Study: Hybrids popular with consumers until they know cost

Almost three-quarters of U.S. consumers are interested in having hybrid technology in their next vehicle, but the added cost seems to be too high for many, a study shows.

In J.D. Power and Associates’ 2008 U.S. Automotive Emerging Technologies Study, 72 percent of consumers surveyed said they were interested in the technology before they learned how much it costs — placing it fifth among the technologies ranked.

When they were told the $5,000 price, though, that number dropped to 46 percent and the technology fell to eighth place.

The annual survey showed that Americans continue to be most interested in such optional safety technologies as blind-spot detection, backup assistance and active-cornering headlights.

But entertainment and information features are gaining ground. Mike Marshall, the study’s director, said the main reason is that young consumers are entering the market.

“Up until last year, safety features dominated,” he said. “There is a general difference in terms of what the young consumers — say 30 and down — what they’ve been exposed to, what they expect.”

Marshall also pointed to a quicker inclusion of advanced features in down-market vehicles. “The rate at which they’re brought down-segment is much, much quicker,” he said.

Driving demand

That hints at another trend: Interest in many technologies is driven in part byavailability.

Clean diesel, for example, didn’t garner much interest. But Marshall thinks that’s largely because the technology isn’t widely available in the United States, and Americans have not had a chance to learn about its benefits.

“There’s a good chunk of the car-buying population that has these latent misconceptions about what diesel is,” he said. “There are these thoughts of diesel being dirty, diesel being noisy.”

He said he expects that perception to change this year as Volkswagen and Mercedes-Benz start selling clean diesel systems in the United States.

Said Marshall: “The mere fact that they’ll be in the marketplace is going to raise the awareness level of clean diesel, and I think that will begin to crack some of these wrong perceptions of what diesel is today.”

Price points

The study shows a few key price points at which consumer interest changes. When the average price of a feature is revealed to be below $500, it usually rises on the list relative to other technologies.

Wireless connectivity, for example, jumps from 16th place to third after its $200 average price is revealed.

Features priced between $500 and $1,000 tended to hold their place on the list when their prices were revealed, while those priced above $1,000 tended to sink.

Other technologies, such as backup assist, have risen. One of the perennial top-ranked features, run-flat tires, wasn’t included in the survey this year. This was the first time in the last four years that hybrid powertrains and clean diesel were included in the full survey.

The study surveyed more than 19,000 U.S. customers.

PRESS RELEASE: Undeterred by Price Premiums, Consumers Show High Interest in Hybrid-Electric Automotive Powertrain Technology

The press release, along with a chart of consumer interest in each of the technologies profiled in the study, is available online at http://www.jdpower.com/corporate/news/releases/pressrelease.aspx?ID=2008076

WESTLAKE VILLAGE, Calif.: 24 June 2008 —Hybrid-electric powertrain technology in vehicles garners particularly high interest among consumers both before and after the average market price ($5,000) is revealed, according to the J.D. Power and Associates 2008 U.S. Automotive Emerging Technologies StudySM released today.

The study is designed to measure consumer familiarity, interest and purchase intent for emerging automotive technologies both before and after an estimated market value is revealed.

The study finds that before the market price is revealed, 72 percent of consumers say they are “definitely/probably” interested in having hybrid-electric technology in their next new vehicle. This marks a considerable increase from the 2005 study, when 58 percent of consumers reported they were “definitely/probably” interested in the technology. Additionally, after the average price point of $5,000 is revealed, consumer interest remains relatively high at 46 percent in 2008.

“High consumer interest in hybrid-electric powertrain technology may be reflective of not only rising gas prices but also a heightened effort among consumers to be more environmentally conscious,” said Mike Marshall, director of automotive emerging technologies at J.D. Power and Associates.

“Clean diesel technology, however, garners relatively low interest in comparison. One explanation for this may derive from a lack of education with the technology. Many consumers cannot differentiate between clean diesel and traditional diesel fuel—which in the past had a negative connotation with unpleasant vehicle emissions. As consumers become more educated in the benefits of clean diesel through increased product offers launching later this year, interest in the technology may increase.”

Prior to revealing the average market price, the study also finds that consumer interest is highest for blind spot detection (76%); backup assist (74%); and navigation systems (73%) before the average market price is revealed. After revealing the average market price, interest is highest in backup assist (68%); active cornering headlight systems (65%); and wireless connectivity systems (53%).

“Wireless connectivity, in particular, makes a considerable jump in the rankings after the average price point of $200 is revealed,” said Marshall. “Consumer interest is likely heightened by the fact that more states may prohibit the use of cell phones while driving. Wireless connectivity will potentially become a necessity rather than a luxury as time goes on.”

The study also finds the following key patterns:

Among consumers who indicate that they are not interested in a rear-seat entertainment system, more than 30 percent indicate such because they do not transport passengers in their rear seats on a regular basis.

Among consumers who say they are not interested in a collision mitigation system—which is an automated safety system that monitors external conditions around the vehicle and warns the driver using visual, physical and audible cues of a potential collision before automatically applying the braking system, tightening seat belts and moving the driver’s seat into the optimal crash position—one of four say they either do not want to give up control of the vehicle, or that they are waiting for the technology to improve before purchasing it.

The 2008 U.S. Automotive Emerging Technologies Study is based on responses from more than 19,000 U.S. consumers. The study was fielded in April 2008. The J.D. Power and Associates 2008 Alternative Powertrain Study,SM which examines the reasons why consumers consider or avoid alternative powertrain vehicles, will be released on July 11.

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, training and customer satisfaction. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies

Founded in 1888, The McGraw-Hill Companies (NYSE: MHP) is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor’s, McGraw-Hill Education, BusinessWeek and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2007 were $6.8 billion. Additional information is available at http://www.mcgraw-hill.com.

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