the presentation:

Auto Sales Shift to Emerging Markets

In 2013, the global automotive industry faces a somewhat mixed economic bag; the average GDP of mature markets will grow at about 1.4%, while the world’s largest emerging markets will grow by 5.5%, on average.*

Clearly, the United States and China are the bright spots to watch in 2013 and thereafter, in terms of sales and production potential. That said, there are pockets of overcapacity in the global industry that need to be addressed. In 2012, total global capacity for light vehicles reached 116 million units, against total global sales of 81 million units. This roughly translates to a utilization rate of 70%—well below the 80% threshold that most automakers need to reach to achieve financial breakeven. While utilization rates can vary widely by market—and impact the health of individual industries—the overall rate for the global industry can positively or negatively affect automakers with global operations.

Looking toward the end of the decade, the global automotive industry is plainly being driven by the largest emerging markets. In 2012, Asian markets accounted for 41% of the 81 million light vehicles sold globally—primarily China and India. By 2019, Asian markets will account for 49% of the 115 million vehicles forecast to be sold globally.

Continue reading ›

Japanese Automakers Regain a Foothold and Make Gains in Emerging Markets

John Humphrey

After slogging through several years of turbulent times that included a mix of vehicle quality challenges, widespread internal restructuring, and a rash of unavoidable natural disasters, Japanese automakers are starting to regain their footing and reassert themselves in markets around the world. In particular, Japan’s largest brands—Toyota, Nissan, and Honda—are performing especially well in the world’s largest emerging markets—China, India, and Brazil. For example:

• In China—a market where total passenger-vehicle sales grew 9% in the first 6 months of the year to 6.9 million units—Nissan sales increased 18% during the same period (making Nissan the second-best-selling brand in China, behind perennial leader Volkswagen). Toyota’s sales jumped 31% (making it the third-best-selling brand), while Honda sales grew 17% (making it the seventh-best-selling brand).

• In India, Japanese brands by far outpaced their competitors in year-over-year growth. Passenger-vehicle sales in India are up 12% through the first half of the year to 1.3 million vehicles. Toyota sales are up 69% (making it in the fifth-best-selling brand), Honda sales have climbed 85% (the eighth-best-selling brand in India) and Nissan sales are up 160% (making it the 10-best-selling brand).

• In Brazil, where Japanese automakers are relative latecomers to the market, Japanese brands are beginning to acquire market share. Industry sales declined 2% in the first half of the year, but Toyota (up 9%), Nissan (up 30%), and Honda (up 5%) were able to stand firm against this decline—even as a majority of their major competitors saw flat or negative growth. Continue reading ›

Brazil Vehicle Ownership Satisfaction Rises Despite Impact of Higher Ownership Costs

Jon Sederstrom

Overall satisfaction among new-vehicle owners in Brazil, which is the world’s fifth-largest country in population and geographic size, improves by 8 points from last year to an average index score of 751 (on a 1,000-point scale), according to our 2012 Brazil Vehicle Ownership Satisfaction Study (VOSS).

The increase in overall owner satisfaction in Brazil could be partly due to the entrance of more brands in the market in addition to more model choices than ever before. At the brand level, it was the second straight year that Toyota is the highest-ranking brand in the study. Toyota is followed in the rankings by two new entrants: South Korea’s Hyundai and Kia brands. Continue reading ›

Cost of Vehicle Ownership in Brazil Has Greatest Impact on Satisfaction

Jon Osborn

New-vehicle owners in Brazil, which is the world’s fifth-largest country in terms of population and geographic area—spend a disproportionate amount of their personal income on their vehicles, compared to new-vehicle owners in other countries. Vehicle owners in Brazil pay much higher prices to purchase their new vehicle—often twice as much as US owners pay—due in part to taxes. Owners in Brazil also spend more to finance their new vehicles. A typical new-vehicle loan can have interest rates as high as 15% per year. Finally, in addition to the costs of purchasing a vehicle, new-vehicle owners in Brazil are concerned about the costs of ownership—which include maintenance and repair, insurance and fuel costs. In fact, according to J.D. Power research, these owners place more importance on the cost of owning a new vehicle than do new-vehicle owners in many other countries.

Each year J.D. Power conducts its Brazil Vehicle Ownership Satisfaction Study (VOSS) on an annual basis to measure new-vehicle owner satisfaction after 2 years of ownership in four factors: Vehicle Quality, Vehicle Appeal, Dealer Service Experience, and Cost of Ownership. And, according to our analysis, Cost of Ownership accounts for 31% of the overall satisfaction index and is the most important of the four key factors in the Brazil VOSS.

Among the other countries where J.D. Power has published VOSS—Canada, France, Germany, Italy, Mexico, and New Zealand—Italy is the only other market where cost of ownership has a similarly high importance weight (32%) in determining overall vehicle ownership satisfaction. In contrast, Cost of Ownership accounts for just 23% of the overall satisfaction index weight in measuring vehicle owner satisfaction in Mexico and only 24% in Canada. Continue reading ›

China’s Auto Exports: Small but Posting Strong Growth

Marvin Zhu

In 2011, China’s automakers shipped nearly 850,000 vehicles from different harbors in China to other world regions. Exports were up 50% from the previous year and contributed US $11 billion (69.55 billion RMB) to the country’s trade balance, which was an increase of 57% from 2010.

While most of the Chinese home-grown brands are suffering to some extent from declining market share in the domestic market, surging exports might help local automakers to counter this decline, according to Marvin Zhu, senior automotive analyst with LMC Automotive.* Recently, he wrote about how China’s local automakers are making inroads in other countries’ auto markets in China Automotive Monthly, published for J.D. Power Asia Pacific. The article is excerpted:

Some Local Companies are Already Overseas Players

Chery, China’s largest local carmaker, recorded sales of 642,000 units in 2011, down 6% year over year. Its export volume reached 160,000 units, which amounted to one-fourth of the company’s total sales. Last July, Chery set up a US $400 million (2.54 billion RMB), fully-owned factory with a complete production line in Brazil. It became the Wuhu-based carmaker’s 17th overseas plant. While this growth and investment is happening internationally, the company announced it would drastically reduce its investments for ongoing R&D projects for the local market. Continue reading ›

A Long Runway for Growth in China and Some Notable Trends

Geoff Broderick

In the coming scramble to win sales in the Tier 2-4 markets and earn profits in China, there is the temptation for OEMs to invest heavily in production, which can result in overcapacity. Discipline must be maintained in China or history will repeat itself—as illustrated by the imbalance of supply and demand in the U.S. market during the past decade. There is likely still more consolidation to come in the global auto market, but there is room for the smart players with solid business and product plans.

In the past five years, the combined vehicle sales market share of the emerging countries—including China and India—grew from less than 20% of the world’s total, to more than 50%. Among all emerging markets, China has one of the longest runways for continued growth based on its low penetration rate (vehicles per 1,000 people), in addition to a growing per capita income and rising disposable income. There also is a real opportunity for a steep takeoff, especially in China’s Tier 2 and 3 urban markets.

China Remains a Pillar in the Global Auto Industry

By 2018, China, the United States, India, Brazil and Russia will be the world’s five largest auto markets in terms of light-vehicle sales, with China as the far-and-away frontrunner at almost double the sales of the United States (30-35 million units vs. 17 million units). Japan, followed by Germany, the UK, Italy and France will round out the 10 largest markets, according to J.D. Power and LMC Automotive Forecasting.*

With closely aligned global supply and demand coupled with improved macroeconomic conditions—albeit slower for Europe—and significant new product introductions and an improvement in available credit—at least in the U.S. market—global sales, led by China (32.9 million unit sales), will boom by 2018 to slightly less than 114 million units.Although China will continue to see an increase in discretionary income, as well as much sales growth fueled from a further penetration of financing and the introduction of leasing, there will likely be intense competition to gain share in Tier 2 and Tier 3 markets. Continue reading ›

Rapid Growth in Brazil’s Auto Market Brings Promise and Tough Competition

Brazil’s new-vehicle market is projected to continue to grow rapidly in the coming years. Passenger-vehicle sales are forecast to reach nearly 3.53 million units in 2011, up from 2.72 million units in 2008. This represents an average annual growth rate of 9% during the past three years.

Just last year, Brazil passed Germany in . . . Continue Reading Rapid Growth in Brazil’s Auto Market Brings Promise and Tough Competition

Vehicle Owners in Brazil Value Quality, but Dissatisfied with Ownership Costs

Jon Osborn

Although owners of passenger vehicles in Brazil say they are most satisfied with the quality and reliability of their vehicle, they also indicate being least satisfied with the cost of vehicle ownership, which is the most heavily-weighted of four measures evaluated in our inaugural J.D. Power do Brasil 2011 Vehicle Ownership Satisfaction StudySM (VOSS). The new study is based on nearly 5,000 online interviews with Brazil’s vehicle owners after an average of two years of ownership.

We find that overall ownership satisfaction in Brazil—the fourth-largest new-vehicle market in the world—averages 743 (on a 1,000-point scale), with the highest satisfaction score of 780 for vehicle quality and reliability and the lowest score of 698 for satisfaction with the cost of ownership. That’s a gap of 82 points.

Collectively, owners of sub-compact and compact models comprise 61% of the vehicle market in Brazil, and ownership-cost satisfaction among these small car owners is the lowest among all vehicle segments examined in the study—averaging 682 for sub-compacts and 693 for compacts. In comparison, average cost-of-ownership satisfaction among respondents in Brazil is considerably higher among larger vehicle segment owners—averaging between 713 and 747. Continue reading ›