J.D. Power sees shift in customer attitudes, big growth in ‘emerging’ markets

J.D. Power sees shift in customer attitudes, big growth in ‘emerging’ markets

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By Michael Hissam 

Let’s open with a quick multiple-choice question: 

Select one or more of the following to complete the sentence describing marketing new vehicles, quality, and customer satisfaction in 2014: “It’s not your father’s…”
A. Oldsmobile.
B. Idea of standard equipment in a new vehicle.
C. Expectation of the car-buying experience.
D. Way of offering feedback to the OEM or other potential OEM customers.

This one was easy: Oldsmobile production ended in April 2004.

Gerardo Gomez, J.D. Powers & Associates, Mexico Operations manager, has plenty of stories and backing data to support B, C or D. His “kicker” is where the industry sees sales growth, as well as how the industry plans to keep tabs on you the new vehicle buyer:

You point to big growth in the emerging markets. You have some fantastic numbers: 31 million in new vehicle sales increases over the next few years in the emerging markets versus just 4.2 million sales increases in the “mature” economies. How sustainable is that emerging market growth?

One key is the economy. If the economy of the country is strong, that for sure is going to drive more sales in the industry. In the last three or four years the ones that are driving the growth are these countries. These countries -- because they have the opportunity to keep up with the growth -- still need additional units just to fill the demand. The key risk here is just to not surpass the infrastructure that is already in each of these countries. 

Here in Mexico you’ve pointed to an interesting phenomenon for the light vehicle sales forecast. Mexico appears to be a dynamic and growing market.

Mexico has been just trying to get back to that right level at where they should be. Remember, back in 2007, 2008 we were over 1 million units in sales in Mexico. We were hit very, very hard as we are very well linked, connected to the U.S. economy. Anything that happens badly in the U.S. economically is always keeping us back. Keeping us back but at the same time the opportunity of growth is there because the people need more transportation or alternative transportation.

A key thing for the OEMs is also just to find the right mixture of the right vehicle at the right price in Mexico. As more competitors are coming to the market for sure they are going to be more aggressive in trying to capitalize that segment of the industry in Mexico that are really focused on the smaller vehicles.

You have been pointing to this image of Mexico as a place for the sales of smaller vehicles. Are you forecasting a shift in what people will be buying in Mexico?

What we are looking at, even though more than 50 percent of the sales in Mexico from now through 2020 are going to be focused on sub-compact and compact vehicles. These small ones fulfill the requirements in price for the Mexicans and as well as in the right size for the country. 

Of course every Mexican would like to have a better car, a bigger car. That also is very, very tied together to the requests from the new generations who live in the small cities and the very crowded cities. They are looking for small vehicles. Even though they want to have more equipment in their cars, they are just looking, with all the communication and technology that all the people use, at what the market, the companies are offering now. 

They are looking for more alternatives: the Bluetooth and more equipment and more accessories Their expectations are becoming going up in terms because they are just looking within the luxury segments for example, what they are offering, so their expectations are just going up.

You’ve been tracking quality in the NAFTA countries. What can you tell us at this point as to what the countries offer in quality?

We are tracking quality not only in the NAFTA countries, J.D. Powers tracks quality all over the globe. Mexico is a very, very competitive market in terms of quality and we have a big history being very good at quality. Right now we are the same level of any manufacturer in the U.S. or Canada. 

Remember this is from the point of view of the customer and the consumers are having different expectations. In terms of problems per hundred vehicles for Mexico it’s about 113, from the U.S., it is about 116. This marks the first time in our study that Mexico comes below the U.S. market.

What impact has the rise of social media had on your research of consumer attitudes?

We have to be keeping up with that technology all the time. The new customers are coming with that technology already in their veins. The key thing is that we have to explore all the current ways to find the feedback from our customers. We are investing a lot in going after different devices to ask them in easier way to have more feedback in real time. 

This means taking advantage of the smartphones and the tablets that they are connected to all the time – 100 percent, 24/7. That’s something that can appear at the moment that they are at the sales point. That’s the kind of thing that we are just trying to look after and we have an area that is always very closely looking at these advanced technologies.

In between the purchaser and the OEM is the dealer. With all these things going on about quality and consumer expectations, what changes does that drive for the dealer?

We have to meet at least the expectation of the customers. We are always talking about exceeding the customers’ expectations. Yes, we can exceed them but how far do you want to go, because that would cost you more money in some cases.

You have to be very, very focused at the dealership level. They have to implement all the activities that OEMs are tracking for years and years and years but somehow the thing is that the dealers’ vision is only for just closing this month. They are not looking at a longer term.

The sales people are focused on today’s sales. The sales manager is focused on the month’s closing -- how is that going to end. The general manager for the dealer is just focusing on the year, the next three or four months. We have to tell them that this really means exceeding the customer expectations with a certain logical level that makes business sense that drives you for future sales, not this year, not next year, but rather the long-term relationship.

That’s the one thing that we have to deal with. We have to build it based on the customer expectations -- on our customers, not on customers of the other brand. We have to know exactly what our customers are looking for.

To what degree does this goes beyond segmentation?

Yes, it is more focused on every person. Segmentation used to work. Now we have to stretch a little bit and try to focus on what you Michael, for example, want. We have to be personalized. We have one-on-one communication. We have to see that the people want to be treated as one and only with specific request for your brand or service.

You’ve brought forth a new concept: Auto Retail 3.0. What’s so different about 3.0 from the old days when Mom and Pop went to dealership?

What we are trying to put in place is the difference of doing business from 10 or 15 years ago and now. With technology we are closer as a brand to anything from any consumer. We have to know what exactly new customers of this new era are going to need to support their sales decisions. We have to be providing 3.0: We have to be there on the social media, on the devices, on the right devices they are using now and because they are going to become our future customers. If you are thinking of the customers that are buying today you will see that maybe this is not resonating with you. Your dealership or your brand is not focusing on the sales for the next three or four years. 

The newcomers to the market on the retail side have to be very, very focused on what every person in every country is going to need. That’s a challenge for the OEMs -- to try to fulfill with the same products a lot of diversity and cultures and ages and a lot of customers. Technology is going to help you in trying to track that and trying to land it on the right strategy.