AUTOMOTIVE ADVERTISING & MARKETING

Initial Quality Study

Initial Quality Study Reveals Porsche as Repeat Winner

JKRAdvertising / Auto Industry in the News /

June 19, 2014

The 28th annual JD Power and Associates Initial Quality Study results have been released, and last year’s winner is also this year’s champ. That’s right … for the second straight year, Porsche is the top dog in the automotive pack.

Following Porsche in the ratings was Jaguar in second place, with Lexus finishing third. On the other end of the spectrum of the Initial Quality Study was Fiat, who came in dead-last by quite a wide margin; and Jeep, who finished second-to-last.

About the Initial Quality Study

JD Power and Associates is the nation’s leading independent research company. Their Initial Quality Study is based on the number of issues a new vehicle owner experiences during the first three months of ownership. This year’s study examined 207 models, measuring the number of problems reported per 100 cars – hence, the lower the score, the better the ranking. Overall, Nissan was the most improved brand, with 22 fewer problems per 100 vehicles.

This year’s study revealed that new vehicle owners had more issues with their cars than the previous year’s study. Specifically, the industry average was 116 problems per 100 vehicles, an increase of three issues from the 2013 study.

Experts surmise the increase is due to the extraordinarily high number of redesigns (the average number from redesigned vehicles was 128 issues per 100 vehicles); and the brutally cold winter, as cold-weather states had more issues than their warmer-weather counterparts.

The Initial Quality Study Best & Worst

The complete top ten was as follows, with the number of problems per 100 vehicles in parentheses:

Porsche (74)

Jaguar (87)

Lexus (92)

Hyundai (94)

Toyota (105)

(tie) Kia and Chevrolet (106)

(tie) BMW and Honda (108)

Lincoln (109)

Finally, here are the bottom five:

Mazda (139)

Scion (140)

Mitsubishi (145)

Jeep (146)

Fiat (206)

Note: The study was based on responses from more than 86,000 people, to more than 200 questions about topics such as mechanical defects and design issues.

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Post-Pandemic Dealer Gross Profits are Down – But They Don’t Have to Stay There!
March 13, 2024
It is no secret that dealer gross profits per vehicle are down sharply in the post-COVID automotive world. According to a recent article in Automotive News, gross profits of the six largest publicly traded dealership groups plunged significantly from Q4 2022 to Q4 2023. One of them was actually down 35% per vehicle!

The article explains: High interest rates, more expensive vehicles and a steadier post-pandemic supply chain continue to soften demand and bring it closer to pre-pandemic levels. Still, new-car buying has remained strong overall …

This means that, while sales volume is similar, overall bottom lines are lower for many dealers due to the reduced gross profits. What about your dealership?

Being Realistic
It’s time to turn the page! The time for dealers to simply be order takers for people willing to pay MSRP for a vehicle (and in some cases more) has passed and dealers have to work hard once again to achieve acceptable gross profits.

Selling a high volume of cars doesn’t control gross profits, no matter how much you wish this was the case. Correct processes and menu pricing – and strict adherence to them – do!

What kind of processes?
∙ Slow down the transaction! Your sales staff has to once again sell the customer on the features and benefits of every new and pre-owned vehicle on your lot.

∙ Your salespeople and managers should devalue the customers’ trade-in value (politely, of course) as much as possible. After all, if the customer expects you to lower your price, shouldn’t you be able to do the same on their trade? Remember, you’ll have to fix it up, put your name on it and resell it to someone else with all the tenacity you would a brand-new car. So make sure you buy it right … because the profit is made when you buy it, not when you sell it!

∙ To that end, management should be ready and willing to leave the desk and do thorough walk-arounds on each trade to ensure the best outcome for the dealership.

The Cure for Low Gross Profits
If you are like a lot of dealers these days, you could use some good news. Here it is: while you may not have the capability to achieve profit margins similar to those you enjoyed during the pandemic, they could likely be improved. JKR’s clients enjoy the benefit of attracting not only more customers, but better ones, too!

If meeting and exceeding your sales goals (and increasing gross profits at the same time) sounds great to you, you need to call us. Don’t settle for reduced gross profits when help is out there to get you closer to where you’d like to be.

Want to know how we do it? Reach out to Senior Partner Richard Brauns (407) 701-4233 or Partner/Vice President Jon Albert (407) 718-2494 today.

JKR Automotive Advertising: We Move Cars.

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