Consumers are paying their attentions to "value for cost" of cars in Korea Republic. Among the 10 satisfaction areas, ‘value for cost’ is the area with the most customers’ complaints. Customers think that their cars are not worth car price and other costs they pay, which is more seriously felt about domestic cars. Large and expensive cars were less satisfactory in terms of value for cost while cheaper compact cars were thought to be more satisfactory. It is likely that the age of cheap and practical cars will come.

The study asked those customers who had bought their new cars within the past 3 years (since July, 2013) to evaluate their satisfaction with such 6 areas as ▲car price, ▲option price, ▲fuel costs, ▲maintenance costs, ▲A/S service costs, ▲expected used car value and overall satisfaction taking everything into account in 10 point scale. Domestic cars scored 25% and imported cars earned 35% in terms of 8 or higher point rating, which is the lowest level among all the 10 satisfaction evaluation areas ([16/17-01] domestic car competitiveness analysis: 10 satisfaction areas). Customer’s satisfaction with ‘value for cost’ is the lowest against any evaluation areas of product and service.

The industry average of ‘value for cost’ satisfaction that factored in the six areas including price and then was converted into 1000 point scale was 599 points with imported cars (613 points) slightly outperforming domestic cars (597 points). Overall, small cars rather than large cars and cheaper cars over expensive ones were rated as more satisfactory on ‘value for cost.’

By car class, compact cars achieved the highest score with 637 points, followed by small cars (614points), small SUV (609 points), and semi-mid sized sedans (597 points) regarding ‘value for cost’ [Figure 1-1]. Small cars and cheaper cars were mostly shortlisted. Large sedans scored 541 points, the lowest among the 10 car classes, showing a large difference of 100 points against compact cars. The results indicated that the owners of large sedans were more price-sensitive, and they were less satisfied with maintenance costs than car purchase price. On the contrary, small car owners were happy with maintenance costs in particular.

The study checked on Best in class models by the 10 car classes regarding ‘value for cost.’ Among those best in class models, Aveo (small car, GM Korea) ranked the 1st with an excellent performance, scoring 683 points [Figure 1-2]. Kia’s small SUV, Niro, was the second best, followed by THE NEXT SPARK. GM Korea listed six models as best in class, which was more than half of the total 10 best in class models while Kia listed two models (super large sedan ‘K7’ and small SUV ‘Niro’) and Hyundai and Ssangyong had only one model each (Semi midsize sedan ‘Avante AD,’ large SUV ‘ RextonW,’ respectively).

What is interesting was that higher discount rates at the point of purchase tended to contribute to customers’ higher satisfaction. The high customers’ satisfaction with GM Korea is likely to be related to the brand’s relatively high perceived discount rates. But this is the story of domestic brands. Lexus and Toyota marked the top performance despite their low discount rates.

Among all the car brands including both domestic and imported cars, Lexus ranked the 1st with 673 points [Table 1-1], followed by Peugeot(668 points), Toyota (642 points), Nissan (639 points), BMW (632 points), and all the top 5 brands were imported cars. GM Korea was the best performer with 625 points among the domestic brands. The car brands that performed above the industry average by area were Nissan in car price and option price, Peugeot in fuel costs and maintenance costs, and Lexus in used car value. GM Korea toppled the list in A/S service costs.

Of the imported car models, Lexus ES ranked the 1st with an excellence performance of 690 points [Table 1-2]. ES was rated as the best among both domestic and imported cars with Toyota Camry (657 points) and BMW 3 series (652 points) coming up next to ES.

Earlier, it was the concept of cost effectiveness that led the growth of imported cars. Customers thought that imported cars were worth their car prices when considering the cars’ performance. Then, customers’ attentions were paid to fuel costs rather than car performance with the entrance of popular imported cars into Korea and then have been moving to more comprehensive costs. Now, customers are seeking ‘value for cost’ which is hard to find with large and expensive cars. The practicality of small and cheaper cars gives customers more satisfaction, and it is likely that the trend of customers’ preference for large cars might end.

This study results came from the 16th wave (conducted in July 2016) of a large-scale annual ‘Automobile Syndicated Study’ with 100,000 samples, which was launched in 2001 by Consumer Insight, an automotive specialized research firm.