Think Pieces

Michael's thoughts on the auto industry, its products, and/or this website.

Who benefits from the research?
Problems with J.D. Power's approach

Like that in Consumer Reports, J.D. Power's research has helped consumers by pressuring vehicle manufacturers to improve reliability. But there are reasons for concern.

1. Motivation

Though they're a bit stuck in their ways, the primary goal of Consumer Reports is to help consumers. In contrast, far and away the #1 goal at J.D. Power is to make money. Now, there's nothing necessarily wrong with seeking to make money. This is what businesses are supposed to do. But it becomes an issue when the pursuit of profits not only limits the helpful information consumers receive, but can actually encourage distorted consumer perceptions of the information that is provided.

Over the years I've heard quite a bit about J.D. Power's basic strategy from friends in the automotive market research industry. Power provides consumers with just enough information to ensure that winning one of the many awards matters. The firm then makes the big bucks by selling the manufacturers more detailed information, rights to use J.D. Power's results in advertising, special interim studies to see if quality has improved, and consulting services that advise how to improve one's scores. In the end, you can count on J.D. Power to tailor the quality and quantity of the information it releases to the public so that its profits are maximized.

In contrast, TrueDelta's primary goal is to help consumers make better decisions. Consumers who fill out J.D. Power's surveys never see at least nine-tenths of the detail they provide. With TrueDelta, the people providing the data will receive the most detailed information in return.

2. IQS and Reliability

J.D. Power collects data at two time points. The Initial Quality Study (IQS), for which they are best known, surveys vehicle owners after 90 days of ownership. The Vehicle Dependability Study (VDS) covers the third year of ownership.

The VDS used to survey consumers after five years of ownership, but a couple years ago this was changed to three years to better suit manufacturers' needs. Once a vehicle design is more than three years old manufacturers rarely update it, so reliability information on older vehicles is of no use to them.

The problem is, people often associate IQS scores with reliability, when they are more a measure of design and assembly quality. Thorough inspection at the plant or dealership can significantly improve them. IQS might be a good predictor of long-term reliability, and the VDS might be a good predictor of even longer-term reliability, but J.D. Power has not presented evidence to support this common inference.

In contrast, TrueDelta will collect data continuously, not just at two points, and will track models as long as there are enough in the sample.

3. What counts as a problem?

A few years ago Hummer and MINI protested because their vehicles received low IQS scores because of poor fuel economy and awful cupholders, respectively. These weren't things as the dealer could fix, as the were endemic to the vehicles' designs. But J.D. Power counted them as problems anyway.

Some consumers would like dissatisfiers to count. Others only want to know the rate of repairable issues. With IQS scores there's no way to separate the two. It's not clear what is being measured.

In contrast, TrueDelta will directly measure the things car buyers want to know, and it will always be clear what TrueDelta is measuring.

4. Focus on the best

J.D. Power's press releases highlight the models that scored the highest in their segments. The advertising they license is also for models that won awards.

This emphasis on the top scorers leads to an over-emphasis on reliability. In the absence of information, many people assume the worst. So they'll tend to buy a top scoring model to be on the safe side.

But how much worse is, say, the tenth model from the top? Perhaps it will require one extra trip to the shop in the first five years of ownership. For some car buyers, its advantages might outweigh the cost and inconvenience of an extra trip. But using J.D. Power's publicly-released information it is not possible to make this judgment.

In constrast, TrueDelta will provide information on all cars in a way that enables them to be directly compared. The emphasis will be on the differences between scores, not which model has the highest score.

Especially as cars become more and more reliable, reliability should not be the deciding factor as often as it is. This will make reliability research less important. But serving consumers, not maximizing perceptions of one's own importance, should be the top priority.

Want better vehicle reliability information? Participate in TrueDelta's research and help make it happen.

Thanks for reading.

Michael Karesh, TrueDelta

First posted: January 27, 2006
Last updated: November 15, 2006

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