Canada April 2015 Fuel-Economy Economics So, what impact does fuel economy really have in terms of satisfaction and repurchase intent among Canadian vehicle owners? To find out, J.D. Power recently authored the Canadian Fuel Economy Impact Report, to dig deeper into this critical marketing question. Suffice to say that while Canadians are largely reliant on the debatable and poorly understood L/100km metric, vehicle owners approach fuel economy from a different, more experiential angle, which is good news for marketers. THE EFFECT OF PERCEIVED FUEL ECONOMY ON REPURCHASE INTENT % Definitely Will Purchase/Lease Same Make of Vehicle [email protected] 416-507-3254 In 2014, the national average retail price of regular fuel hit an all-time high at $1.28 per litre –an increase of 35% from 2009.* Despite the increase in the cost of fuel, Canadians are buying more CUVs and SUVs evidenced by a 2014 year-end product mix of 58% light trucks and 42% passenger cars, up from 52%/48% in 2009.** 60% 50% 40% 30% 20% 10% 0% 0 1 2 3 4 5 6 7 8 9 10 Vehicle's fuel economy rating (10-point scale) Source: J.D. Power 2014 Canadian Fuel Economy Impact Report *Statistics Canada ** Power Information Network (PIN) Behind the Numbers The relative impact of an owner’s fuel economy experience is highly dependent on a number of variables, including vehicle segment, and stated reasons for brand purchase. However, brands can create halos by highlighting fuel-efficient technology. For example, while only 17% of European vehicles sold in Canada in 2014 were diesel-powered, the perception of their fuel economy has boosted fuel economy satisfaction among those owners (regardless of fueltype) significantly higher (7.7 out of 10) than those owning Asian (7.2 out of 10) and North American (6.9 out of 10) nameplates. Some owners are more sensitive to the fuel economy of their vehicle. Among owners who cite fuel economy as their primary reason for purchase, and who also reported a problem with excessive fuel consumption, fuel economy satisfaction scores drop by 2.3 times, (from 8 out of 10, to 3.5 out of 10) compared with those who reported no such problems. However, among owners who did not consider fuel economy to be their primary purchase driver, the impact of an excessive fuel consumption problem was significant, but more muted, dropping fuel economy satisfaction by a factor of 1.7 times (7.3 out of 10 to 4.4 out of 10) In examining brand repurchase intent, the influence of fuel economy is diminished. Owners expect great fuel economy, and only if they view their performance as outstanding (10 out of 10) does fuel economy become a loyalty factor. Fully 57% of those owners say they “definitely will” repurchase, nearly doubling between scores of 8 and 10. Generate middling to poor satisfaction here though, and the impact is negligible, with repurchase intent rising from 13% at 4 out of 10 to only 17% at 7 out of 10. Clearly, fuel economy is an expectation rather than a differentiator. Across segments, this impact is highly variable. Among owners in the sub-compact segment, for example, overall vehicle ownership satisfaction decreases by 144 points out of 1,000 when owners report a problem with excessive fuel consumption compared with only 79 points in the compact segment. Fuel economy satisfaction is more perception than simply a L/100km statistic. The good news for OEs is that focused marketing tactics such as showcasing a halo product or a consistent fuel efficient message, can affect how consumers feel about their own experience. J.D. Power does not guarantee the accuracy, adequacy, or completeness of any information contained in this publication and is not responsible for any errors or omissions or for the results obtained from use of such information. Advertising claims cannot be based on information published in this publication. Reproduction of any material contained in this publication, including photocopying in part or in whole, is prohibited without the express written permission of J.D. Power . Any material quoted from this publication must be attributed to J.D. Power. © 2015 J.D. Power and Associates, McGraw Hill Financial. All Rights Reserved.
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