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Study Makes Compelling Case for an Increased Level Of Branded Products

15 August 2000

    FARMINGTON HILLS, Mich. - According to consumers, branded systems and 
components are rapidly growing in importance.  Moreover, their interest in 
knowing the manufacturer and/or brand name of modern electronics and 
communications systems is growing faster than the average vehicle system.  
In addition, while the OEMs are starting to grasp the importance of the 
supplier branding concept, their tentativeness could be costly in the long run.

    The Supplier Branding Study (SBS) 2000(R) builds upon the themes that were
developed in the 1999 SBS(R).  The report is divided into three major sections: 
Safety, Interiors and Telematics and thirteen sub-categories.  When both Phase I 
and Phase II of the study are completed, over 700 consumers will have participated.  
This year's report was expanded in the areas of telematics/communications, and 
it is apparent that this was a timely decision.  SBS 2000(R) will contain 
seven studied vehicle segments:

    * Compact Cars
    * Mid Size Cars
    * Luxury Cars
    * Minivans
    * Mini/Small Sport Utility Vehicles
    * Compact Sport Utility Vehicles
    * Pickup Trucks

    Early study results reported in June 2000 indicated that consumers' interest 
in branded navigation systems and on-board computers had jumped as much as 31% 
from the 1999 SBS(R).  Phase I study results, with 610 participants, have 
verified these initial themes.  Almost 75% of the people surveyed indicated that 
it was important to them to know the brand name of service providers (companies 
like OnStar which offer global positioning satellite based services).  In 
addition, over 57% of participants indicated that it was important to know the 
manufacturer of Video Entertainment Systems and over 63% stated that it was 
important to know the same information about On-board Computers.  The latter 
figure is over 100% higher than last year's result.  As Kathleen K. Rizk, 
Managing Partner of The Planning Edge, noted, "In these specific areas brand 
names like Alpine, IBM, Motorola, OnStar, Panasonic, Philips, Pioneer, Sony and 
Toshiba performed very well and provided high value to consumers."

    Other areas where branded components were particularly important to consumers 
included Tires, Speakers and Stereo & CD Players.  Over 81% of the study's' 
respondents indicated that it was important to know the manufacturer/brand of 
tires on their vehicle.  Consumers are clearly opinionated about the tires that 
come on their cars and trucks and the value of individual vehicles can be 
improved if the OEM chooses the right tire brand for each vehicle.  Some well 
known Speakers and Stereo & CD Player manufacturers and brands were well 
received in the study, including: Bose, Pioneer, JBL, Infinity, Sony, Panasonic 
and Alpine.

    One of the defining points of the study is the section concerning companies/
brands that "would enhance the value of a new vehicle."  Of the 40 tested 
companies/brands, ten companies/brands showed the most promise:

    * Scotchguard
    * Stainmaster
    * AAA
    * Motorola
    * DuPont
    * General Electric
    * JVC
    * Microsoft
    * Nokia
    * IBM

    Obviously, several high technology companies can be found on this list.
This is an indication that there is consumer sensitivity to the increased
level of electronics and services that are now available on vehicles.  DuPont
is the only organization listed twice (besides the DuPont name, the company is
the maker of Stainmaster products).  Despite stiff competition, Motorola
scored the highest rating of all the technology companies listed, and AAA's
performance was superb.  AAA and automobiles clearly go together in people's
minds.

    For the OEMs these findings should be a reminder that it is imperative to
provide consumers with the products and brands that they want and need.  More
and more often a product's quality and value are being defined by the brand
names of key components on individual vehicles and not just by the end
manufacturer of the vehicle.  In addition, they are being defined differently
by various individuals in both the large and niche-oriented vehicle segments.
If the OEMs do not provide consumers with what they want, it is possible that
the automotive aftermarket will, and this would be a major long-term economic
problem for the OEMs.

    The Planning Edge is an analysis and consulting firm located in Farmington
Hills, Michigan.  The organization specializes in automotive related work with
a strong emphasis on proprietary projects that focus on automotive branding,
new component and system technologies, advanced business practices and
consumer attitudes.