• by Karl Greenberg , May 14, 2010

In the world of automotive quality, consumer perception may lag reality, sometimes by years, but it also trumps reality when it comes to determining things like resale value. Ford's resale value is up, and the latest Automotive Lease Guide (ALG) study of consumer attitude suggests public opinion is driving the change. 

Jim Farley, Ford's head of marketing, was on the horn this morning to talk about how Ford now tops the industry in how much it has improved in ALG's Automotive Consumer Attitude Survey. The study measures a brand's Perceived Quality Score (PQS) relative to the industry. Ford and Ford trucks are in first and third place, with Kia in the middle and Hyundai at number four.

Chevrolet is the fifth-most-improved brand in perceived quality. Also striking in the Spring 2010 study is how much Toyota's recall issues around unintended acceleration have hurt its PQS; the brand is in last place, with quality having dropped 16.5 points on a 100-point scale per ALG.

"Perception of brand is just as important, or even more so, than fact," says Farley. "But what I've learned over 20 years is, the truth comes out. And what we are starting to see this year is [that] about 84% of Ford customers are satisfied with the quality of their vehicles.

"The other thing we are seeing ... is that of the people who have bought our products over the past couple of years, the favorable opinion is higher than that of our competitors, so the people buying our current Fords have a different experience or perception of Ford than people on the outside," he says. "But we are starting to see perception catch up to reality."

Farley says that proof of Ford's improved stature is in the pudding; the vehicles are worth more when people trade them in. "Resale value is the ultimate proof point. You can win awards like [J.D. Power & Associates'] IQS but until you can prove to customers that their car is worth more than other companies', it's a reputation issue, not a wallet issue. Now it's becoming a wallet issue."

He says that for vehicles in service one to five years, Ford vehicles outperformed Toyota by 17% at auction prices, and that vehicles with one year of service like Fusion, Taurus, or F-150 have experienced a 17% improvement in pricing at auction. "Perception of quality, company and product are leading resale values," he says. "It means we can eliminate discount relative to quality and get back to pricing power and parity."

Farley tells Marketing Daily that resale value will be "absolutely essential" to explaining to customers in all media that Ford represents the best value in the market. "You can expect us to leverage extensively on the progress made on Fusion in our sales campaigns on TV or digital."

Fusion's market share is up 50% and has very low days of dealership supply, he says, adding: "We are continuing to be very disciplined on the incentive side, and what we found is that as we spend more money advertising Fusion, the brand health gets better, so as Fusion goes, so does the company's reputation."

Fusion ad campaigns this summer and fall will talk about Ford's resale. "Of course, we will really weave this into our auto show and direct-marketing CRM activities to customers. So it's twofold; it's in public advertising -- digital, TV, sales events -- but also in the dealership. We feel the dealership is one of the best places to tell the story in detail because people are in there -- they are thinking about the trade-in value. That's the second key place we need to bring the story to life."