International Newsmaker Q&A: Don DeVeaux

Researchers from GfK Automotive have found that significant barriers exist for Chinese and Indian automakers seeking to gain a viable market share among American drivers with their debut lines of imported vehicles.

Managing Director Don DeVeaux recently discussed some of the issues revolving around Indian and Chinese launches into the United States:

Q: What are some strategies that American businesses can use to assist overseas automakers in successfully penetrating the U.S. market?

A: First and foremost, it all starts with understanding the American consumer and their wants/needs to make sure that the product being offered is not only something the American consumer wants, but also that it meets their expectations. Companies that track consumer attitudes can be invaluable in “setting the stage” to ensure that this gap is closed. Having a product offering that has already been designed and tested with American consumers would also increase the chance of success. There have been many examples of automobiles that have been successes in one market and failures in the United States because American consumers didn’t feel that they delivered the value, quality, packaging or features that they demanded.

Q: Might this be a significant opportunity for car dealers who had previously lost their franchises to get back in the game by working with these foreign nameplates?

A: This certainly is an opportunity and will require the same assessment of “risk/reward” that dealers who took on the fledgling Japanese brands in the late 1950s/early 1960s or the Korean brands a generation later. However, these dealers will need to demonstrate their commitment to customer satisfaction in order to obtain and maintain a Chinese or Indian vehicle franchise.

Q: What are some of the things that U.S. business owners can do to assist these companies in obtaining additional acceptance of overseas nameplates among American vehicle buyers?

A: American consumers, like all consumers, expect a lot from their automobiles and the companies that stand behind them. There will be a natural skepticism about any new brand, as there has been in the past, and manufacturers will have to both build trust by eliminating these concerns – about quality, about reliability, about the ease of service, etc. – and generate excitement through innovative design, features, pricing, etc.

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Q: You had mentioned a divide among Gen Yers and Gen Xers vs. baby boomers in relation to accepting overseas brands. What are some of the factors driving this?

A: It is a function of the experiences that each group has had in their lives. Baby boomers came of age in an era where American products were the best, if not among the best, in the world, and they have formed their opinions about automobiles in that environment. Even though vehicles such as the Honda Accord and Toyota Camry achieved mainstream acceptance, due in large part to acceptance by baby boomers, baby boomers remained fractionalized into “domestic” and “import” groups – with devout loyalists in both. On the other hand, the Gen Y/Gen X generations have grown up in a world where products from all countries, not just in automobiles, are among the best in the world and therefore their willingness to consider a new entrant is much higher. Having a product that delivers quality, value and up-to-date technology enabling enhancements and connectivity is vital to generating and re-generating purchase intent for Gen X and Gen Y.

Q: How can these generational obstacles be overcome?

A: By offering reasons to purchase that trump the alternatives and/or overcome barriers to resistance. For instance, manufacturers must embrace the fact that there will be skepticism about quality, and therefore, they must attack that head-on with “proof points” about quality, documentation about their manufacturing capabilities and long history, warranties that overcome fears about durability, etc. They can also appeal to consumers who are looking for a point of difference – aggressive pricing, unique styling/design or features, etc. Inexpensive, fuel-saving technologies (low displacement engines, low price hybrid designs) could be another angle that would resonate with U.S. consumers, particularly younger ones.

Q: You’ve been complimentary of what Korea’s Hyundai has done to penetrate the U.S. market. What are some of the details relating to how the company has accomplished this?

A: It didn’t happen overnight and took time to overcome perceptions, but Hyundai addressed quality concerns by offering a leading-edge warranty, continuously improved its product quality and offered favorable pricing/value for the money and uniquely styled vehicles. They expanded their market presence in terms of their distribution footprint, and their product portfolio in a very systematic manner and grew in a measured way that didn’t stretch their ability.

It is important to note for these new manufacturers, however, that the field of play in which they will be entering is much different than when Hyundai and Kia entered several years ago. While price is important, the product quality bar is much higher today.

Q: Are there strategies that overseas OEMs can employ specific to the tight economic conditions faced by many Americans?

A: Offering a less expensive vehicle or one that offers more features/content for the same price is the obvious strategy and one that will likely be employed by both the Chinese and Indian manufacturers, but there are other alternatives such as unique features, styling/design/packaging, and “brand cachet.” Tapping into the market trend towards personalization could be one avenue to differentiate oneself and take advantage of the American aftermarket infrastructure and creativity.

Researchers from GfK Automotive have found that significant barriers exist for Chinese and Indian automakers seeking to gain a viable market share among American drivers with their debut lines of imported vehicles.

Managing Director Don DeVeaux recently discussed some of the issues revolving around Indian and Chinese launches into the United States:

Q: What are some strategies that American businesses can use to assist overseas automakers in successfully penetrating the U.S. market?

A: First and foremost, it all starts with understanding the American consumer and their wants/needs to make sure that the product being offered is not only something the American consumer wants, but also that it meets their expectations. Companies that track consumer attitudes can be invaluable in “setting the stage” to ensure that this gap is closed. Having a product offering that has already been designed and tested with American consumers would also increase the chance of success. There have been many examples of automobiles that have been successes in one market and failures in the United States because American consumers didn’t feel that they delivered the value, quality, packaging or features that they demanded.

Q: Might this be a significant opportunity for car dealers who had previously lost their franchises to get back in the game by working with these foreign nameplates?

A: This certainly is an opportunity and will require the same assessment of “risk/reward” that dealers who took on the fledgling Japanese brands in the late 1950s/early 1960s or the Korean brands a generation later. However, these dealers will need to demonstrate their commitment to customer satisfaction in order to obtain and maintain a Chinese or Indian vehicle franchise.

Q: What are some of the things that U.S. business owners can do to assist these companies in obtaining additional acceptance of overseas nameplates among American vehicle buyers?

A: American consumers, like all consumers, expect a lot from their automobiles and the companies that stand behind them. There will be a natural skepticism about any new brand, as there has been in the past, and manufacturers will have to both build trust by eliminating these concerns – about quality, about reliability, about the ease of service, etc. – and generate excitement through innovative design, features, pricing, etc.

PAGE 2

Q: You had mentioned a divide among Gen Yers and Gen Xers vs. baby boomers in relation to accepting overseas brands. What are some of the factors driving this?

A: It is a function of the experiences that each group has had in their lives. Baby boomers came of age in an era where American products were the best, if not among the best, in the world, and they have formed their opinions about automobiles in that environment. Even though vehicles such as the Honda Accord and Toyota Camry achieved mainstream acceptance, due in large part to acceptance by baby boomers, baby boomers remained fractionalized into “domestic” and “import” groups – with devout loyalists in both. On the other hand, the Gen Y/Gen X generations have grown up in a world where products from all countries, not just in automobiles, are among the best in the world and therefore their willingness to consider a new entrant is much higher. Having a product that delivers quality, value and up-to-date technology enabling enhancements and connectivity is vital to generating and re-generating purchase intent for Gen X and Gen Y.

Q: How can these generational obstacles be overcome?

A: By offering reasons to purchase that trump the alternatives and/or overcome barriers to resistance. For instance, manufacturers must embrace the fact that there will be skepticism about quality, and therefore, they must attack that head-on with “proof points” about quality, documentation about their manufacturing capabilities and long history, warranties that overcome fears about durability, etc. They can also appeal to consumers who are looking for a point of difference – aggressive pricing, unique styling/design or features, etc. Inexpensive, fuel-saving technologies (low displacement engines, low price hybrid designs) could be another angle that would resonate with U.S. consumers, particularly younger ones.

Q: You’ve been complimentary of what Korea’s Hyundai has done to penetrate the U.S. market. What are some of the details relating to how the company has accomplished this?

A: It didn’t happen overnight and took time to overcome perceptions, but Hyundai addressed quality concerns by offering a leading-edge warranty, continuously improved its product quality and offered favorable pricing/value for the money and uniquely styled vehicles. They expanded their market presence in terms of their distribution footprint, and their product portfolio in a very systematic manner and grew in a measured way that didn’t stretch their ability.

It is important to note for these new manufacturers, however, that the field of play in which they will be entering is much different than when Hyundai and Kia entered several years ago. While price is important, the product quality bar is much higher today.

Q: Are there strategies that overseas OEMs can employ specific to the tight economic conditions faced by many Americans?

A: Offering a less expensive vehicle or one that offers more features/content for the same price is the obvious strategy and one that will likely be employed by both the Chinese and Indian manufacturers, but there are other alternatives such as unique features, styling/design/packaging, and “brand cachet.” Tapping into the market trend towards personalization could be one avenue to differentiate oneself and take advantage of the American aftermarket infrastructure and creativity.