Experts: Fresh products set brands apart - Mercedes Benz SLK Forum
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#1 Old 01-27-2017
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Experts: Fresh products set brands apart

Here’s a tip for automakers who want to improve their brand performance among consumers and make their dealers more successful: New product. New product. New product.

Fresh offerings have become a key differentiator among brands that are doing well and those that are slipping, according to indicators from J.D. Power and the forecasting firm LMC Automotive.

Older models are dragging down some franchises on several fronts, including dealer profit margins and consumer impressions, says David Sargent, vice president of Power’s global automotive operations.

Even high-flying brands begin to lose momentum when portfolios grow stale, he said without naming names.

The phenomenon emerged as Sargent and others presented Power’s annual Franchise Assessment Review at the J.D. Power Auto Summit on the eve of the NADA convention. The industry franchise assessment is an off-the-record briefing to retail industry leaders on the condition and outlook of each brand in the U.S.

Sargent declined to discuss the specifics of the 2017 review. But he acknowledged that older products are often at the root of problems -- real or perceived -- in a brand’s reputation, the retained value of its vehicles, customer relations and vehicle appeal.

“Older vehicles don’t retain their values when they come back to market, especially if there’s already a new one on the market,” he said. “New products help your retail-vs.-fleet mix, which means better dealer margins.”

Fresh product wins, added Jeff Schuster, senior vice president of forecasting for LMC, who also presented the confidential franchise review: “In this competitive market, if you don’t have something new coming, you’re vulnerable.”

The impact of a stale product lineup is greater on smaller brands and luxury marques, Sargent said. Larger brands with broad lineups can refocus shoppers’ attention to newer models.

But franchises are keen on scrutinizing their performance on service satisfaction and initial quality feedback from buyers. And customers may lodge their dissatisfaction if a newly purchased older model doesn’t have the recent technology that is showing up on rival models.

Brand satisfaction feedback from consumers can suffer if customers are buying models that are not up to date, Sargent said outside the franchise presentation.

He noted that brand reputation often lags the launch of successful new products. General Motors continues to combat negative impressions in the U.S., despite big gains in its product quality. Kia is battling a poor brand reputation despite the positive reception of its younger products.

“Reputation moves slowly in a positive direction,” Sargent said. “New product can move the brand forward, but it takes a long time.”
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