Market Insight: Major brands losing trust of buyers

NEW data from Roy Morgan Research has revealed that Australian consumer trust in some of the biggest automotive brands declined in the past year, with all but three of the top ten car-makers losing ground.

Roy Morgan’s ‘single source’ survey is conducted on a continuous basis, with the latest results comparing the 12 months to July 2014 versus the equivalent period in 2013.

Over this period, Roy Morgan surveyed trust levels amongst more than 4,000 potential new car buyers – including those who are new to market and not currently driving a vehicle.

The results reveal that there has been an 11 per cent shift downwards in consumer trust overall in the past 12 months, a figure which is being weighed down by some key players in the local industry.

Out of the top ten best-selling makes in the country, Holden fared the worst in the survey with a drop in consumer trust of 28 per cent, with 18.3 per cent of respondents saying they had faith in General Motors' local arm compared with 25.4 per cent in the same period last year.

Potential buyers also lost faith in Ford in the past year, with the Blue Oval dropping 21 per cent with 16.8 per cent of people surveyed saying they trusted the American automotive giant, down from 21.2 per cent last year.

These results are perhaps unsurprising given Ford's announcement in May last year and Holden’s in December that the companies would close their local manufacturing facilities after years of declining interest in locally built cars.

As Ford’s decision to close up shop in 2016 was seen as almost inevitable by industry watchers due to its lack of export program, shrinking local sales and fierce competition from imports, it seems to have taken less of a hit in the trust stakes compared with GM.

Some of the trust towards Holden from new-car buyers has eroded given it continued to say that the company’s manufacturing operations, and its 2900 employees, would be safe up until just prior to when it confirmed that it would leave Australia in 2017 before Christmas last year.

The General may have lost more ground with its advertising campaign - launched after its announcement - that sought to alleviate buyer’s concerns by reminding the public that it was staying in Australia, but as a full-line importer rather than a manufacturer.

Holden experienced a backlash for the campaign’s “We’re here to stay” tagline, which was derided on social media and seen as insensitive to employees who were going to lose their jobs in 2017.

On the overall list, Holden was ranked seventh, with Ford in eighth place.

Interestingly, consumer trust towards the other local car-maker, Toyota, has not shifted at all in the past 12 months, despite its announcement in February that it will withdraw from Australia’s manufacturing scene in 2017.

Toyota was easily the highest ranked brand overall in the survey, with 34.1 per cent of people surveyed expressing their faith in the Japanese brand, maintaining the same percentage as last year.

A full 10 per cent behind Toyota on 24.6 per cent was second placed German luxury car-maker BMW, which fell 12 per cent compared with last year’s result of 27.9 per cent of respondents trusting the brand.

Fellow German Mercedes-Benz was third with a less dramatic drop of 5 per cent from 25.8 to 24.04 per cent of people surveyed expressing trust in the premium brand.

Meanwhile 19.4 per cent of survey respondents confirmed their trust in Audi – a 14 per cent slide from last year and less dramatic than sister company Volkswagen, which dropped by 24 per cent from 21.7 to 16.5 per cent in the past 12 months.

The drop in VW’s consumer trust has almost certainly been impacted by last year’s recall affecting 26,000 Golf, Polo, Jetta, Passat and Caddy models built between June 2008 and September 2012 relating to a potential “power interruption” to its seven-speed dual-clutch DSG transmission.

Other drops in confidence were for Renault which dipped 23 per cent from 8.4 to 6.5 per cent in the past year, as well is its alliance partner Nissan that dropped 21 per cent from 15.1 to 12 per cent.

Mitsubishi (-10 per cent), Peugeot (-8 per cent) and Skoda (-2 per cent) also lost ground compared with last year.

The only brands to improve on the result over the 12-month period were South Korean brand Hyundai and Japanese car-maker Subaru.

Confidence in Hyundai grew by 4 per cent from 11.4 to 11.9 per cent, with buyer trust increasing thanks to improvements to the quality of its product range, its lengthy five-year/unlimited kilometre warranty and lifetime capped-price servicing.

Subaru was the tenth most trusted brand, with 16 per cent of respondents saying they had faith in the car-maker, a three per cent difference compared with last year’s 15.6 per cent result.

Roy Morgan Research industry director automotive Jordan Pakes said consumer trust in an automotive brand is key to it maintaining a solid customer base in Australia’s competitive marketplace.

“Brand perception is all-important when it comes to staying competitive in the automotive market, whether it’s booming or not,” he said.

“Buying a new car is a major financial commitment, with the average new car buyer looking to spend about $34,500 on their next purchase. If they don’t trust a brand, it’s unlikely they’ll part with their hard-earned dollars.

“In the past 12 months, Australia’s new car intenders have lost trust in several automotive brands, with the industry’s average trust levels dropping by almost 11%.

Roy Morgan’s single-source survey results are based on about 1000 interviews covering a range of topics that are held almost every weekend during the year, culminating in more than 50,000 interviews over 12 months.