BEIJING – Perceptual quality will be the next battleground for carmakers, according to Renee Stephens, vice president of U.S. Auto Quality at J.D. Power.
Stephens made the comments at the 3rd Sino-Korean Auto Industry Development Forum held on Beijing on November 17. The event, with a theme of “Analysis of Perceptual Quality,” was organized by the State Information Center and Hyundai Motor Group (China) Ltd.
“The evolution of the consumer quality pyramid is shifting toward emotional quality and usability is taking on a greater role and influence,” said Stephens. “Trust and relationship building will be the next differentiator and those that succeed in this will win.”
By trust and relationship building, Stephens was referring to making sure that technology features added into today’s cars work and perform as expected. Those that increase confusion or are less helpful may result in work-around situations and lost value, while brands that are experiencing faster improvement are those that are addressing usability concerns well, according to Stephens.
Hyundai and Kia, for example, have seen enormous improvement in both the U.S. and China in J.D. Power’s latest Initial Quality Study (IQS) and Automotive Performance Execution and Layout (APEAL) rankings. Beijing-Hyundai and Dongfeng-Yueda-Kia, for example, ranked No. 1 and 2 and No. 1 and 4 in the two respective studies recently released for China.
“There has been a significant drop in problems in audio, communication, entertainment and navigation (ACEN) features for Korean brands,” said Stephens. “The improvement on domestic, European and Korean brands now outpaces the Japanese brands in the U.S. and for the first time in 29 years Japanese brands have ranked below industry average. This trend is mirrored in this year’s China IQS results.”
Quality improvement is a crucial factor for Chinese automakers if China were to become an automotive powerhouse, according to H.F. Wang, president of Hyundai Motor Group (China) Ltd.
“The focus on quality in the global auto industry is shifting from manufacturing quality to perceptual quality,” said Wang. “Chinese automakers likewise are pursuing this changing trend and exploring new development paths. We hope that Hyundai-Kia’s experiences can serve as valuable reference for Chinese automakers.” The painstaking effort Hyundai has put in to improve quality over the years is a major reason why the company has elevated to the fifth largest automaker in the world, according to Wang.
The key to making sure that the perceptual quality of your products are accepted by your customers is repeated customer surveys during different stages of the product development process, according to Jim Chyou, director of interior and exterior technology institute at Chery Automobile Co., Ltd.
“Surveys needed to be conducted before, during and after the design process, as well as during the engineering prototyping process and we have an internal perceptual quality team that lead the survey work,” said Chyou. “You need to be close with the market at all times, and probably cultivate ‘golden noses’ and ‘golden ears’ from within your organization that can represent consumers. It’s something Chery is striving toward but we are not there yet.”
Chyou revealed that Chery’s upcoming Tiggo 7 SUV to be launched in 2016 will reflect a marked improvement on perceptual quality, which eventually will be on a par with international levels.
China’s auto industry has developed to a point where perceptual quality must become a priority focus for OEMs, according to Xu Changming, director of information resources at the State Information Center.
“With rising income and purchasing power, Chinese consumption upgrade will continue and that means Chinese brands must improve their quality and especially perceptual quality to accommodate this trend,” said Xu.
Chinese brands that have done particularly well on perceptual quality in the last couple of years are Great Wall and Chang’an, according to Xu, and that has translated directly to jump in sales. But Xu warned that the rise in Chinese brand sales this year cannot be contributed solely to quality improvement, but rather because they have found a segment of the SUV market (inexpensive small SUVs) that foreign brands have not penetrated fully into. “Once they do, Chinese brands will be under pressure. So in the long run, Chinese brands must improve quality and perceptual quality if they want to increase market share,” said Xu.
Wu Yingqiu, publisher, chairman and CEO of Global Auto Media Group and a veteran journalist, echoed Xu’s comments and pointed out that Chinese brands’ rise this year may have been “hyped.”
“The SUV has been a lifesaving draw for Chinese brands,” said Wu. “But if we take out the SUVs, the numbers look really bad. Chinese brand passenger car sales are down significantly this year even though SUV sales have gushed.”
Wu warned that once foreign brands introduce more price competitive models in the SUV segment, what is happening in the passenger car market may repeat itself in the SUV segment and a shakeup is inevitable for Chinese brands.
Despite its significant improvement over the years, Chinese brands are at least still five years behind Korean brands, according to Wu citing a recent survey of media representatives, and Chinese brands have a lot to catch up since Korean brands are continuously evolving as well.
“Korean brands offer integrated dependability, perceptual quality and performance brand perception, but Chinese brands are still working toward better dependability. This is where the gap lies,” said Wu.