Blog: Dave LeggettJapanese tail-wind in US market

Dave Leggett | 29 May 2003

I've had an interesting response to that earlier blog entry about GM's new 'Mea Culpa' advertising campaign, or more specifically, to that stat that 40% of Americans these days won't even consider purchasing a GM vehicle on the grounds that they have a poor quality reputation.

Glenn Mercer, a member of McKinsey's Automotive practice, points out that a look at used market dynamics suggests that GM has a long haul ahead and the Japanese makes will enjoy the fruits of past success for some time to come.

If we assume that many young people are buying a used car for their first, second or even third car, then the GM vehicle quality they will be seeing at the 5-7 year age bracket of the used market is still marred by an immense quality and reliability gap with the likes of Toyota. More recent success in closing the quality gap is less relevant to these buyers because it will take time for the improvement to show in the vehicles out there in the used market.

So, what happens when the young person ages into a new-car buyer in his or her 30s or 40s? Maybe they are naturally driven to the more reliable (Japanese) used car make experiences and away from the less reliable (Big Three). Doesn't seem too intuitively hard to believe does it?

Glenn also provided this nugget. Art Spinella at CNW tracks this phenomenon diligently, and produces these data: If, in the USA, a person's first USED car was a Toyota, the odds the person's first NEW car will be a Toyota is about 55%. If the person's first USED car was a Honda, the number is 60%. If a GM: 38%; Ford: 39%; Chrysler: 23%.

Food for thought methinks. Thanks Glenn.


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