Nielsen research shows that green marketing by auto companies continues to have a positive effect on consumer perceptions with 51 percent of consumers reporting that green marketing initiatives increased their consideration of the product. This is up 24 percent compared to 2010. Social media discussion about auto makers’ green marketing initiatives has also been more positive this year with a 44 percent increase in positive discussion versus 2010.

“Our research identifies how effective auto manufacturers are in raising awareness of their green products, initiatives, and innovations,” said Lois Miller, President, Nielsen Global Automotive. “We can then understand if they were able to change perceptions and consideration in a positive way among consumers.”

“We are thrilled that Nielsen Automotive has again chosen the Los Angeles Auto Show to host its increasingly important Green Marketer of the Year Award,” said Brendan Flynn, Director of Communications for the Los Angeles Auto Show. “Nielsen’s award provides an accurate and important gauge for auto makers and makes a perfect addition to the green story at the LA Show.”

Methodology
To determine the finalists and winner, Nielsen leveraged three research studies to incorporate awareness levels and perceptions across media types. The studies included:

• A custom survey of nearly 7,000 consumers’ cross-media awareness and perceptions of environmental messages by automotive brand
• Response data from 2.5 million viewers of national television advertising collected by Nielsen’s ad effectiveness measurements service, focusing on green automotive ads
• Measuring social media “buzz” sentiment within green-related discussion threads

Auto manufacturers that ran any national TV ads with “green” themes between October 2010 and September 2011 were eligible for consideration.

Marketing around “green” vehicles continues to be an important factor in driving sales for the auto category. In a recent  study of more than 1,700 U.S. consumers and their electric vehicle purchase consideration, Nielsen saw that seven  out of 10 U.S. consumers would consider purchasing an electric vehicle, and 63 percent would consider them for their positive environmental impact. However, price continues to be a barrier with only 35 percent saying they would pay more for these vehicles. Also, looking at online discussion (“buzz”) about EVs, consumers still often mention anxiety about how far these vehicles can go on a charge. With the current limited availability of charging stations, some question the wide-spread use of a car that needs to be charged frequently.

In order to overcome these obstacles, it will be crucial for marketers to get the message out about the benefits of electric cars and other green vehicles by effectively touting points such as fuel efficiency and environmental friendliness. As these vehicles become available for purchase, marketing will play a key role in providing consumers with solid evidence to make the purchase.

Recognizing the potential impact a successful marketing campaign can have on the industry, Nielsen has joined with the Los Angeles Auto Show to create the 1^st annual Nielsen Automotive Green Marketer of the Year Award. Measuring the most effective green marketer will focus on understanding which auto brand was able to raise the awareness and change perceptions around environmental issues most effectively, and will be based on three components:

1. A custom survey of consumers to understand their awareness and perceptions of environmental messages by manufacturer
2. Response data from 2.5 million viewers of national television advertising collected by Nielsen, focusing on green automotive ads
3. Measuring internet “buzz” sentiment changes in social media within green-related discussion threads

Stay tuned for more information regarding the finalists and winner of the first Nielsen Automotive Green Marketer of the Year Award, which will be announced November 18 at the LA Auto Show.

When asked if they would be willing to pay more for an electric car than the cost of a conventional car, 65% of U.S. consumers said they did not want to pay more for electric cars. In the U.K., more than three-quarters (76%) were unwilling to pay more. Of those who accepted the price differential, slightly more than half of consumers in both countries (51% U.S., 57% U.K.) said they would not be willing to pay more than $5,000 above the average price of a standard vehicle.

“Although electric cars have been around for a while, big car manufacturers like Chevrolet and Nissan have been ramping up their advertising efforts recently as they get ready to introduce their new offerings – the Chevrolet Volt and Nissan Leaf,” said Sallie Hirsch, SVP of Research for Nielsen’s automotive unit. “There are some obvious challenges, such as the higher cost of electric cars, that advertisers will need to navigate as they develop their marketing campaigns, but the overall interest shown by consumers in this survey is promising. As electric vehicles are brought further into the mainstream and begin gaining in popularity, the cost will likely come down and many of the other challenges will be addressed as well.”

Through its advertising effectiveness and engagement tools, Nielsen has begun measuring the new national TV ads that debuted last month for the Nissan Leaf. The Leaf ads are part of Nissan’s new “Innovation for All” campaign, which has been gaining traction across Nielsen’s key resonance metrics for recall and likeability.

The increase in advertising is a sign of a rebound in the auto industry, which has struggled amidst the prolonged recession and weak consumer confidence. Of the top 20 product categories in U.S. ad spending, the largest growth in the first half of 2010 was seen in automotive as auto sales began to improve. According to Nielsen, in the first six months of the year, more than $42 million was spent in the U.S. advertising the Chevy Volt and Nissan Leaf brands. Overall, $3.5 billion was spent on auto advertising in the first half of 2010, up 27% over a year ago. The increased automotive advertising was driven largely by spending by Chevrolet parent company, General Motors, which was up 95% over last year.

Despite modest improvements in consumer confidence and a resulting boost in car sales, Nielsen’s survey on electric cars, which was conducted in September among more than 2,300 people in the U.S. and U.K., also showed that inflated gas prices continue to weigh on the minds of recession-weary consumers when considering the purchase of a new car. In fact, despite the global push towards choosing more fuel-efficient and environmentally-friendly cars, 78% of consumers in both the U.S. and U.K. said their main reason for wanting to buy an electric car was to “save on fuel costs.” Helping the environment ranked second on consumers’ list of priorities. While more UK consumers (70%) than U.S. consumers (63%) were likely to cite the environment as a reason for going electric, U.S. respondents were 60% more likely than their U.K. counterparts to say they would buy electric to support the companies making the vehicles.

Challenging some pessimistic expectations, only 16% of the respondents said they were skeptical about the new Russian business and government initiative to develop a new city car with a hybrid or fully electric drivetrain, while 62% fully supported the idea.

A surprising 85% noted they would consider buying if the new car were available now, but only if it met key requirements such as design, dependability and durability.

Twelve percent of participants said that they would consider buying the hybrid city car if it had a unique design that set it apart from existing car models. At the same time, only 4% noted that the innovative fuel supply system was a key consideration, despite it being one of the main advantages of the new car.

A large majority (63%) of Russian car owners stated that quality assembly was of primary importance, and, as expected in the current economic situation, affordable price won 57% of the votes. Long-term cost-effectiveness, such as low fuel consumption and maintenance costs, was important for one in four of those surveyed. Adaptability of a the car to the tough Russian climate was a significant factor as one in three car owners noted it as a purchase consideration condition.

“The results of the survey demonstrate not only the potential of the new initiative of the Russian business to launch a new city automobile, but also provide insights into consumers’ priorities when it comes to purchasing new cars in general,” said Alexey Mishukov, the leading expert on the Automotive market Studies, Nielsen Russia.

“The key takeaway is that in the short-term, it is more beneficial to take into account ‘utilitarian’ motivation of consumers,” Mishukov added. “Five of the most popular factors are directly connected with saving: affordable price and cost effectiveness of ownership. Among non-price factors, Russians are focused the practical side of the deal as well. The most important for them is adaptability of a car to the rough local climate and road conditions and a high quality of assembly.”

Overall, the study shows that many consumers have adopted more environmentally friendly habits, while others have not acted as quickly. “The current momentum surrounding green initiatives and reduced energy consumption presents utilities and home improvement companies with a golden opportunity,” says Jonathan Drost, Account Executive, Energy for The Nielsen Company. “When going green is cost effective, such as opting for Energy Star appliances or government incentive programs, customers migrate in that direction. The biggest hurdle for energy companies is educating the consumer on things like Smart Grids, Energy Efficiency programs and Renewable Green Energy.”

Red State, Blue State, Green State, Clean State
While clean energy and conservation seem like topics on which everyone can agree, consumers participating in green energy programs, like Energy Star tax credits or green pricing programs offered by utility companies, show party line splits. With roughly 3 percent of households participating in these programs, homes identifying as “liberal” or “moderate” are more likely to take part than conservatives.

The level of participation varies widely by region. The west (consisting of California, Oregon and Washington) has embraced green energy programs far more than any other region, comprising 24 percent of all participation. This is due largely to the fact that California has had green pricing programs in place for many years.

Demographically the responses indicate that green energy program participation was greatest among the higher educated and those making over $50,000. But, surprisingly, a higher proportion of those making between $50,000-$100,000 (34 percent) participated compared to those making more than $100,000 (30 percent). Participants also skewed younger, with 40 percent falling between the ages of 18-34 and 39 percent in the 35-54 year age range. Those above 55 make up 20 percent of those taking part in green programs.

Here Comes The Sun
Renewable energy sources are at the heart of the emerging green economy, and if consumers have any say, solar would be their carbon neutral source of choice.  “I believe solar came out on top as a preference because it is a technology that consumers can identify with,” Drost offers.  “Not only can a consumer place solar panels on their home or purchase solar water heaters, but also they see retailers installing solar panels on their roof and hybrid cars with solar roof options. It’s been a media hot topic as well.”

The Drive for Plug-ins
Plug-in hybrids may help push consumers away from their oil-centricity. While only 3 percent of households say they plan on buying a plug-in hybrid, an additional 24 percent said they would purchase once the technology becomes more widely used.

Fifty-eight percent of respondents said they would wait until their current vehicle needs to be replaced before running out to purchase a plug-in. Still, there is a core group that remains pro-gas-guzzler. Fifteen percent of those polled said that they would keep buying gas cars until they are no longer available.

“This is an exciting and challenging time in the industry,” says Drost. “We are past the ‘early adopter’ stage in many areas of Energy Efficiency and Renewable Energy. It will require an increase in education, consumer targeting, and messaging to bring the next wave in. When you consider 95% of Households say they are willing to change the way they consume energy, the next wave could be very, very large.”

• Download The Nielsen Company’s Energy Trends report.

The re-designed Forester boosted sales for Subaru, while Hyundai and Kia launched new models appealing to younger drivers.  Existing models, such as the Sorento and Sedona posted strong sales growth (69% and 48%, respectively).  And Lincoln was the only U.S. brand to outperform the market (although sales remained in negative territory on a year-to-year basis).   Foreign automakers benefitted disproportionately from escalating gas prices because consumer perception that their vehicles, especially hybrids and diesel models, are more fuel-efficient.  Hybrids remain an exciting but emerging segment, as consumers take their time investigating the genre.  Meanwhile, consumer interest in the basic economy vehicle was solid when gas prices were high, but dropped sharply once gas prices dropped.

Read more about the positive developments in the auto industry in 2008, as well as consumer behavior with respect to shopping for and buying vehicles in the July edition of Consumer Insight

“These estimates help manufacturers and marketers better understand the markets that have ‘green’ potential, and help them focus their resources,” said Bruce Wilkinson, Vice President of Media and Communications for Nielsen Claritas. “Additionally, it helps them to plan media campaigns and determine inventory levels for each model, market-by-market.”

The research looked at the national ownership rates of high-mileage vehicles including the Honda Fit, Toyota Prius, Toyota Yaris and Mini Cooper. Using auto registration data from RL Polk and Nielsen’s PRIZM segmentation, the percentage of each segment owning these vehicles was calculated. Individual market potential then was calculated based upon the segment composition of each market.

The top ten was made up primarily of coastal metropolitan area, including Boston (4th), San Diego (5th), Chicago (6th) and Los Angeles (9th), all with populations of over one million. Two exceptions were the relatively small areas of Monterey-Salinas, CA (7th), which has a population of 234,000 and Honolulu, HI (8th), with a population of 442,000.

Places where gas guzzlers still rule the road tended toward the south and Midwest, with the states of West Virginia and Mississippi holding seven of the ten areas that had the lowest rates of green auto ownership.

Learn more about Segmentation & Targeting.

Some insights on the Insight

The 2010 Honda Insight is having a tough time breaking out of the Prius’ shadow as the majority of consumers often compare the two vehicles. However, keep in mind that the Honda Insight just came on the market in March 2009 while the Toyota Prius has been around for roughly 10 years. Buzz generated by the Insight’s release in March was no comparison to the attention it gained at the Paris & Detroit Auto Shows.

Shoppers, Buyers and Rejecters are turning to Twitter to tweet about their intentions and experiences. Thus far, the 2010 Honda Insight is outpacing both the 2010 Prius and 2010 Ford Fusion on Twitter.

Which hybrid has the most “positive” charge?

2010 Honda Insight online discussion is driven primarily by comparisons to the Toyota Prius. Price is frequently referenced as the Insight’s selling point; however, some do not feel that the difference in price makes up for the Insight’s lower MPG rate (compared to the 2010 Prius) or perceived lack of features. When diving into the topics surrounding the conversations around the Insight and Prius to gauge sentiment, the Insight created a more polarized view.

If consumers regularly evaluate the Insight as a potential “Prius Killer,” the Insight may fail to emerge with a unique reputation, divorced from the Prius. The perception that the design of the Insight is too similar to that of the Prius highlights the belief that the Prius is the gold standard to which all other hybrids must aspire. Insight and future hybrid cars will have to keep an eye not only on the road, but also the web to help shape the conversations of the new breed of hybrid shopper.

A Look Under The Hood

A. Prius discussion spiked in the summer months, driven by its status as the benchmark hybrid in the time of high fuel prices and buzz about the next-gen version.

B. Peak buzz for the Chevy Volt in September was driven by the unveiling of the 2011 production version and publicity events.

C. The Nissan GT-R generated strong buzz throughout 2008, peaking in October when Porsche contested its Nürburgring lap time.

D. Ford Fusion buzz shows an upward trend, driven by consumers discussing updates for the 2010 models, the debut at the L.A. Auto Show and the hybrid version’s surprisingly strong fuel economy.

If you are interested in the complete Monthly Automotive Industry Overview, please contact Larry Black.