How can a notionally 'underdog' brand like Mazda trump a premium powerhouse like Audi? Let's find out.
A recent study in this country demonstrated that new car buyers in Australia are primarily influenced by car review and comparison websites. A massive 61 per cent of buyers fell into this category. By comparison, only 38 per cent were influenced by dealerships, and 45 per cent were influenced by car manufacturer's websites.
The study is called Auto Futures: Journey to Vehicle Ownership. It was produced by Ipsos, a marketing research think tank. There's a fascinating report from NBC News in the USA here that shows the same thing going on in the USA.
If I were a car company I'd be reacting a lot faster - really. The alternative is losing control. The future for car dealers looks tremendously bleak. Despite the multi-millions of investment in real estate and branding, dealerships are looking down the barrel of becoming upmarket vending machines.
Dealers are Losing It
Dealerships have already lost their role as customer advisors (the information is all online - customers increasingly know more about the product than the salesperson, having researched extensively before darkening the dealer's door). Dealers are today increasingly forfeiting the transaction and negotiating role to buyer advocates like car brokers, which routinely secure a better deal in a far less confronting way.
It's fascinating that car companies spend megabucks on technically complex, but clunky and hard-to-use, websites, and are able to influence - to an unknown degree - less than half of customers who purchase their products.
Independent websites, however, are far more successful and effective in influencing the car purchasing decision.
Here's a case in point. Last week I was contacted by a visitor to this site named Chandru. Chandru was in the market for an Audi Q3 - a significant purchase in his case totalling more than $50,000. Chandru found me from organic Google search results and watched my video titled Volkswagen Australia Defective DSG Recall. You can read our Q&A exchange here.
This guy is not a tyre-kicker. He's not a car nut with no cash. He's not a school-kid rev-head who reads reviews instead of doing his homework. He's not a unique visitor-bolstering statistic. He's not downloading wallpaper. He's not a time-waster. He's an MBA graduate about to sign off on a novated lease. His company has said: Choose a car. Spend 50 grand. If you're a car company, he's that most elusive of commodities: an actual sales prospect.
I conducted an objective, value-based assessment of a $50,000 Q3 versus a similarly priced direct competitor (BMW X1) and a $50,000 Mazda CX-5 (effectively, the 'works burger' of CX-5s).
In practice, this is very hard for a buyer to do - buyers come from all walks of life. Some are analytical, others not so. Even the non-automotively versed analytical ones are confronted by a wall of jargon. They are also confronted by the gross non-standardisation of information presented in car company websites (it's not in a car company's best interests to facilitate comparison, after all).
Cutting to the chase, an objective assessment of $50,000 small SUVs from Audi and BMW, compared with the same thing from Mazda revealed that you're essentially paying $20,000 (ish) for the premium German badge.
In other words, if you buy the German vehicles it'll cost you $70,000 in optional extras to get the same equipment level as a $50,000 Mazda CX-5.
The Mazda and the Germans are not natural bedfellows - at least, that's the way the debate is framed by marketing campaigns. Yet, if you landed here from Alpha Centauri tomorrow morning, you would not be able, initially, to vell them apart. After scientific analysis, however, you'd be asking yourself how the hell one of them costs so much less (or why it packs so much more into it for the same price).
Additionally, and here's something Audi probably would not want any prospective buyer to know, I told my reader Chandru about JD Power's 2014 US Vehicle Dependability Study, which revealed overall Audi's ranking relative to Mazda. (Audi was independently assessed as 14.4 per cent less reliable overall by JD Power.)
Here's Chandru's response to my Q&A post:
"Thanks John. This was the most important piece of advice one could get before buying a new car. I have decided to get a Mazda CX-5 Akera petrol ... through my company's novated lease [program]. Thanks for the response. Helped me lot."
Does critical assessment influence purchasing decisions? Absolutely.
If nothing else, this should tell you something about the value of impartial, credible advice, versus the value of the premium perception of the four rings (and a lot has been spent on that). I'm not expecting a Christmas card from Audi, or an invitation to the Frankfurt Motor Show as a result - but that's okay because my fundamental obligation is giving Chandru (and other readers) the right advice. This is a significant consumer purchase, and in my view the right advice is pretty thin on the ground. (Generally because many so-called impartial reviewers are either incompetent or actually very biased - see below.)
There's an inherent difficulty for all new vehicle buyers in Australia: One of the most congested new car markets in the world. Around 60 brands and 300 different new vehicles all vying for buyers' attention. Car buyers drown in the hundreds of millions of dollars worth of above-the-line and below-the-line marketing 'noise' generated by car companies. How is a conventional car buyer to make an informed decision? The dealership experience is also awful: the wild, wild west of retail. Car company websites are clunky and designed to deflect direct comparison.
Credibility Question-mark: Would You Like Veracity With That?
The question then becomes: How do you know if the advice you're given online by a review website is reasonable? Is it robust? Is it influenced by the car company's advertising budget? Is the journalist personally motivated by the car company to write overly positive reviews?
I know one Australian motoring journalist who was told by a premium German car company that further cars for review would not be forthcoming if the positivity of his reviews did not improve. I know many who are more concerned with flying around the world on the car company's ticket than they are concerned with giving readers impartial advice - I'd name them, but it's a long list, and I don't want to be in court for the next 12 months discussing the nuances of defamation...
Lastly, how do you know if the journalist giving you advice is even halfway competent? Is he or she a professional with - gasp - actual qualifications and experience, or just someone who wants to drive new cars and built a website? When publishing still involved paper there was at least some imperative to deliver quality content. Printing was expensive, some effort was taken to ensure the calibre of the words was responsible.
The web has given anyone unprecedented access to generate an audience - the challenge for consumers is not finding information, it's assessing its veracity.
That's the next great frontier for car buyers to cross: separating the wheat from the chaff in the fourth estate. Because by my assessment, at least half of the new vehicle reviews online re unmitigated rubbish - either by virtue of incompetence or inbuilt bias as a result of the writer's underlying motivation to remain in [Car Company X's] good books. And that unmitigated rubbish is just as capable of influencing purchasing decisions as the robust, credible advice with which it sits, side-by-side on search engine results.