Hunting Down Automotive Value
What do you value in a friend? Is it an absence of faults or the presence of positive qualities? Very likely it is a little of both, and if you think of your automobile as your friend, you might well look at things the same way. Not only do you seek an absence of negatives, but you would also like the presence of factors that satisfy and delight you -- great looks, superior handling, or a killer sound system, for example.
In putting together its annual Total Value Award and Total Value Index, San Diego-based Strategic Vision attempts to put a box around all those positive and negative aspects of car ownership. It believes that true value is about much more than the cheapest deal. Reliability, a solid warranty, strong anticipated resale value, durability, and innovation are all part of its definition of "total value."
With that as backdrop, the brand leaders in Total Value come as no surprise. BMW and MINI topped all brands for 2006, while Honda headlined the list of "full-line" manufacturers. Perennial value leader MINI Cooper led its segment for the fifth year running, and it was the overall Total Value winner among all vehicles and segments. With the BMW 3 Series and MINI Cooper Convertible leading Total Value in their respective segments, BMW and MINI vehicles turned in the highest levels of "believed" resale value, which was validated by outside sources. BMW's Ultimate Service program differentiated it from other luxury brands in the maintenance/service arena.
As you might guess, Honda's key strength was in its "expected" reliability scores among its owners. With each Honda model excelling in that area, Honda Civic, Accord Coupe, and Pilot led Total Value in their respective segments. The Honda Ridgeline also topped its segment, proving that delivering superior product experience, innovative features and standard equipment can overcome the hurdle of premium pricing to deliver total value.
"The calculation of Total Value clearly incorporates explicit statements that owners make about value, but those statements do not alone provide sufficient differentiation to give us the diagnostic power we want or to be able to herald one brand or vehicle as the leader in a segment," said Strategic Vision Founder and CEO Darrel Edwards, Ph.D. "By incorporating the importance of the variables that make up the experience and the economic factors which impact the perception of value, we find convergent, stable indices of true value."
General Motors took honors as the top domestic corporation with four 2006 Total Value winners -- Chevrolet Corvette Coupe and Convertible, Saturn Vue, and Chevrolet Silverado 2500/3500. With the recent introduction of a five-year 100,000-mile warranty, Strategic Vision believes GM is poised for significant gains in the index if the Total Value message is clearly recognized and communicated for individual models.
"GM's new warranty will bring new prospective buyers to the brand, who otherwise might have felt the quality, durability and value was missing," said Alexander Edwards, president of Strategic Vision automotive research group. "If GM can communicate the right quality cues and value in current and future vehicles, then they will be poised for success in the near future."
Korean brands Hyundai and Kia also turned in strong performances. On the strength of interesting styling, good quality and long warranties, the new Kia Optima and Hyundai Azera were Total Value leaders in their respective car segments, and the Kia Sedona topped the Honda Odyssey in the minivan category. The Hyundai Tucson finished at the top of the Small Sport Utilities segment in a tie with the Saturn Vue. According to Strategic Vision analysis, the challenge for both Hyundai and Kia remains gaining consideration from buyers, and success rests on communicating foundational issues of expected reliability and durability along with clear cues of quality.
Toyota's best showing came from its Scion and Lexus brands. Scion continues strong, with the long-in-the-tooth Scion xB proving that vehicles can continue to deliver value throughout their production cycle, demonstrating Total Value is not exclusively the domain of new vehicles. The Lexus LS 430, another vehicle toward the end of its life cycle, turned the same trick in the Luxury Car class.
Nissan had three Total Value leaders, including the Xterra and Armada. It also achieved a milestone with the Titan replacing the Ford F-150 as the Total Value winner in full-size pickups. Innovation and the level of standard equipment helped nudge Titan ahead in the tightly contested segment.
"Total Value is absolutely critical now in the US market," concluded Alexander Edwards, president of Strategic Vision, Automotive Group. "It is even important for brands with strong reputations, but is critical for everyone else. Total Value is more than price paid or deal, and it is more than initial quality (TGW) divided by price -- which some profess. Total Value encompasses the complete ownership experience with emotional components and priorities."
The Total Value Study surveyed over 64,000 new vehicle buyers who purchased their vehicles between October 2005 and March 2006, asking an extensive array of questions about their first 90 days of ownership.
Long a student of quality, Driving Today Contributing Editor Tom Ripley writes about the auto industry and the human condition from his home in Villeperce, France.