Environmental Protection Agency

   Fuel Economy Label



   Literature Review
United States
Environmental Protection
Agency

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       Environmental Protection Agency
                Fuel Economy Label

                  Literature Review
                  Office of Transportation and Air Quality
                  U.S. Environmental Protection Agency

                             and

               National Highway Traffic Safety Administration
                United States Department of Transportation
                        Prepared for EPA by
                            PRR, Inc.

                    EPA Contract No. GS-23F-0364P
                         Task Order 0001
United States                 z^D^^^             EPA-420-R-10-906
Environmental Protection         ^^r  ^R §             A   4.imn
Agency                     ^\^S ^             August 2010

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     Table  of  Contents
     Executive Summary	3
     /. Introduction and Methodology	13
     II. Understanding How Consumers Choose Vehicles	17
        A. The Vehicle Buying Process	17
        B. Sources of Information 	20
           1. Typical Sources of Information	20
           2. The Emergence of the Web as an Important
           Information Source	21
           3. Importance of New Web-based Consumer-to-Consumer
           Tools and Strategies	23
           4. Green Car Labeling 	24
        C. Factors Which Influence Vehicle Choice	24
           1. Vehicle-related factors	24
           2. The Role of Demographics in  Vehicle Purchasing	30
           3. The Role of Psychographics in Vehicle Purchasing	32
           4. Fuel-Efficient/Low Emission Vehicle Options	39
           5. Importance of Interactions with Customers	44
     III. Consumer Education Campaigns Regarding
     Fuel Efficient Vehicles	47
        A. Evaluation of Existing Consumer Education Campaigns	47
        B. Overview of Existing Social Campaigns Influencing
        Perceptions About Vehicles	48
     IV. Summary of Results and Conclusions	53
     Attachment 1 - Summaries of Major Studies	57
     Bibliography	75
Literature Review

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EPA Fuel Economy Label Redesign

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      Executive  Summary
     In 2006 EPA updated how the city and highway fuel economy
     values are calculated to better reflect typical real-world driving
     patterns and provide more realistic fuel economy estimates. In
     addition, EPA redesigned the fuel economy label to make it more
     informative for consumers. The redesigned label more prominently
     featured annual fuel cost information, provided contemporary and
     easy-to-use graphics  for comparing the fuel economy of different
     vehicles, used clearer text, and included a web site reference to
     www.fueleconomy.gov which provided additional information.

     EPA and the National Highway Traffic  Safety  Administration
     (NHTSA) are now initiating a new rulemaking  to ensure  that
     American consumers continue to have the most accurate, meaningful
     and useful information available to them  when purchasing  new
     vehicles and that the  information is presented to them in clear and
     understandable  terms. Further, the agencies must provide metrics
     that are relevant and useful for advanced technology vehicles such
     as plug-in hybrid electric vehicles (PHEVs).

     To help inform the creation of the new label, as well as to inform
     an eventual public  education campaign regarding fuel-efficient
     vehicles, EPA engaged PRR to work with them in the design
     and implementation  of several information gathering protocols
     including:

        •   Literature review

        •   Focus groups (in 3 phases)

        •   National level online survey of new vehicle buyers

        •   Expert panel
Literature Review

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This document  presents findings from the  literature review that
PRR conducted. The primary focus of the review was to understand
how consumers  decide which vehicles  to purchase and the factors
that influence their decisions. This information will prove useful
to informing the label redesign, as well as the planned educational
campaign to assist consumers to identify more fuel-efficient vehicles.

PRR assembled  and reviewed eighty articles pertaining to topics
relevant to  understanding  the consumers' vehicle  choice and
purchase process. Of the eighty articles reviewed, fifty-five were
included in this literature review  report.  (However, all  eighty
articles appear in the bibliography.)


Understanding How Consumers Choose

Vehicles

Several factors were explored to help  understand how consumers
determine which vehicle to buy. These included the decision-making
process and the sources of information and types of information they
use. Also of interest were the impacts of such factors as reliability,
safety, price, and fuel economy in the vehicle purchase process. The
impacts of consumer demographics  and psychographics were also
noted in the review. Of growing importance is the availability of
emerging technologies and fuels  and  how  consumers weigh the
cost, consumption, fuel source and environmental impacts of such
vehicles against other factors. Literature addressing the importance
of interactions between the vehicle dealers and consumers and how
that impacts consumer satisfaction and loyalty was also reviewed.


The Vehicle  Buying Cycle

The vehicle buying cycle is that period  of time between consumers'
first  contemplation of purchasing a new vehicle and when they
actually purchase the vehicle. For many consumers, purchasing a
big-ticket item like a vehicle happens only occasionally and tends
to be related to  other major changes in  their lives. This increases
the  anxiety level of the consumer and  increases the need for good
information to drive the decision process (Center for Advancing
Health, 2009). With the dramatic increase in the type and amount
of information  available to consumers on the  Internet, most
consumers consider more alternatives and make decisions quicker
                                         EPA Fuel Economy Label Redesign

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      than  ever  (Center  for  Advancing  Health,  2009). The  vehicle
      buying cycle is contracting due to the amount of information that
      consumers are accessing on the Internet. By the time the consumer
      enters the dealership to test drive a vehicle s/he is closer to a final
      purchasing decision than was true in the past. The Internet also
      provides consumers the opportunity to  purchase  vehicles online
      (annual growth rate of 14.6% in the United States over the past
      five years) which is very attractive to consumers who do not want
      to negotiate with vehicle dealerships. Consequently, influencing
      consumer purchasing decisions increasingly needs to occur prior to
      consumers visiting dealer showrooms.

      Sources of Information

      Consumers gather information from a variety of sources  as they
      work their way through the vehicle buying decision-making process.
      Traditionally, information has come from vehicle manufacturers
      and dealers, by word of mouth, and from family and friends, but
      much has changed with  the advent of the Internet and the ability
      of consumers to search for information on specific types of vehicles
      and brands. Nearly half of consumers visit a vehicle manufacturer's
      Web  site (Capgemini, 2009a), particularly in search of product
      and price information. Consumers are also increasingly using the
      Internet  to access fuel economy information. The Internet also
      serves as a great source of information from those with first-hand
      experience with specific vehicles through reviews and blogs.

      Factors Which  Influence  Vehicle Choice

      Vehicle related factors

      Consumers differentiate between different makes  and models by
      what the vehicles have to offer, and make choices that maximize
      their utility when compared to other available makes and models of
      interest (Garcia, 2007). Even though there has been a tremendous
      growth in the number  of vehicle makes and  models  and vehicle
      features, the most  important factors  that  lead consumers  to
      purchase a particular vehicle have remained consistent over time.
      According to Cars  Online (Capgemini, 2009a, 2008, 2007), the
      top four factors  that consumers continue to claim they value
      when making vehicle purchasing decisions are: reliability, safety,
      price, and fuel economy. This finding is  in line with the Deloitte
Literature Review

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(2008, 2010) survey findings wherein fuel economy and price were
reported to be the most important vehicle attributes by consumers
who were between the ages of 17 and 30 years.

Vehicle reliability  influences consumers'  experience and colors
their opinion about the make and model of the  vehicle, as well
as the reliability and reputation  of  the brand (halo effect).  No
matter which vehicles consumers choose to buy,  they have high
expectations that the vehicle will be safe. In fact, many consumers
are willing to pay  more to obtain a vehicle with enhanced  safety
features. While the role of safety in consumers' decision process is
yet to be explored in depth in research studies, both the government
and manufacturers have acknowledged consumers' increasing need
for safety in vehicles.

Vehicle price has become even more critical for consumers because
of the global economic  crisis, which has  interested  consumer
interest in purchasing low-cost  fuel-efficient  cars  (Capgemini,
2009a, 2008). Fuel economy has also become even more critical for
consumers because of increasing gas prices. Further, fuel economy is
the top reason why people are opting for fuel-efficient or alternate-
fuel vehicles (Capgemini, 2009a, 2008). When gas prices go up and
some feel the crunch in the operating costs  of their current vehicle,
they look for vehicles that have higher fuel efficiency.

Demographics

Vehicle purchasing decisions are influenced by consumers' specific
needs and situations, but are also influenced by specific consumer
demographics.  Those  demographics  can  include  age, gender,
income, education  level, and household size. Each  of these factors
can influence what type of vehicle is likely to meet a consumer's
needs. The studies  reviewed showed that, not surprisingly, higher
income families and  individuals  tend to drive more  expensive
vehicles, larger households tend  to  drive  larger vehicles, and
households are more likely to drive a minivan the more  members
are under the age of 19 (Choo & Mokhtarian, 2002).

Deloitte's 2008 Generation Y survey results found that in regards to
fuel economy and environmental impact, those with lower personal
or household income are more likely to rate gas mileage  as an
extremely or very important factor. Women attach more importance
than men to gas mileage, storage capacity, and environmentally-
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      friendly production, while men tend to be more focused than women
      on leg room and horsepower. In addition, those who have attended
      college are more likely to say that thinking about the economic
      outlook and the relationship with oil-producing countries has a
      strong impact on their vehicle purchase decisions (Deloitte, 2008).
      Finally, concern for the environment, although important, is not
      important enough for most Gen Y consumers to pay a premium for
      a vehicle (Deloitte, 2010; Deloitte/MSU 2010).

      Psychographics

      In addition to demographics, psychographics also influence vehicle
      purchasing decisions. Psychographics are more about providing
      what consumers want than just providing something that they
      need (Assaraf, 2008). It's about what types of  lifestyles they lead,
      what type  of images they want to portray, how much  and for
      what reasons they travel in their vehicles, and how they view their
      vehicles as an extension of self. Personality and lifestyle play a big
      part in what types of vehicles consumers choose to purchase and
      drive. It is  also  clear that by knowing more about a consumer's
      travel attitudes,  personality, and lifestyle the better the prediction
      of the type of vehicle that will appeal to that consumer.

      For  example, when  considering  purchasing  a vehicle,  Gen Y
      consumers (age  17-28) indicated that  (Deloitte, 2008):

         •    A vehicle says a lot about a person's taste/sense of style (82%)

         •    When buying a  vehicle, I consider how it  impacts my
              personal pursuit such as jobs, relationships, and hobbies
              (77%)

         •    When buying a vehicle, I consider how it reflects who I am
              as a person (67%)

         •    A vehicle says a lot about a person's status in society (65%)

         •    A vehicle says a lot about a person's values (57%)
Literature Review

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Fuel-Efficient/Low Emission Vehicle Options

Consumer  demand  for  green  products  is  growing,  and  the
automobile industry is no exception. There is growing awareness of
fuel-efficient and alternative fuel vehicles, and consumer research
indicates a growing interest in purchasing more fuel efficient and
low emissions "greener" vehicles. While there is growing awareness
of the environmental  impact of the automobile, environmental
concern typically shows up as a secondary factor and is not enough
on its  own to compel consumers  to pay a premium  in price  or
sacrifice  performance  for  the sake  of  "being  green." For green
vehicles to gain  widespread commercial acceptance, the cost and
performance must at least match traditional vehicles.

In addition, while Generation Y drivers tend  to understand the
environmental benefits  of  "green" vehicles  better than other age
groups, many feel they lack the information to make good choices.
They also are concerned about cost and tend to prefer vehicles that
can provide both economic and environmental benefits.

A number of other barriers get in the way of consumers purchasing
electric vehicles.  These include: concerns about insufficient driving
range, the  need  for  specialized  infrastructure  (such  as  charging
stations), battery performance, and doubts concerning the electric
car's ecological value.

Importance of Interactions with Customers

Also important to a consumer's decision of what vehicle to purchase
are the experiential factors that influence consumer loyalty to the dealer
and/or brand, their satisfaction with the purchase, and their behavior
after purchase. As the  global auto industry  struggles to deal with
the  economic downturn and American carmakers try to recuperate
from a year full  of bad news, maintaining a strong customer focus
becomes  essential for survival and good performance. As Accenture
(2009) in their paper 'New Places, Faces and Spaces: Customer-centric
principles for acquiring customers  in today's multi-polar world' points
out, the key to negotiating the extreme volatility of the  present day
market is to build customer loyalty to ensure long-term growth. This
requires dealers  to understand their current customer  base, work
hard to  engage  new customers, develop trust-based relationships
with customers, and manage customer interactions and transactions
efficiently. Good service and experiences build loyalty, which results in
customers returning to the dealership for their next vehicle purchase.
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      Another part of this equation is the transformation of the customer-
      dealer relationship in recent times. With customers having access to
      all sorts of information from the Internet about the vehicles under
      consideration, they gain more of the power in the  relationship than
      before. This creates a customer-dealer relationship that is more like
      an interaction between two equal parties. Further, consumers also
      read online reviews and rankings about other shoppers' experiences
      at the dealership and use these to determine what kind of experience
      they're going  to have at a dealership.


      Consumer Education Campaigns

      The  literature review  did  not find any academic studies  on  the
      results  of education  campaigns to encourage consumers to  choose
      more environmentally  friendly vehicles. Therefore, the focus of the
      information presented  is on existing education campaigns, but not
      on their outcomes. For each campaign, a brief description of the
      campaign and a review of key  outreach components are presented.


      Conclusions

      This literature review provides a summary of available information
      on  the vehicle  buying process,  information sources  used  by
      consumers as they  shop for  vehicles, the  factors that  influence
      consumer  vehicle purchasing decisions, and  the impact  of  the
      increasing availability of "greener" vehicles. It  also summarizes
      information on available public education campaigns that address
      the benefits of driving "greener" vehicles.

      The  sources used to prepare this literature review were  varied in
      their methodologies  and carried a variety of limitations as to their
      coverage of the population of U.S. car buyers. It should be noted
      that  in spite of the multiple methods used by the major sources, a
      number of similar and  consistent results and themes emerged from
      among them.

      The following are a  number of key findings that have implications
      for the redesign of the fuel economy label, as well as an educational
      campaign designed to aid consumers'  understanding of more fuel-
      efficient vehicles.
Literature Review

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                                                The length of the vehicle buying cycle is contracting as
                                                more  and  more consumers  obtain  more  information
                                                sooner from the Internet. By the time consumers enter a
                                                dealership,  many are closer  to purchasing a vehicle than
                                                ever before. The Internet has emerged as  one of the most
                                                important sources of information for consumers interested
                                                in purchasing a vehicle. To gather information consumers
                                                can visit manufacturer  and  dealer Web sites,  and  rely
                                                on consumer-to-consumer tools  like reviews and blogs.
                                                Consumers are also increasingly interested in purchasing
                                                vehicles  online.   Consequently,   information   on  the
                                                redesigned  fuel economy label that is intended to inform
                                                them  about a  vehicle's performance in regard to several
                                                metrics (such as fuel consumption, cost, and environmental
                                                impact) should also be available online to assist consumers
                                                to find more fuel-efficient vehicles.

                                                Considering that  in the  consumer surveys  reviewed
                                                consumers  consistently  stated that the most  important
                                                factors that influence which  vehicle  they  purchase are
                                                reliability, safety, price, and fuel economy (not necessarily
                                                in that order), the  fuel  economy  label and educational
                                                campaign will need  to  acknowledge the place  that fuel
                                                economy plays in the purchase process and identify ways
                                                to 'be heard' as consumers make their decisions.

                                                Consumer  vehicle  purchasing  is also  influenced  by
                                                individual demographics and psychographics in terms of
                                                how a vehicle satisfies the practical and emotional needs of
                                                the consumer. Age, gender, income, household size, urban
                                                or suburban living, as well as availability of other travel
                                                options, all play a part in what type of vehicle a consumer
                                                decides to purchase. But  so do the psychographic aspects
                                                of 'what  a  vehicle says  about me.' This suggests that to
                                                be most  effective, the  educational campaign should be
                                                tailored to  specific demographic market  segments, while
                                                also making the purchase of fuel-efficient  vehicles a 'cool'
                                                statement  about the  consumer.  Acknowledging  what
                                                is important in  the vehicle  purchase  process to  specific
                                                demographic segments, as well as to what consumers think
                                                of as 'cool', can serve as a gateway to getting their attention
                                                and assisting them to identify more fuel-efficient vehicles.
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              Finally,  demographic and  psychographic influences not
              only help in understanding the appeal of particular vehicles,
              but also point the way towards potential messaging to help
              consumers make better informed decisions.

              A  major challenge will be  explaining the functioning  of
              advanced technology  vehicles  to  consumers.  Overall,
              consumers   lack  information on "green"  vehicles  and
              technologies to really understand the differences and  be
              able to  make comparisons across  brands,  models, and
              technologies. Identifying easy-to-understand ways to explain
              advanced technology vehicles, how they function, and the
              fuel-efficiency of such vehicles will need to be determined
              before an effective  educational campaign can be designed.
              The redesigned fuel  economy  label  will be  an important
              starting point for this since it is being designed to effectively
              allow consumers to  make  informed comparisons among
              vehicle types.

              Lastly, the  results  of the literature regarding consumer
              education  campaigns  related  to  helping consumers
              better understand  the  benefits  of  purchasing   a  more
              environmentally friendly vehicle can serve as  an important
              starting  point for the  agencies' educational  campaign.
              Although it  does not appear from the literature that these
              campaigns have evaluated outcomes, they can still provide
              good information, especially if  key staff members from
              those  campaigns  are interviewed to learn  about  what
              worked  and didn't  work from their perspectives.
Literature Review                                                                                               11

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12                                                                                               EPA Fuel Economy Label Redesign

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             ntroduction  and
      Methodology
     In 2006, EPA updated how the city and highway fuel economy
     values are calculated  to better reflect typical real-world driving
     patterns and provide  more realistic fuel economy estimates. In
     addition, EPA redesigned the fuel economy label to make it more
     informative for consumers. The redesigned label more prominently
     featured annual fuel cost information, provided contemporary and
     easy-to-use graphics for comparing the fuel economy of different
     vehicles, used clearer  text,  and included a web site reference to
     www.fueleconomy.gov which provided additional information.

     EPA  and  the National Highway Traffic  Safety Administration
     (NHTSA)  are now initiating a  new rulemaking to ensure that
     American consumers continue to have the most accurate, meaningful
     and useful information available to them  when purchasing new
     vehicles and that the information is presented to them in clear and
     understandable terms. Further, the agencies must provide metrics
     that are relevant and useful for advanced technology vehicles such
     as plug-in hybrid electric vehicles (PHEVs).

     To help inform the creation of the new label, as well as to inform
     an eventual public education campaign regarding fuel-efficient
     vehicles, EPA engaged PRR to work with them in the  design and
     implementation of several information gathering protocols including:

        •   Literature  review

        •   Focus groups (in 3 phases)

        •   National level online survey of new vehicle buyers

        •   Expert panel
Literature Review                                                                              13

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                                         This document presents findings from the literature review that
                                         PRR conducted. The primary focus of the review was to understand
                                         how consumers decide which vehicles to purchase and the factors
                                         that influence their decisions. All articles for this literature review
                                         were selected with that focus in mind. This information will  prove
                                         useful to informing the label redesign,  as well as the educational
                                         campaign to inform consumers about new vehicle technologies and
                                         how to use the fuel economy label to compare vehicles within and
                                         across technologies.

                                         PRR assembled and reviewed eighty articles and studies to  better
                                         understand how consumers decide  which vehicle to purchase and
                                         what influences those  purchasing decisions. Of most interest were
                                         those articles  and studies  that provided information from the
                                         viewpoint of the consumer. Because  of the speed at which trends are
                                         evolving, most of the sources selected for inclusion were published
                                         between 1995 and 2010. The sources span a broad range of books,
                                         articles, papers, and secondary research reports. Data presented are
                                         primarily taken from  business, marketing, and academic journals
                                         and magazines; Web  sites; newspapers; conference proceedings;
                                         and published government guidelines, standards, and documents.
                                         From the eighty articles reviewed,  fifty-five were included in this
                                         literature review report.

                                         The major sources used in this literature review are summarized in
                                         Attachment 1 to this report. These summaries provide information
                                         on purpose, methodology, results and relevance  to this literature
                                         review. As noted in Attachment 1, the sources used were based on
                                         varying methodologies. Also noted  is that all sources are based on
                                         research from the U.S.,  except for the Capgemini studies which
                                         include information from a  variety of  countries. Even with their
                                         varying methodologies, several themes emerged that were consistent
                                         across  many of the sources  reviewed  and  are presented in the
                                         literature review. When appropriate, methodological limitations are
                                         noted in the text of this report and are also noted in Attachment 1.

                                         This report was purposely written in  a reader-friendly style that
                                         summarizes the key findings in a format that will be useful to  a
                                         variety of audiences. In particular, the review provides the following
                                         information:
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         •    Decision-making process used by consumers

         •    Sources of information and types of information consumers
              use to make their decisions:

              •  Typical sources of information

              •  Emergence of the Web as an important information
                 source

              •  New Web-based Consumer-to-Consumer tools  and
                 strategies

              •  Online buying

         •    Factors that influence vehicle choice, including:

              •  Vehicle specific factors such as reliability, safety, price,
                 and  fuel economy

              •  Consumer demographic and psychographic influences
                 on vehicle purchases

              •  Availability of  green  vehicles and  how consumers
                 weigh the environmental  advantages  of purchasing
                 green vehicles against  all other factors  they consider
                 when deciding which vehicles to purchase

              •  Importance of interactions between the vehicle dealers
                 and  consumers, and  how that  impacts  consumer
                 satisfaction and loyalty

         •    Education campaigns that have been used to encourage
              consumers to make more environmentally friendly choices
              when buying vehicles

      The APA citation style was  used  in this  report to acknowledge
      the sources used in its preparation. The sources cited in the body
      of the report appear  alphabetically at the end of the report  (see
      Bibliography) and hyperlinks to full articles have been included for
      these sources in the bibliography for easy access and retrieval.
Literature Review                                                                                              15

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16                                                                                              EPA Fuel  Economy Label Redesign

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         .   Understanding   How
     Consumers   Choose  Vehicles
     To better understand how consumers determine which vehicle to
     buy, a variety of factors were examined. The review started with
     the decision-making process used by consumers and the sources
     of information and types of information they use to make their
     decisions. The review then looked at the factors that influence vehicle
     choice including vehicle specific factors like reliability, safety, price,
     and fuel economy. Also considered was how individual consumer
     demographics and psychographics influence vehicle purchases. Of
     growing importance is the availability of green vehicles and how
     consumers weigh the environmental advantages of purchasing a
     green vehicle against all other factors they consider when deciding
     which vehicle to purchase. Lastly, the importance of interactions
     between the vehicle dealers and consumers and how that impacts
     consumer satisfaction and loyalty was considered.


     A. The Vehicle Buying Process

     The vehicle buying process is that time between when consumers
     first contemplate purchasing a new vehicle and when they actually
     purchase the vehicle. For many consumers purchasing a big-ticket
     item like a vehicle happens  only  occasionally and tends to be
     related to other major changes in their lives. The primary reasons
     that consumers start considering the purchase of a new vehicle
     are mechanical problems with their existing car, or the appeal of
     a new car or particular car feature (Capgemini, 2005). With the
     dramatic increase in the type and amount of information available
     to consumers  on the Internet, most consumers consider more
     alternatives and make decisions quicker than ever.
Literature Review                                                                       17

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                   n
               Awareness
                 Opinion
              Consideration
               Preference
                Purchase
In the past, studies have shown that the typical process used by consumers
was  composed of several distinct phases known as the purchasing
funnel. First developed over a hundred years ago, the purchasing funnel
is used to describe how consumers narrow choices as they move from
awareness, to opinion, to consideration, to preference, to purchase. For
vehicles, the purchasing funnel illustrates how consumers narrow their
vehicle choices as they gather information and make judgments at each
stage (Chatterjee, Jauchius, Kaas, Satpathy, 2002).

How consumers purchase vehicles has  evolved with the increased
use of the Internet to gather information about potential choices.
Historically, consumers have  started out considering six or seven
different vehicles which they refine down over time to one or two
vehicles they will go test drive (Clift, 2006). New studies by CNW
Research have  shown  that about halfway through the decision
process, consumers may add new vehicles for consideration as they
are exposed to  additional information through their searches on
the Internet. Other important pieces of information available to
new vehicle purchasers are reviews from current owners that may
influence new vehicle buyer  opinions  and considerations  (Clift,
2006). This creates a decision process that is  not  always as linear
as that illustrated by the purchasing funnel. Although consumers
may go  back and forth among the steps of the purchasing funnel,
it is clear that consumers must first be aware of the various vehicle
options  before they can  form an opinion, and  they must have a
positive opinion of a vehicle option before they will consider it and
decide to gather more information to narrow their choices to make
a decision (Henry, 2008).

For many consumers, once they have narrowed their selection to a
few vehicles, they visit a dealer with the  intention of going for a test
drive. Armed with additional information from the Internet (as well
as other sources) before they enter an automotive dealership to look
at and potentially test drive a vehicle, it is now more difficult than
in the past to influence a consumer's decision on which vehicle they
will ultimately purchase once they are at the dealership. Consumers
are also able to  more quickly reach a decision of whether or not
to purchase a particular vehicle once  they make the decision to
take a test drive. They then gather additional information to make
a final decision on which to purchase. At this point, other factors
can influence the decision making process including vehicle pricing,
the value of a trade-in, financing options, and how the consumer
is treated by the dealership (Center for Advancing Health, 2009).
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      As the duration of the vehicle buying cycle contracts through the use of the
      Internet, automotive companies have less time to influence purchases. Based
      on results from its annual surveys of consumers interested in purchasing
      a new vehicle, Capgemini concluded that what used to take six months,
      may now only take four months. When a consumer  is finally ready to
      visit a dealership, they  are much closer  to making a purchase than they
      likely were in the past.  Consumers go to dealerships when they feel they
      have enough information on what they want to purchase and how much
      they want to pay to be able to negotiate. They gather more information
      through  research on the Internet  and visit fewer dealerships than  in past
      years before  making a vehicle  purchase  (Capgemini, 2009a). Based on a
      Capgemini's 2009 customer survey of 3,000 persons interested in buying a
      new vehicle, more than two-thirds of the respondents stated that they began
      gathering information two to four months before they planned to purchase
      a vehicle, and 60% visited a dealership for the first time within two months
      of purchasing a vehicle (Capgemini, 2009a).

      The Internet also provides consumers the opportunity to purchase vehicles
      online which is very attractive to consumers who do not want to negotiate
      with vehicle dealerships. Online sales volumes have increased at an  annual
      growth rate of 14.6% in the United States over the past five years (Deloitte,
      2009). In a 2009 Capgemini consumer  survey, 21% of U.S. consumers
      said  they were likely to purchase a  vehicle online.  This is up from 17%
      the previous  year (Capgemini,  2009a). Yet, online sales only represented
      represent 4% of total car sales in the United States in 2009 (Deloitte, 2009).

      Price discounts, avoiding in-person interactions and price negotiations with
      a dealer,  and ease and speed of the transaction were cited as the top reasons
      to purchase a vehicle online. The primary barrier to purchasing online cited
      by respondents is the inability to  test drive a vehicle. Other barriers cited
      by respondents include not being able to see photos or video of the vehicle,
      inability  to access accurate and complete  product and pricing information,
      unsuitable interface to negotiate on pricing with dealers, concerns about
      delivery,  and lack of integration with related services such as financing and
      insurance (Deloitte, 2010; Capgemini, 2009a). There is also strong interest
      in buying parts and accessories online, primarily as  a means to find lower
      prices as an alternative to the traditional dealer model (Capgemini, 2009a).
      Overall,  online buying is increasing, but  it is unclear if there will be large
      scale adoption of the Internet as a sales channel.
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                                         B. Sources of Information

                                         Consumers gather information from a variety of sources  as they
                                         work their way through the vehicle buying decision-making process.
                                         Traditionally, information has come from vehicle manufacturers
                                         and dealers and by word of mouth. Much has changed with the
                                         advent of the Internet and the ability of consumers to search for
                                         information on specific types of vehicles and brands. The Internet
                                         also serves as a great source of information from those with first-
                                         hand experience with specific vehicles through reviews and blogs.
                                         Access to all  this additional information has allowed consumers
                                         to make quicker and more informed decisions  once  they visit a
                                         dealership.

                                         1. Typical Sources of Information

                                         In the past, vehicle buyers relied on information from manufacturers,
                                         dealers, third-parties, classified  ads, family and friends. More
                                         recently, vehicle buyers have  started to gather information  from
                                         the Internet (Center for Advancing Health, 2009). There is evidence
                                         that consumers gather information and conduct research prior to
                                         visiting vehicle dealerships (Nye, Greene,  Hopson, and Saulsbury,
                                         2003), although when particular types of information are accessed
                                         in the  purchase process was not identified in the literature cited
                                         above. A 2009 consumer  survey  by Capgemini of more  than
                                         3,000 potential car buyers (consumers planning to purchase  a car
                                         in the  next twelve  months) in eight countries revealed internet-
                                         based information sources were most popular with consumers in
                                         the United States and Western Europe, including dealer Web sites
                                         (52%), manufacturer Web sites (50%), search engines (48%), and
                                         information Web sites  (42%). However, consumers  still use and
                                         value more traditional sources of information, such as  friends
                                         and  family  (45%), independent  car valuation  services  (38%),
                                         manufacturer-specific franchise dealers (34%), and used car dealers
                                         (28%). Just  16% of consumers  indicated  they used television
                                         advertising and auto shows  as information sources in  the  car-
                                         buying process (Capgemini, 2009a).
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      2. The Emergence of the Web as an Important
      Information Source

      The Internet has become a standard information source for vehicle
      buyers.  It has grown steadily over the  past several  years, from
      approximately 65% of U.S. consumers in 2005 using the Web to
      access vehicle information, to nearly 90%  in  2009 (Capgemini,
      2009a). The  typical  web  usage pattern is  that consumers start
      their research with search engines, then move to manufacturer and
      dealer sites, and finally to  consumer-to-consumer (C2C) tools like
      web forums; blogs; RSS (Really Simple Syndication) feeds, which
      is  a news and blog content syndication tool; and discussion sites
      (Capgemini, 2009a). New  car buyers  report  spending nearly seven
      hours conducting online research to inform their decision: 47% of
      new vehicle buyers using the internet in the buying process visit an
      independent site when initiating the research for their new vehicle,
      and 46%  visit  a  manufacturer website while conducting their
      online research (Center for Advancing Health, 2009).

      It  appears that consumers seek out the  information sources that
      provide useful  data on the attributes that  they care about, and
      that those attributes of interest vary widely (Center for Advancing
      Health,  2009). The  Centers  for  Advancing Health  cites  a J.D.
      Powers  and Associates survey in which shoppers describe using
      independent, third-party sites such as Kelly  Blue Book, Edmunds,
      and Consumer Reports for researching vehicle pricing, ratings, and
      reviews; manufacturer Web sites for information  about vehicle
      model options,  features, and specifications; and  dealer  sites for
      inventory information (Centers for Advancing Health, 2009).

      Research conducted by the EPA in collaboration with PRR provides
      additional insight into where consumers obtain  information  on
      fuel economy. Thirty-two  focus groups  were conducted between
      February  25 and May 27, 2010 in the cities of Seattle,  Chicago,
      Houston and Charlotte. The participants were asked to complete an
      online survey before they took part in the focus group discussions.
      The findings from this pre-group online survey indicated that two-
      thirds (67%) of the respondents used manufacturers' websites to
      search for information on fuel economy. The other sources that
      participants reported searching for fuel economy information were:
      fuel economy label on vehicles (60%), Consumer Reports (51%),
      Edmunds.com  (31%), auto  dealers (30%),  asking  those who
      had similar vehicles (29%), auto  magazines (e.g., Car & Driver,
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                                         Road & Track, Motor Trend; 30%), Edmunds.com (30%), auto
                                         dealers  (25%) and Government  websites (e.g. fueleconomy.gov,
                                         EPA Green Vehicle Guide; 17%).  The sources of information that
                                         were less popular included  television ads (12%), environmental
                                         organizations (4%), newspapers  (4%) and radio ads (2%). The
                                         survey also found that close to three-fourths (72%) considered EPA
                                         as a trusted source of information on fuel economy (PRR - Pre-
                                         Focus Group Online Survey Report, 2010).

                                         The most  important Web site features  to  consumers are price
                                         and product  information, and the  ability to  compare vehicles.
                                         Consumers have consistently ranked these as the  most important
                                         Web site features for several years. Less important Web site features
                                         include dynamic graphics, (such as video or eye-catching graphics),
                                         the ability to check dealer inventory, and online  information about
                                         the latest ads and promotions (Capgemini, 2008, 2009a). While the
                                         use of the  Internet does  not  appear  to preclude consumer use of
                                         the dealer or word of mouth to gather information, there is some
                                         indication that consumers are substituting Internet research time for
                                         time spent at dealerships. In addition, print advertising is becoming
                                         less influential as the Internet  becomes more useful  and widely used
                                         (Center for Advancing Health, 2009; Capegemini, 2006, 2007).

                                         It also appears that the presence or lack of desired Web site features
                                         can  impact consumer buying  decisions. For  example,  a 2008
                                         Capgemini consumer survey of more than 3,100  car buyers in eight
                                         countries revealed that  more than three-quarters of respondents
                                         said that "having the [web]  features that matter to them would
                                         make them more likely to purchase a vehicle from that company,"
                                         and "more than half said that if the features they care about are not
                                         available they would be less likely to buy from that company." This
                                         pattern was found to be consistent across all markets included in
                                         the survey (Capgemini, 2008).

                                         Consumers increasingly  use  the Internet to  access  fuel economy
                                         information. Usage of the DOE and EPA Web site, www.fueleconomy.gov,
                                         increased from  400,000 user sessions in  1999 to more than 30
                                         million user sessions in 2008. Based on web  traffic, the four most
                                         popular features of the fueleconomy.gov website are: 1) Find-a-car,
                                         which allows  consumers to compare up to four vehicles in terms
                                         of fuel  economy, fuel cost, greenhouse gas emissions, and energy
                                         security; 2) "Your MPG," a feature that allows users to share real-
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      world MPG experience with others; 3) driving and maintenance
      tips to help drivers maximize fuel  economy; and 4) MotorWeek
      Fuel Economy, which features public television programming to
      provide consumers with information about  fuel economy and
      alternative fuel vehicles (Greene, Gibson, Hobson, 2009).

      3. Importance of New Web-based Consumer-to-Consumer
      Tools and Strategies

      Many  consumers  who  use  the  Internet  to gather  information
      prior to going to a dealer showroom use consumer-to-consumer
      (C2C) tools after researching vehicles online with search engines
      and manufacturer and dealer Web sites  (Capgemini, 2009a). C2C
      tools include automotive blogs, forums, discussion groups, video
      sites and RSS feeds, and allow consumers to gather supplemental
      qualitative information  including  consumer opinions  on and
      reviews about specific car brands. Consumers also may use C2C
      tools to engage in a two-way dialogue with automotive experts
      and other consumers and to receive news about new vehicles and
      information about vehicle recalls  (Capgemini, 2008, 2009a).

      Interestingly, a 2009 Deloitte survey  of 1,100 Gen Y consumers
      (randomly drawn  from  a panel of  individuals  who  agreed  to
      participate in  online surveys) found that  the majority of Gen Y
      consumers (64%) do not get their information on a vehicle brand
      or model  from social networking sites, despite this group's high
      rate of social media use for general  communication. Further, more
      than half (58.2%) do not look for vehicle advice on blogs or other
      social media forums. Instead, the majority (79.9%) rely on search
      engines  such as Google or Yahoo!  for  information on a specific
      vehicle (Deloitte, 2010).

      However,  there is  some  evidence that  C2C tools may influence
      buying decisions. A  2009 Capgemini consumer  survey revealed
      that more than two-thirds of consumers said they would be more
      likely to purchase a particular vehicle or buy from a certain dealer
      if they found positive comments posted on blogs and web forums
      about the vehicle or dealer.  In addition, approximately 57%  of
      respondents said they would be less  likely to  buy a particular make
      or from a  specific dealer if they found negative comments on these
      kinds of sites (Capgemini, 2009a).
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                                        4. Green Car Labeling

                                        While  the  Internet is one resource  consumers are increasingly
                                        using to look  for fuel economy estimates when researching and
                                        comparing vehicles, well designed eco-labels can also  be useful
                                        in providing fuel economy  information  to  consumers (Teisl &
                                        Rubin, 2008).  In addition, participants in focus groups conducted
                                        in Maine in 2004 stated that they get much of their information
                                        on vehicles on-line, and  while  they  would  like  to  have  more
                                        information about environmental factors on the vehicle label, most
                                        had made their vehicle purchasing decision before they visited a
                                        dealership and were exposed to eco-labeling on the vehicle  (Teisl
                                        & Rubin, 2004). In their "Green Car Labeling" study, Northeast
                                        States for Coordinated Air Use Management (2003) interviewed
                                        658 individuals 25 years or older that lived in the Northeast region
                                        of the U.S who had purchased a vehicle in the last two years, or
                                        planned to purchase a vehicle in the  next two years. They found
                                        that one-half  of these individuals thought that  knowing about
                                        vehicle emissions was highly  important when purchasing a  vehicle.
                                        In addition, four out of 10 of these individuals stated that if the
                                        information was readily available, they would be highly likely to
                                        consider emissions in  their next vehicle purchase.  A  key  finding
                                        from this  study was that the importance of emissions in their
                                        vehicle purchasing  decision increased when emissions information
                                        was available, with three-quarters of the people interviewed stating
                                        they were in favor of green  car labeling and  that they  would be
                                        moderately or highly likely to use the information on the  label in
                                        their next vehicle purchase.


                                        C. Factors Which  Influence  Vehicle Choice

                                        1. Vehicle-related factors

                                        As Garcia (2007) has pointed out, automobiles have traditionally
                                        been thought  of as bundles of attributes desired by consumers.
                                        Consumers  tend to  differentiate between  different  makes  and
                                        models  by the various attributes they offer.  They make  choices
                                        among various makes  and models to  maximize their  utility by
                                        choosing the make  and model considered superior compared to all
                                        other available choices.
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      Even though there has been a tremendous growth in the number
      of vehicle  makes and models  that  offer a plethora of vehicle-
      attribute combinations to consumers, the most important factors
      that lead consumers to purchase a particular vehicle have remained
      consistent  over time. According to  Cars  Online  (Capgemini,
      2009a, 2008, 2007), reliability, safety, price, and fuel economy (not
      necessarily in that order) are the top four factors that consumers
      have consistently stated they focus on when it comes to making
      their final decision about which vehicle to buy.

      a. Vehicle  reliability and reliability of brand

      The value that reliability plays to both manufacturers and consumers
      is of interest to both consumer researchers  and practitioners. In
      general, consumers consider a vehicle to be reliable if it is likely to
      have fewer problems than other vehicles even as it ages (Consumer
      Report, 2010). Vehicle reliability has been found to have  a positive
      impact on the consumers' likelihood of choosing a vehicle (Woods,
      2010; Scordo, 2009;  Dangol, Jitpaiboon &  Walters, 2007; Train
      & Winston, 2007). The benefits  that consumers  see in  buying a
      vehicle  with high reliability include lower costs of repair and
      higher resale value. Therefore, consumers are likely to be concerned
      about vehicle reliability when researching their upcoming vehicle
      purchase (BuyingAdvice.com, 2007).

      While reliability in simple terms may be thought of as how well a
      vehicle is likely to run without expensive maintenance and repair
      over time, it has far reaching impacts on brand reputation. Based on
      how reliable consumers consider the vehicle  model to be, a brand
      halo kicks  in whereby consumers build opinions about the vehicle
      make, brand reliability and manufacturer's reputation. Such a halo
      effect can have serious positive implications for consumers' future
      vehicle purchase. A recent research  study by Capgemini (2009a)
      found that an increasing number of consumers were growing brand
      loyal and were more likely to purchase  the same  make/brand as
      their current vehicle.

      Research has found that because a new vehicle's reliability is not
      available at the point of purchase,  the  reliability history of the
      model (measured based on the number of repairs reported by the
      owners of  such model), and brand reputation play an important
      role in consumers'  evaluation of a  new vehicle (Betts  & Taran,
      2004). Further, when such a reputation is backed  by trusted and
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          Because the study was based
          on a convenience sample of
          Deloitte U.S. employees, it may
          not be representative of the
          U.S. auto consumer population.
          Further, it should be noted
          that intended behavior (i.e.,
          consumers' willingness to pay
          more for safety features) may
          not necessarily translate into
          actual purchase behavior.
widely-cited publications such as Consumer Reports, Edmunds
publications and other reviews, it has a major impact on consumers
with regard to their purchase decision (Train & Winston, 2007; Betts
& Taran, 2004). For example, foreign automakers have developed
a  reputation for building highly reliable cars as compared  to
American carmakers (Woods, 2010; Dangol, Jitpaiboon & Walters,
2007; Train & Winston, 2006; Nichols  &  Fournier, 1999). This
has resulted in the declining market share of U.S. automakers who
have not gained the reputation for improved vehicle reliability as
compared to Japanese and European manufacturers (BuyingAdvice.
com, 2007; Train & Winston, 2006).

b. Safety

Consumers also continue say that they consider  safety to be one
of the most important considerations in buying a  new or  used
vehicle  (Consumer  Reports, 2010, 2008;  Capgemini,  2009a,
2008, 2007, 2006;  Deloitte, 2008; BuyingAdvice.com, 2007) and
research vehicle safety  performance ratings  before purchasing a
vehicle  (Harris, 2001).  In addition,  consumers say that they are
increasingly seeking safety features in their vehicles (Deloitte, 2010)
and are willing to pay more for a vehicle to obtain improved safety
levels (Harris, 2001). A U.S. national automotive consumer  study
of 2,160 respondents (who qualified as future new or used vehicle
buyers) in 2003 (TRW  Automotive, 2003) found that consumers
had progressively increased their rating of the importance of safety
features such as smart airbags, vehicle stability control and anti-
rollover systems  as  compared to  how they  rated safety systems
in 1998. Further, findings from a recent Deloitte survey (Deloitte,
2009) based on 991 U.S.-based Deloitte U.S. employees1 indicated
that U.S consumers are willing to pay a premium for safety features
and options such as skid control, telematics, safety devices (such as
back-up sensing systems, electro-chromatic  mirror/auto dimming
mirrors, energy-absorbing steering system, head restraints, padded
kneed bolster, etc.), and blind spot mirrors. The Deloitte study also
predicted that  the  current economic crisis  will  leave customers
to value vehicle safety  more than before and  seek vehicles with
enhanced safety features.

Consumers' increasing  demand for safety has  led manufacturers
to think and  develop safety-related  innovations  and features
(such as automatic crash notification, emergency assistance, and
remote vehicle  diagnostics) in their recent models (Deloitte, 2009;
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      Dannenberg & Burgard, 2007). Yet, due to cost, many vehicle safety
      improvements were not universally implemented until mandated by
      the U.S. National Highway Traffic Safety Administration (NHTSA).
      Most recently, NHTSA  has  introduced  a proposal to mandate
      Electronic Stability Control (ESC) on all passenger vehicles by the
      2012 model year (Consumer Reports, 2009). According to NHTSA
      (2010), ESC will reduce single-vehicle crashes of passenger cars by
      34% and single  vehicle crashes of sport utility vehicles (SUVs) by
      59%, with a much greater reduction of rollover crashes. NHTSA
      also estimated that ESC will save 5,300 to 9,600 lives and prevent
      156,000 to 238,000 injuries in all types of crashes annually once
      all light vehicles on the road are equipped with ESC.

      c. Vehicle price

      Vehicle price is  also  one of the top considerations that heavily
      impact  consumers' vehicle purchasing decisions  (Deloitte, 2009,
      2008; Capgemini,  2009a, 2008; Consumer Reports, 2009). In
      most cases, consumers want to buy a vehicle that they can afford
      without  compromising much  on other important  factors  such as
      reliability and safety. They also want a vehicle that fulfills their
      emotional and functional needs. For example, people are drawn
      to the BMW as  "the ultimate  driving machine," though they  may
      choose a model  with a small  engine and automatic transmission.
      While previous research has shown that consumers do not always
      seek the absolute lowest price while purchasing a vehicle (Root,
      2008), it is important to remember that the current economic crisis
      has impacted consumer behavior with regard to vehicle pricing.

      Vehicle price has  become even more important than before the onset of
      the global recession. Based on a  recent survey, Deloitte (2009) predicts
      a critical shift in auto consumers' purchase priorities as customers
      seek value in the form of cheaper and more efficient vehicles. While
      research  is yet to substantiate such a shift, recent studies have found
      another significant  shift with regard to vehicle price. Consumers are
      increasingly using the Internet to search for vehicle pricing information
      (Consumer Reports, 2009) and are wanting to buy new vehicles online
      as an alternative  to the traditional dealer model (Capgemini, 2009a).

      Research has also  shown that  the Internet has  lowered vehicle
      prices by informing consumers about dealer invoice prices  and
      thereby enabled  consumers to  negotiate lower prices (Zettelmeyer,
      Morton  & Silva-Risso, 2005).
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                                        d. Fuel economy

                                        Research has shown that fuel economy is one of the top factors that
                                        consumers report  influence which vehicle they choose (Deloitte,
                                        2009, 2010;  Capgemini, 2009a, 2008, 2007). It has become even
                                        more critical in the minds of U.S. consumers in their final vehicle
                                        purchase decisions because of the volatile changes in gasoline prices
                                        in 2007 and 2008  (Deloitte, 2008; Capgemini, 2008).

                                        Not  surprisingly,  concern  about  fuel  prices has  resulted  in
                                        consumers' increased interest in more fuel-efficient or alternative-
                                        fueled cars. Research studies by Capgemini (2009a,  2008,  2007)
                                        have found that more than environmental concerns, fuel economy
                                        is the leading driver behind consumers buying fuel-efficient  or
                                        alternative-fuel vehicles, with 83%  of respondents reporting fuel
                                        economy was important/very important in  2007. This figure rose
                                        to 90% in the 2008  and 2009 surveys. Studies further found that
                                        women, lower income households, younger consumers,  non-white
                                        purchasers, and buyers  in more densely populated areas attached
                                        more importance to  fuel efficiency in vehicles compared to others
                                        (Deloitte,2008; McCarthy & Tay,  1999).

                                        While fuel economy has been discussed in the past (especially during
                                        times of decreased fuel availability such as during the oil  crisis of
                                        1973), only a few studies have attempted to  explore it in depth.
                                        In one such study, based on  interviews  with 57 U.S. households,
                                        Turrentine & Kurrani (2006) attempted to determine how U.S.
                                        consumers think  and  behave  with respect to automotive fuel
                                        economy. They found that there is no systematic way in which auto
                                        consumers analyze fuel economy  in their automobile or  gasoline
                                        purchases. Most consumers  simply  look at the cost  of their last
                                        tank of gas and the unit price  of gas  on that day, and then forget it.
                                        As a result, they do not optimize their fuel economy decisions, and
                                        make large errors when asked to estimate their gasoline costs and
                                        savings over time.

                                        As the price of gasoline increases, consumers  feel the  impact on
                                        the operating cost of their vehicle and look for vehicles that meet
                                        higher fuel  efficiency  standards. The more  the  consumers  are
                                        concerned about fuel efficiency, the  more they search for  vehicles
                                        that meet their expected fuel economy expectations (McCarthy &
                                        Tay, 1999).
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      In addition, there is  a  body of research that uses vehicle choice
      modeling to help determine the role of fuel economy in consumer
      vehicle purchasing decisions. In Helfand and Wolverton's  2009
      review of this research, they determined that while this modeling
      is a valuable tool for regulators, there are wide variations  in
      how these studies estimate the  value that consumers place on
      fuel economy, that consumers tend to under-value the benefits  of
      greater fuel economy  and that consumer willingness to pay for fuel
      economy does not equal the expected value of the  fuel savings.
      They conclude that more research is needed on how  to model the
      role of fuel economy on consumer vehicle purchasing decisions
      (Helfand & Wolverton, 2009).

      e. Other vehicle related factors

      Apart  from the  above discussed factors, studies have documented
      other factors that influence consumers' vehicle purchase decisions.

      In their 2007 survey, based on 2,600 consumers across  five countries
      (United  States  China,  France, Germany, and United  Kingdom),
      Capgemini documented the following factors as being very important
      to consumers in their  vehicle purchase decisions. Ranked in order  of
      stated  importance: reliability of brand, safety, price of vehicle, fuel
      economy, quality of interior/style, after-sales  service, brand name  of
      vehicle, products and  services, extra options at no extra cost, vehicle
      availability, sales/delivery date, trade-in value, environmental factors,
      product/feature options, ability to research information on Internet,
      0% or low financing, additional warranty coverage/service credit, and
      cash-back incentives. As a follow-up, Capgemini conducted surveys
      in 2008 (with 3,100 consumers across eight countries- United States,
      Brazil, China, France,  Germany, India, Russia, and United Kingdom)
      and 2009 (with 3,000 consumers across the same eight countries) with
      similar results, although there were some minor changes in the  order
      in which these factors  were rated by respondents. A few novel factors
      did emerge as important in these two  surveys, including 'Hybrid  or
      other alternative-fuel  cars' (in the 2008  survey as well as the  2009
      survey), treatment by the manufacturer during my previous ownership
      cycle (in the 2009 survey) and treatment by the dealer during my
      previous ownership cycle (in the 2009 survey). The 2008 and  2009
      surveys revealed that consumers in developing markets (Brazil, China,
      India, and Russia) were more likely than consumers in mature markets
      (France, Germany, United States, and United Kingdom) to rate factors
      such as  additional warranty  coverage, cash-back  incentives, and
      product feature options as important factors in choosing a vehicle.
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                                         In their 2008  Generation Y study, (based  on a random sample
                                         survey of 1,006 people between the ages of 17 and 28), Deloitte
                                         reported  the following  factors  to be  the most important  in
                                         vehicle purchase decisions (in order ranked most important): gas
                                         mileage, affordability,  performance, leg  room, exterior  styling,
                                         low emissions, quiet interior, storage, interior look, 'company is
                                         a good corporate citizen', technology, intelligent settings, wheels,
                                         horsepower, environment-friendly  factory,  manual transmission,
                                         and latest model on the market.

                                         As a  follow-up  to  their 2008 survey, Deloitte (Deloitte, 2010)
                                         conducted  another  survey (based  on a  similar random sample
                                         survey of 1,100 people between the ages of 18 and 30 years). This
                                         survey found the following factors to be the top factors that were
                                         critical to respondents' vehicle purchase decisions (in order ranked
                                         most frequently): gas mileage, affordability, exterior styling, interior
                                         room, power locks and windows, air conditioning/heat, safety, CD
                                         player, reliability, and automatic transmission.

                                         2. The Role of Demographics in Vehicle Purchasing

                                         Vehicle purchasing decisions are influenced by consumers' specific
                                         needs,  situations and  demographics. Those demographics  can
                                         include age, gender, income, education level, and household size.
                                         This section presents three examples of how these factors might
                                         affect vehicle purchases. While they may not be indicative of how
                                         the overall population makes vehicle purchasing decisions, they do
                                         show how demographics can influence people's decisions.

                                         a. Demographics and vehicle type

                                         One large study (Choo & Mokhtarian, 2002), based on a randomly
                                         selected mail survey of 1,904 residents in three neighborhoods in
                                         the San Francisco area, provides some interesting insights into what
                                         types of consumers drive what types of vehicles. The neighborhoods
                                         covered by this survey were both urban and suburban and included
                                         a variety  of ages, income levels, and household sizes. The  survey
                                         specifically asked individuals about the vehicle they primarily drive.

                                         It found that with all other things being equal, the more a vehicle
                                         costs, the less likely it is to be purchased. It also found that higher
                                         income families  and individuals are more likely  to drive more
                                         expensive vehicles such as luxury cars and SUVs. In addition, the
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      more members there are in a particular household, the more likely
      that household will drive a larger car. In fact, the greater the number
      of people under the age of 19 in a household the more likely that
      household is to drive a minivan. Yet, there  were also some large
      households with lower incomes that drive small cars.

      In terms of age, younger drivers are more likely to drive a small car,
      a sports car, or an SUV. Drivers over the age of 65 are more likely to
      drive a larger luxury car than any other vehicle type. Homemakers
      and retired people tend to drive larger more comfortable cars like
      minivans or luxury cars. In general, pickups  and large cars tend to
      be  driven by less educated drivers, and females are  less likely  to
      drive pickups than any other vehicle type. Those that live in urban
      settings are more likely to drive small and luxury cars.

      b. What about Generation Y?

      Much recent research has been conducted by Deloitte on Generation
      Y consumers.  This  includes those individuals  born in the late
      1970s and the 1980s. People included in this generation have lived
      their entire lives during the environmental movement  and with
      availability of personal computers. Much of this research is trying
      to address how this particular age group views sustainability and
      gathers information when it comes to purchasing a vehicle.

      One study partially based on this data (Deloitte, 2010) found that
      Generation Y  says they consider the impact  of their  purchases on
      the environment when shopping for a vehicle. However, many stated
      that were not willing to pay a premium for a  more environmentally
      friendly  vehicle. Therefore,  to be successful, manufacturers must
      provide both an economic and environmental value for Generation
      Y consumers to adopt emerging sustainable technologies. Additional
      findings  based  on these survey results (Deloitte,  2008) found that
      respondents with lower personal or household income were more
      likely to rate gas mileage as  an extremely or  very important factor.
      Women attached more importance than men to gas mileage, storage
      capacity, and environmentally-friendly production, while  men were
      more focused than women on leg room and horsepower. In addition,
      those who had attended college were more likely to say that thinking
      about the  economic outlook  and the U.S.  relationship  with oil-
      producing countries had a strong impact on their purchase decisions.

      From Deloitte's 2009 survey (Deloitte, 2010), respondents indicated
      that the top three options or features that a vehicle must have and
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                                         are "critical to your vehicle purchase decision" were: gas mileage,
                                         affordability/price, and exterior styling/looks. The respondents also
                                         had some strong feelings about the end of the purchasing process
                                         and a majority stated that they would prefer to test drive a vehicle
                                         for 24 hours (69%), know the final price upfront (85%), purchase
                                         the vehicle without negotiating with a salesperson  (60%), and not
                                         have to haggle over the price of the car (62%).

                                         c. Needs of older drivers

                                         Based  on U.S.  Census data, in 2005 there were  50 million people
                                         aged 60 and above, and it's estimated that that amount will increase
                                         to 75 million by 2020. That translates into one in five people being
                                         age 60 and above by 2020. This group also has the greatest amount
                                         of disposable income of any age group. To appeal to  this group,
                                         products need to  be designed to address their  changing  physical
                                         needs (Deloitte, 2005). For example, when Ford realized that driver
                                         fatality rates were higher for drivers past 50, they decided to design
                                         cars that increase occupant safety for older drivers including crash
                                         avoidance, crashworthiness, and post crash assistance. To help them
                                         understand the physical limitations and experiences of older drivers
                                         they designed the Third Age Suit, which engineers can use to  evaluate
                                         mobility strength and vision limitations of someone  50 years and
                                         older. The suit adds bulk, restricts movement, and includes goggles
                                         that simulate cataracts. Based on their results, Ford is designing and
                                         building vehicles for  aging customers (Deloitte, 2005).

                                         3. The Role of Psychographics in Vehicle Purchasing

                                         In purchasing a vehicle, psychographics help explain how vehicles
                                         satisfy the emotional needs of the consumers, not just the practical
                                         needs. It's about what type of lifestyle you lead, what type of image
                                         you want to portray, how much and for what  reasons you travel
                                         in the vehicle, and how you view  the vehicle as an extension of
                                         yourself (Assaraf, 2008). This section presents  examples of how
                                         psychographics can influence vehicle purchasing decisions.
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      a. How travel attitude, personality, and lifestyle influence
      vehicle type in the San Francisco  Bay Area

      A study (Choo & Mokhtarian, 2002) based on a randomly selected
      mail survey of 1,904 residents in three neighborhoods in the San
      Francisco area specifically looked at how travel attitude, personality,
      lifestyle, and mobility factors influence individual vehicle choice.
      The results of the study were then used to develop a choice model
      based on these factors as well as typical demographic variables.

      The study presents six descriptive attitude clusters for the sampled
      area:

         •    Affluent professionals - affluent and mobile. This cluster
              eats out a lot, is not family and community oriented and
              usually doesn't have a large family. They seem to be more
              entertainment oriented than work oriented.

         •    Transit-using urbanites  - Young, urban, highly  educated
              and community oriented. This cluster is pro-environment
              and pro-high density (they live in urban areas and like it).

         •    Homemakers and older workers - Older suburanites who
              focus on family and home and don't particularly like travel.

         •    Travel  haters  -  This  work-oriented cluster doesn't  like
              travel, does as little travel as possible and wants to do less
              of it.

         •    Excess travelers - Young, urban,  highly  educated  and
              adventure seeking.  This  cluster is  pro-environment  and
              pro-high density, and pro-travel. Not  one  of the highest
              income groups, perhaps because they are prioritizing their
              adventure time over work time and status-seeking.

         •    Adventurous and car-oriented suburbanites  - Car-bound,
              excess travelers, oldest, organized,  status conscious,  and
              suburban.
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                                          In addition, the study presents eleven descriptive personality and
                                          lifestyle clusters including:

                                             •    New family  model - Young families, enjoy traveling for
                                                 fun, but not for work, family/community oriented, but not
                                                 settling down.

                                             •    Homebodies - Not particularly  social, don't really like to
                                                 travel, one of the more neutral  in attitudes toward travel
                                                 clusters compared to others.

                                             •    Mobile yuppies - Young, professional, highly educated,
                                                 travel lovers.

                                             •    Transit advocates  -  Highly educated,  environmentally
                                                 sensitive, transit oriented.

                                             •    Assistant   VPs  -  Suburban,  auto-oriented  (but  not
                                                 particularly travel loving), older, least educated, frustrated
                                                 (meaning they feel less in control  and less satisfied with
                                                 their lives).

                                             •    Status seeking  workaholics  -  Travel most (miles  and
                                                 frequency) for work, auto-bound, enjoy work travel. One
                                                 of the most extreme clusters in regard to attitudes toward
                                                 travel. Most  status seeking, workaholic and not calm.

                                             •    Suburban and stationary - Mostly older, suburban women,
                                                 calm, don't travel a lot.

                                             •    Older  and   independent  -   Older,   independent,
                                                 unencumbered (most strongly  NOT  family/community
                                                 oriented), entertainment focused.

                                             •    Middle-of-the-roaders - Most neutral cluster in regard to
                                                 travel attitudes, most strongly family/community oriented.

                                             •    Travel loving  transit  users  -  Highly educated  urban
                                                 women,  middle  income,  environmentally  sensitive, like
                                                 short distance travel by bus, strong excess travelers, highest
                                                 walking share of total miles traveled.
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         •    Frustrated loners -  Most extremely  frustrated (group
              with highest level of frustration with their lives), above
              average commutes, somewhat transit oriented  (Choo  &
              Mokhtarian, 2002).

      The study  analyzed vehicle  type in relation  to  these attitude,
      personality, and lifestyle clusters. All vehicle types, except the mid-
      sized car group, have distinct characteristics:

         •    Small car drivers are pro-environment, tend to live in high
              density areas, and do not have  a  strong  travel freedom
              attitude. They tend to be loners  and perceive themselves
              as traveling less in a personal vehicle than others. They are
              also less likely to enjoy personal  vehicle travel. They tend
              to be female, 40 or younger, have 4-year college degrees,
              and are in clerical or professional jobs. They live in single
              vehicle and  single adult  households. Higher proportion
              of  Transit-using Urbanites,  Excess  Travelers,  Transit
              Advocates, Travel Loving Users, and Frustrated Loners
              clusters.

         •    Compact car drivers have a weaker travel freedom attitude
              and travel less in their personal vehicles for long-distance
              trips. They tend to perceive themselves as traveling less  by
              personal vehicles than others. Like small car drivers, they
              have higher  proportions  of professional jobs, and single
              vehicle and  single adult  households. They have middle
              incomes.  Higher proportion of Affluent  Professionals,
              Transit Advocates, and Suburban and Stationary clusters.

         •    Mid-sized  car  drivers  have  no  distinct travel attitude,
              personality, lifestyle, mobility, or travel liking characteristics.
              Demographically they are  more  likely  to  be females
              or homemakers, and to  have higher incomes  or larger
              households. Higher proportion of  Affluent Professionals,
              Assistant VPs, and Middle-of-the-roaders clusters.

         •    Large  car drivers tend to not have pro-environmental  or
              pro-high density attitudes. They  tend to be males, older
              or retired, and  part-time employees. They also tend to  be
              less educated and have lower incomes. They have more
              than one vehicle, and tend to be older households. Higher
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                                                proportion of Homemakers and  Older Workers, Travel
                                                Haters, and Adventurous, Car-oriented Suburbanites, and
                                                higher than average proportions of Homebodies, Assistant
                                                VPs, Middle-of-the-roaders, and Frustrated Loners clusters.

                                                Luxury car drivers are more likely to be status seekers and
                                                to often travel long distances by plane. They are more likely
                                                to be  male and older or retired. They are highly educated
                                                and higher income people. They have more than one car
                                                and live in older adult households. Higher proportion of:
                                                Travel Haters, Excess Travelers, New Family Model, Status
                                                Seeking Workaholics, and Older and Independent clusters.

                                                Sports car drivers are more likely to be adventure seekers.
                                                They  are more  likely than average to have 4-year college
                                                degrees and lower incomes. They live  in two-worker or
                                                younger adult households. Higher proportion of: Excess
                                                Travelers, New Family model, Mobile  Yuppies, Status
                                                Seeking Workaholics, and Frustrated Loners clusters.

                                                Minivan/Van   drivers have  a  weak  pro-high  density
                                                attitude. They perceive that they travel more by personal
                                                vehicle than do others. They enjoy traveling by personal
                                                vehicle more  than average. They tend to be  females and
                                                homemakers  between the ages  of 41  and 64. Both higher
                                                and lower household incomes are represented. They have
                                                more than one vehicle and larger households with children.
                                                Overrepresented  in  Homemakers and Older Workers,
                                                and Adventurous, Car-oriented Suburbanites; and higher
                                                than average  proportions of Homebodies, Suburban and
                                                Stationary, Middle-of-the-roaders,  and  Travel  Loving
                                                Transit Users  clusters.

                                                Pickup drivers  have  a  weaker pro-high density  attitude.
                                                Their short-distance  travel is higher than average, while
                                                long-distance travel  by airplane is lower. They tend to
                                                have  lower education levels, are  full-time employees in
                                                service-related jobs, have middle incomes and two-vehicle
                                                households. Higher  proportions  of:  Homemakers  and
                                                Older  Workers, Adventurous, Car-oriented Suburbanites,
                                                New Family Model, and Assistant VPs clusters.
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         •    SUV drivers tend to have a strong travel freedom attitude
              and enjoy traveling  short-distances  by personal vehicle.
              They  are likely to be age 40  or  younger and are highly
              educated or  high  income people. They have a higher than
              average proportion of larger  households with  children.
              Higher   proportions   of:   Adventurous,  Car-oriented
              Suburbanites, New Family Model, Mobile Yuppies, and
              Older and Independent clusters.

      Based on these results, the authors concluded that travel attitudes,
      personality, lifestyle, and mobility  factors do affect individual
      vehicle   type  choices.  In regards  to attitudes  that  are  pro-
      environment,  those  clusters that are  pro-environment  are those
      that use transit and tend to drive smaller cars. They tend to be more
      affluent  and more highly educated  and community oriented. The
      authors' conclusions are  based on based on a randomly selected
      mail survey of 1,904 residents in three neighborhoods in the San
      Francisco area and while they provide interesting insights into how
      psychographics can  influence  which vehicles consumers chose to
      purchase and  drive,  they are not representative of the overall U.S.
      population. (Choo & Mokhtarian, 2002).

      b. Views of Generation Y

      Deloitte's 2008 survey of Generation Y,  found that a majority of the
      respondents felt that a vehicle reflects  a person's  style, status and
      values, but that when considering the  purchase of a new car, the
      underlying qualifications were always safety and comfort. Specifically,
      the study found that "roughly two-thirds of the respondents strongly
      or somewhat agreed that a vehicle reflects a person's taste and status
      and they consider these factors when making a purchase decision."
      This conclusion was based the results  of those that somewhat or
      strongly agreed to the following statements:

         •    A vehicle says a  lot about a person's taste/sense of  style
              (82%)

         •    When  buying  a  vehicle, I consider how it  impacts my
              personal pursuit  such as jobs, relationships, and hobbies
              (77%)

         •    When buying a vehicle, I consider how it reflects who I am
              as a person (67%)
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                                            •    A vehicle says a lot about a person's status in society (i.e.
                                                 importance or wealth) (65%)

                                            •    A vehicle says a lot about a person's values (57%)

                                         When considering purchasing a vehicle, this group responded that
                                         the most important factors are:  gas mileage (92%), affordability
                                         (91%), performance (90%), leg room (65 %), exterior styling (65 %),
                                         and low emissions (58%). However, for this group environmental
                                         friendliness plays an increasing role in their perception of what is
                                         'cool' in terms of what they drive. The respondents gave as their
                                         top four reasons that a vehicle is considered  'cool' to be: its exterior
                                         styling (44%), affordability (40%), being environmentally friendly
                                         (35%),  and  comfort  (33%). Based on these  results,  Deloitte
                                         concluded that  for  Generation Y,  environmental friendliness  is
                                         playing an increasing role in their perception of cool. Additionally,
                                         when asked what broader issues they considered when purchasing
                                         a new  vehicle, 62%  responded they considered  the environment,
                                         and 80% of that 62% also responded that they were willing to pay
                                         more for an environmental friendly vehicle  (Deloitte, 2008).

                                         c. Vehicle choice is  often based  on emotions

                                         Based on  the  results of their 2006 and 2007  surveys, Capgemini
                                         concluded that consumers are increasingly driven  by their hearts  as
                                         well as their heads. They found that although rational factors such as
                                         safety, price, and reliability play a  role in consumer decisions, these
                                         factors are often overlooked by other  more emotional factors. For
                                         example, when respondents were asked why they had or were going
                                         to switch vehicles, "fits my needs," "wanted  to try something new,"
                                         and "enjoyment of the vehicle" scored higher than  fuel economy and
                                         safety. To be successful, manufacturers and dealers have to appeal to
                                         both rational  and emotional aspects of vehicle buying.

                                         People buy vehicles to make a statement about their personality and
                                         become emotionally attached to their vehicles. In  addition, vehicles
                                         can say a great deal about the people who drive them. For example,
                                         the main  reason that consumers reported buying one leading
                                         hybrid vehicle was not because of fuel economy or low emissions,
                                         but because they saw the car  as  making 'a statement about  me.'
                                         This was especially the case since this particular vehicle was only
                                         available as a hybrid and so driving it made a clear statement about
                                         the driver's priorities. Also important to consumer decision-making
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      are the influences of social  norms  and the behaviors of those
      around us. What others around us drive may influence what we
      choose to drive and what we view as acceptable to drive (European
      Commission, 2009).

      4. Fuel-Efficient/Low Emission Vehicle Options

      Consumer  demand  for  green  products is growing, and  the
      automobile industry is no exception. There is growing awareness of
      fuel-efficient and alternative fuel vehicles, and consumer research
      indicates a growing interest in purchasing more  fuel efficient and
      low emissions "greener" vehicles. In a 2009 study  of  consumers
      in eight countries (United States, Brazil, China, France, Germany,
      India, Russia, and United Kingdom) 41% of respondents reported
      currently owning a fuel-efficient or alternative-fuel vehicle, up from
      36% in the prior year's survey. Another 30% of consumers plan to
      buy a fuel-efficient or alternative fuel vehicle (Capgemini, 2009a).

      The main technologies available for green vehicles include alternative
      fuels (which include compressed natural gas, second-generation bio-
      fuels, and hydrogen), advanced internal-combustion-engine (ICE)
      technologies, and fully  electric vehicles (The Boston  Consulting
      Group, 2009). One view is that hybrids are serving as a transition
      technology that will  aid in the switch to electric  vehicles and that
      while hybrids will still outnumber electric vehicles in the year 2020,
      trends  point to  a fully electric long-term future  (Deloitte, 2009).
      Others see more promise in the development of alternative power-
      train technologies such as advanced internal combustion engine
      technologies  (ICE) and electric  as  more promising technologies
      than alternative fuels due to the significant investment and further
      technological progress needed  to  achieve substantial  reductions
      in alternative fuel CO2 emissions (The Boston Consulting Group,
      2009). However, there is some indication that natural gas could
      become an important part of the domestic fuel supply, especially
      for fleets (Deloitte, 2009).

      a. Reasons for buying fuel  efficient/low emission 'green' vehicles

      Despite increasing demand for greener purchase alternatives and
      growing awareness of the environmental impact of automobile use,
      consumer research shows that fuel savings is the primary  factor
      influencing decisions to purchase green vehicle with concern about
      environmental impacts showing up as a secondary factor (Ernst and
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                                         Young, 2010; Capgemini,  2009a; Capgemini, 2008;  Capgemini,
                                         2007). This finding is echoed in focus group research conducted in
                                         Knoxville and Los Angeles with consumers who were in the market
                                         for a new or used vehicle. The focus group participants indicated
                                         that with the  exception of fuel economy, environmental concerns
                                         were not a factor in participants' decision-making process when
                                         purchasing a vehicle, and those who do consider fuel economy do
                                         so primarily for economic rather than environmental reasons (Nye,
                                         Greene, Hopson, Saulsbury, 2003).

                                         There is some evidence that concern for environmental impacts has
                                         a growing influence  on vehicle purchase decisions. In Capgemini's
                                         2009 survey of potential car buyers, 20% of U.S. respondents said
                                         that the environment  was their  primary reason for  choosing  a
                                         fuel-efficient or alternative-fuel vehicle, up from 9%  the previous
                                         year (Capgemini, 2009). However, research on the electric vehicle
                                         market noted that the rising price of fuel is the main factor driving
                                         interest in electric vehicles, and while concerns about energy security
                                         and climate change  are growing, they are not yet contributing to
                                         purchase behavior (Ernst and Young, 2010).

                                         The results of  Capgemini's 2007 survey indicated that  older
                                         consumers are more  likely than the younger consumers (defined as
                                         consumers 18-34 years of age) to identify fuel economy as a primary
                                         factor for purchasing a fuel-efficient or alternative-fuel vehicle. In
                                         addition, men are more likely than women to place  an emphasis
                                         on fuel economy, while a higher proportion of women identified
                                         environmental impact as the primary reason for purchasing a green
                                         vehicle (Capgemini, 2007).

                                         A Michigan State University study based  on Deloitte's Generation
                                         Y survey data similarly found an emphasis on fuel economy. It
                                         found that miles per gallon, price and brand were determined to
                                         be the most important product attributes to the Gen Y consumer,
                                         with environmental  concerns  taking  a secondary role (Deloitte/
                                         MSU, 2010).

                                         A 2008 Deloitte survey analyzing Generation Y's relationship with
                                         the automobile  demonstrated that  while  gas mileage, price, and
                                         performance were rated the most important factors in the  decision
                                         process,  low  emissions and production  in  an environmentally
                                         friendly factory  were also rated as important factors. In addition,
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      Generation Y consumers rated environmental-friendliness as  one
      of the top  three reasons  that a vehicle is cool, along with exterior
      styling and affordability (Deloitte, 2008). Deloitte's 2009 follow
      up  survey  indicated that 73%  of respondents  agree  that  the
      environment is an extremely important factor when purchasing a
      vehicle, while nearly half of respondents agree that the types of
      vehicles they drive directly affect the environment. Additionally,
      nearly 53 % of respondents would pay more for an environmentally-
      friendly vehicle. Nearly 65% would pay more for a vehicle that is
      better for the environment and saves energy costs. But 45% would
      NOT pay  more for  a vehicle that did not save money on energy
      costs even  if it was better for the environment (Deloitte, 2010). In
      short, a vehicle must provide both environmental and  economical
      advantage  to the Gen Y consumer.

      Other studies support the idea that although there is a growing
      interest in  green vehicles, cost is still an important issue. A 2009
      survey of  3,000 car buyers in  Brazil, China, France, Germany,
      India, Russia,  the  United  Kingdom and  United  States found
      that consumers  show some willingness to pay for improved  fuel
      efficiency:  70%  of respondents said they would pay no more than
      10% extra for a fuel-efficient or alternative-fuel vehicle, and 20%
      were not willing to  pay any premium at all (Capgemini, 2009a).
      Another study found that while a majority of U.S. drivers (52%)
      claim  a preference for alternative fuel vehicles, only 28% would
      be willing  to pay a  premium for  such vehicles. Most customers,
      it seems, do not feel that the savings at the pump are sufficient
      to offset the higher price of today's  alternatively fueled  vehicle
      (Deloitte, 2010).

      One study estimates that a 10% core of possible electric vehicle
      early adopters has formed (Ernst and Young, 2010). A 2004 report
      on the then-emerging gasoline/electric hybrid estimated the natural
      market for gasoline/electric hybrids to be about 15%  of  the U.S.
      population, further noting that the key to sustainability of the green
      vehicle market is the ability to capture the more than "30 percent
      of the U.S. consumer market that is friendly to green products, but
      unwilling to give up much to embrace it" (Booz & Company Inc.,
      2004). In this sense, it appears that while there is increasing interest
      in going green, green vehicles, especially electric vehicles, are  still
      considered to be a niche market.
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                                         b.  Barriers to increasing market share of green vehicles

                                         While much of the literature focuses on the commercial viability
                                         of  electric vehicles, and indicates that electric vehicles will feature
                                         prominently in the long-term future of the green vehicle industry,
                                         there are numerous barriers to  their widespread adoption. These
                                         barriers include lack of public awareness, price, need for specialized
                                         infrastructure, battery performance, and doubts  concerning  the
                                         electric car's ecological  value.  Despite growing interest in green
                                         vehicles, for there to be  widespread adoption, green vehicles need
                                         to  be  seen as a "no  compromise"  alternative, in  that their price
                                         and performance is at least on par with the traditional or "brown"
                                         vehicles available on the market (Booz & Company Inc., 2004).

                                         Public awareness of emerging powertrain technologies is weak in the
                                         United States. Data from the Deloitte' Generation Y surveys revealed
                                         that on average, Generation Y  consumers do not feel  as though
                                         they are experts with respect to sustainable vehicle technology, and
                                         this absence of confidence may represent a  significant  barrier to
                                         adoption (Deloitte/MSU, 2010). Thirty percent of U.S. consumers
                                         are still unaware of hybrid/electric technologies even though those
                                         vehicles have been on the market for more than ten years. Further,
                                         few consumers are willing to embrace new technology  prior to it
                                         being well established in the market (Ernst and Young, 2010).

                                         A report  by Price Waterhouse Coopers estimates electric vehicles
                                         to  cost approximately $7,000 - $20,000 more than a traditional
                                         vehicle depending on the vehicle  under consideration, with much of
                                         the premium attributed to battery cost (Price Waterhouse Cooper,
                                         2009). Consumer research reveals some willingness to pay a higher
                                         upfront cost for an electric vehicle, if lower vehicle operating costs
                                         offset  the  higher upfront cost over  time (The Boston Consulting
                                         Group, 2009). Another study found that consumers would accept
                                         a three-year amortization period for the price  differential,  but
                                         noted  that under current cost conditions, electric  vehicles do  not
                                         come close to meeting this time horizon (Price Waterhouse Cooper,
                                         2009). Other studies  show that consumers  would be  willing to
                                         pay a  premium of 10%  for enhanced fuel efficiency  (Capgemini,
                                         2009a) and a 14% premium for  an electric vehicle (Wyman, 2009).
                                         Some experts conclude that a combination of high fuel prices and
                                         government purchase incentives is  needed for electric vehicles to
                                         make  financial sense to the consumer  (The Boston Consulting
                                         Group, 2009, 2010; Price Waterhouse Cooper, 2009; Capgemini,
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      2009b). Analysis by the Boston Consulting Group suggests that
      in order for U.S.  electric car purchasers to break even in three
      years, one of three conditions would need to be met, alone or in
      combination: an oil price increase from $100 to $300 per  barrel;
      a 200% increase  in gasoline prices caused by higher oil  prices,
      higher taxes, or both; or $7,500 in government incentives per car
      purchased (Boston Consulting Group, 2010).

      Battery performance is another key barrier to widespread adoption
      of the electric  vehicle. The current driving range of an electric
      vehicle is between  160 to 190 miles on a single charge, with battery
      recharge time of four to eight hours (The Boston Consulting Group,
      2009,2010). This insufficient driving range is viewed as a barrier to
      widespread commercial acceptance. A 2010 nationwide survey of
      1,000 respondents of driving age (Ernst and Young, 2010) revealed
      that 33% of respondents have daily driving range  expectations of
      more than 200 miles. Interestingly, the  Ernst and Young  survey
      revealed that respondents' driving range expectation is much higher
      than  their actual  daily miles  driven. While 72%  of  respondents
      drive less  than  30  miles per weekday, 87% of respondents  expect
      electric vehicles to have a daily driving  range of  50 - 200 miles
      (Ernst and Young, 2010). One study concludes  that  electric cars
      need  to achieve a  driving range of approximately  312 miles on a
      single charge (The Boston Consulting Group, 2010 - batteries for
      electric cars). Further,  electric cars require a network of charging
      stations, which will be costly to  build. Without the  necessary
      infrastructure, drivers of electric vehicles  will be restricted to short
      commutes (PriceWaterhouseCoopers, 2009a, 2009b;  The Boston
      Consulting Group, 2009, 2010; Capgemini, 2009b). However, the
      2010 nationwide  consumer survey by Ernst and Young revealed
      some willingness to pay for the infrastructure necessary to support
      electric cars, with 34% of respondents saying that  they are willing
      to help pay for charging stations to be installed in their communities
      (Ernst and Young, 2010).

      Finally, there is some indication of doubt as to whether electric vehicles
      are truly "clean vehicles" because in some cases, the electricity used
      to power electric vehicles is generated by high polluting sources such
      as coal power plants (PriceWaterhouseCoopers, 2009; Capgemini,
      2009b). Another  potential area of concern is the environmental
      impact of recycling used batteries (Capgemini, 2009b).
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                                         c. Vehicle choice among green vehicles

                                         Gas/electric hybrid vehicles such as the Toyota Prius are the primary
                                         type of advanced  technology vehicles that consumers  currently
                                         own or plan to buy. This is likely  due to the fact that these cars
                                         have been on the market the longest, and they run on regular motor
                                         fuels and leverage existing infrastructure (Capgemini, 2009b; Booz
                                         & Company Inc., 2004). Further, gas-electric hybrids  available
                                         on the market today are competitive in terms of style, as some
                                         manufacturers provide hybrid versions  of traditional models. In
                                         addition, initial data indicate that hybrid reliability is on par with
                                         all-gasoline traditional models, and that the cost and resale value
                                         of hybrids is typically competitive  with that of traditional models
                                         (Booz & Company Inc., 2004).

                                         In Deloitte's 2009 survey of Generation Y consumers, respondents
                                         were  asked  to  indicate  which type of  sustainable  technologies
                                         would favorably impact  their purchase. Standard gasoline engine
                                         with high fuel efficiency and hybrid gas/electric engines were citied
                                         most  frequently (23%  and  22%  respectively). Alternative fuel
                                         vehicles (ethanol/gasoline engines  and clean diesel engines) and
                                         electric vehicles  were each selected by 12-13%  of respondents.
                                         Slightly less than 7% said that  sustainable technology does not
                                         affect their purchase decision in some way (Deloitte, 2010).

                                         Consumer education is lacking with regard to available green vehicle
                                         technologies. It seems that consumers do not have the information
                                         needed to really understand the differences between vehicles to be
                                         able to make comparisons across brands and types of technology
                                         (Deloitte/MSU, 2010). Further, as described in the previous section,
                                         there are several drawbacks to the electric vehicles available on the
                                         market today that  limit them from becoming a realistic choice for
                                         more than a dedicated group  of early adopters.

                                         5. Importance of Interactions with Customers

                                         As the global auto industry  struggles to deal  with the  economic
                                         downturn and American carmakers try to recuperate from a year
                                         full of bad news,  maintaining a strong customer focus  becomes
                                         essential for survival and good performance. As Accenture (2009)
                                         points out, the key to negotiating the changes in the present market,
                                         building customer  loyalty and ensuring growth in the long-term,
                                         involves understanding the current customer base, experimenting
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      and  expanding  to  newer  customers,  developing  trust-based
      relationships with customers, and managing customer interactions
      and transactions efficiently.

      Further, the role that manufacturers and dealers play in promoting
      fuel economy among customers is pivotal. Recent pre-group online
      surveys conducted by EPA in collaboration with PRR found that
      over  of two-thirds of  the  respondents looked at manufacturers'
      websites to search for  information  on fuel economy. The  surveys
      also  showed that close to one-third (30%)  searched for fuel
      economy information at automobile dealerships.

      a. Customer satisfaction and loyalty

      The previous sections in this literature review explored the vehicle
      buying process and the various vehicle-related demographic and
      psychographic factors that impact current and potential customer
      vehicle choice. This  section  explores the  experiential  factors
      that influence consumer loyalty to  the dealer and/or brand, their
      satisfaction with the purchase, and their behavior after purchase.

      With  the  world  shrinking into a global village,  the Internet
      becoming a passport to almost everywhere, and the offering of
      an  assorted range of competing vehicles (models and makes) to
      choose from, consumers are becoming increasingly  diverse with
      specialized needs  and are more aware than ever of what  vehicle
      they want to buy even before they enter the showroom (Capgemini,
      2006a). The customer-dealer relationship  has  undergone  drastic
      transformations in  recent  times. With customers having access
      to information about the  vehicles  under  consideration, the new
      customer-dealer relationship model is more like  an interaction
      between two equal parties. As  Capgemini, (2006b) has pointed
      out, the final vehicle purchase decision is a result of a trust-based
      relationship where the  dealer is not "selling" but instead enabling
      the customer to buy.

      During the purchasing process, the customer-dealer relationship
      starts  about two weeks  before the final purchase  when  the
      customer  visits the showroom (Capgemini, 2006b). During this
      entire customer-dealer  interaction,  the customer goes through
      various emotions; how well the dealer manages these emotions can
      impact the sale, the price a customer pays, and the reputation of
      the manufacturer. In its 2008 study, J.D. Power found that auto
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                                         consumers attach a great amount of importance to the quality of
                                         interaction with the dealer and are willing to pay a slightly higher
                                         price to the dealer who has highly professional staff and provides
                                         high-quality customer  experience and services. Further, the study
                                         stated  that consumers also  read online reviews  and  rankings
                                         about other shoppers'  experiences at the dealership and use these
                                         to determine what kind of experience they're going to  have at a
                                         dealership (Root, 2008).

                                         In addition to its direct implications (whether or not the customer
                                         buys the vehicle from that dealer), the customer-dealer relationship
                                         has far reaching impacts on customer satisfaction and their loyalty
                                         to a brand and/or manufacturer, which in turn affect brand  and/
                                         or manufacturer reputation  (Car  Internet Research Program  &
                                         Capgemini, 2008). As  Oracle (2003) explained, a poor  dealer
                                         experience can have  a significant  negative  impact  on  brand
                                         perception.  Conversely, those who have a  good experience and
                                         feel satisfied are  more likely to purchase the  same make  and/or
                                         brand from the same dealer in the future. In practice, this requires
                                         that dealers and manufacturers learn to understand the consumer's
                                         universe, the tools at their disposal, and the states of mind they are
                                         in when deciding to buy a vehicle (Capgemini,  2006b).

                                         While previous analyses by Oracle (2003) and Capgemini (2006a,
                                         2008) indicated that the automotive industry had been facing declining
                                         customer loyalty over time, a slightly more recent survey by Capgemini
                                         (2009a) found  an increase in the number of consumers who  have
                                         become brand and dealer loyal and that consumer satisfaction  with
                                         the buying process has grown in the last year. The study attributed
                                         this increase to "contraction in the dealer business and improvements
                                         in quality and service resulting from investments  in customer lifecycle
                                         management  systems"  (Capgemini, 2009a). In  addition, the study
                                         pointed out that  consumers  are  more loyal  to the brand than  to
                                         the dealer. A similar finding was reported in the Dohring Company
                                         National Automotive Consumer study (1996). The study was based
                                         on 1,253 respondents who were surveyed across the United States and
                                         found that more customers are likely to be loyal  to a certain make of
                                         vehicle than to a  dealership and  that  customers primarily associate
                                         their purchases with the automotive manufacturer  rather than the
                                         particular dealer that they purchase from.
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          .  Consumer  Education
     Campaigns  Regarding
     Fuel   Efficient  Vehicles
    A review of literature on the results of education campaigns
    used to encourage consumers to make more fuel efficient vehicle
    choices revealed the following. However, it should be noted that
    the literature review yielded little academic research evaluating the
    effectiveness of these educational campaigns.


    A. Evaluation of Existing Consumer

    Education Campaigns

    Some researchers question the effectiveness of focusing on fuel
    economy as a means to change consumer purchase decisions, instead
    supporting a focus on fuel efficiency and technological advances.
    A 2000 study (Plotkin, 2000) states that  education programs
    on fuel economy have limited value when fuel prices are low,
    suggesting that it may be more effective for government-sponsored
    educational  programs to encourage consumers to consider green
    technologies. Kurani and Turrentine (2004) concluded that current
    strategies of drawing attention to annual fuel cost savings could
    disappoint buyers, noting that the importance of fuel economy
    comes and goes in the minds of consumers as the price of gasoline
    or household income changes, or as individual drivers go through
    lifestyle changes, such as needing to drive more. The authors
    conclude that educational efforts that focus on fuel efficiency and
    technical advances may be more effective, that consumers "might
    value fuel economy more highly if it were more like shiny paint or
    a bold body style—an attribute with some emotional punch."
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                                        A 2008 graduate thesis (Bacani, 2008) looked at the effectiveness
                                        of Maine's Clean Car Program  (described  below)  in improving
                                        the likelihood of ownership of vehicles with higher environmental
                                        performance. Bacani concluded that the campaign did not appear
                                        to be  affecting  consumer behavior with regard  to purchase  of
                                        environmentally-friendly vehicles, and that Maine consumers are
                                        buying more  environmentally-friendly vehicles simply  because
                                        there are more  environmentally-friendly models available in the
                                        market. However, the study did not look at price, indicating a need
                                        for further research  to verify results. The author suggests public
                                        education on  the importance of the air pollution score  and the
                                        greenhouse gas scores would be helpful when purchasing a vehicle.

                                        B.  Overview of  Existing Social Campaigns

                                        Influencing Perceptions About Vehicles

                                        Existing campaigns include:

                                          •    www.fueleconomy.gov

                                               Website  provides  fuel  economy estimates, energy and
                                               environmental impact ratings, fuel  savings tips, and  links
                                               to other information such as links to fuel prices and crash
                                               ratings.  The  site also provides a side-by-side comparison
                                               tool to help  consumers choose a fuel efficient vehicle to
                                               meet their needs. The website is maintained jointly by the
                                               U.S. Department of Energy's Office of Energy Efficiency and
                                               Renewable Energy and the U.S. Environmental Protection
                                               Agency to help fulfill DOE and EPA's responsibility under
                                               the Energy Policy Act (EPAct) of 1992 to provide accurate
                                               MPG information to consumers.

                                          •    It All Adds Up to Cleaner Air, Federal Highway Administration,
                                               www.italladdsup.gov

                                               It All  Adds Up to Cleaner Air is a  public  education and
                                               partnership-building initiative developed by several federal
                                               agencies including the Federal  Highway Administration,
                                               Federal  Transit Administration, and U.S. Environmental
                                               Protection Agency for the purpose of informing the public
                                               about the impact of their transportation choices on traffic
                                               congestion and air quality. The campaign was developed
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              to help state and  local governments meet mobility and
              clean air goals of Transportation Equity Act for the 21st
              Century and the Clean Air Act Amendments. The campaign
              provides  state and local agencies free commercial-quality
              promotional  materials  that   emphasize  four  actions
              people can take to improve air quality and reduce traffic
              congestion:  combining  errands into a  single car  trip,
              keeping cars properly maintained, refueling in the evening
              without topping off the gas tank, and choosing alternate
              modes  of transportation, such as carpooling, mass transit,
              biking, or walking.

         •    Planet Pollute,
              www.planetpolluto.com/indexl.html

              Planet  Pollute is an  educational game developed by the
              Sacramento  Metropolitan  Air Quality  Management
              District that teaches children about  the causes  and effects
              of pollution.

         •    Cleaner Cars for Maine Program,
              www.maine.gov/dep/air/lev4me/index.html

              The Cleaner Cars for Maine Program is designed to help
              consumers choose low-emission and fuel  efficient cars.
              Program  strategies include providing a sticker  identifying
              green  vehicles and consumer  education in  the  form of a
              website,  brochures, newspaper and radio  advertising to
              educate consumers about Maine's air quality, green vehicle
              shopping tips, and maintenance tips.

         •    Pew Campaign for Fuel Efficiency,
              www.pewfuelefficiency.org/index.html

              The Pew Campaign for Fuel Efficiency is a public education
              campaign advocating greater fuel efficiency standards for
              the U.S. car and light truck fleets. The Campaign works
              with a diversity of interests — business, faith, consumer,
              environmental, safety and national  security groups  — to
              educate the public  and inform the national policy debate.
              The campaign  focuses  on six reasons to increase fuel
              efficiency, including  security,  savings, power (the ability
              to increase fuel efficiency without sacrificing acceleration
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                                                and other measures  of performance), jobs,  safety (the
                                                ability to make cars more fuel efficient without sacrificing
                                                vehicle size or safety), and lower CO2 emissions. Strategies
                                                include extensive media outreach, national and local print
                                                and radio advertisements, and public opinion research.

                                                Drive Smarter Challenge Campaign,
                                                http://drivesmarterchallenge.org/

                                                The Drive Smarter Challenge Campaign is a program of the
                                                Alliance to Save Energy. The campaign provides a website
                                                that encourages people  to  learn about  money-saving
                                                driving and vehicle maintenance  tips and take the Drive
                                                Smarter  Challenge by choosing from six  fuel efficiency
                                                actions. The  site provides a calculator that computes an
                                                individual's savings and keeps a running tally of savings
                                                by  everyone who has taken the challenge and  encourages
                                                people to get friends  and family to take the challenge by
                                                offering discounts on  fuel-efficient products.

                                                DriveClean.ca.gov,
                                                www.driveclean.ca.gov/

                                                DriveClean.ca.gov is an online buying guide for clean and
                                                efficient  vehicles. The website, run by the  California  Air
                                                Resources Board, allows consumers to compare pollution
                                                levels  between  vehicles and  provides  information and
                                                resources to learn about advanced vehicle technologies and
                                                fuels. The program provides an Environmental Performance
                                                Label, a label required on all  new cars sold in California
                                                manufactured after January 1, 2009. The  label provides
                                                a global warming score, which ranks each vehicle's CO2-
                                                equivalent value on a scale of  1-10 (10 being the cleanest)
                                                relative to all other vehicles, and a smog score, which tells
                                                the consumer how much a vehicle pollutes. Similar to the
                                                global warming score, the smog score uses a scale of 1-10
                                                with 10 being the cleanest.
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         •    Don't Be Fueled! Mothers for Clean and Safe Vehicles,
              www.dontbefueled.org/index.shtml

              Don't Be Fueled!  Is  a  grassroots campaign initiated by
              parents concerned about the safety and  environmental
              soundness of the existing fleet of vehicles. The campaign
              has  established  a  website that serves  as  an information
              clearinghouse and organizes events.

         •    Freedom From Oil,
              http://gx.freedomfromoil.org/

              The Freedom from Oil Campaign is a joint effort of the
              Rainforest Action Network, Global  Exchange, and the
              Ruckus Society. The campaign is working to end America's
              oil  dependence,  reduce oil  related conflicts, and  stop
              global climate  change  by convincing  the auto industry
              to  dramatically  improve fuel efficiency  and eliminate
              vehicle greenhouse gas emissions. The campaign focuses
              on supporting  grassroots activists  by offering materials
              and information,  skills training,  local organizing, group
              development, and  other general support.
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      IV.   Summary  of   Results
     and  Conclusions
     The purpose of this literature  review was to  summarize  the
     information on  the vehicle buying cycle, the information sources
     used by consumers as they shop for vehicles, what factors influence
     consumer vehicle purchasing decisions, the impact of the increasing
     availability of "greener" vehicles, and information on available public
     education campaigns on the benefits of driving "greener" vehicles.

     The sources used  to prepare this literature review were varied
     in their methodologies and carried a variety of methodological
     limitations as to their coverage of the population of U.S. vehicle
     buyers. Attachment I provides a summary of each major source
     used and an explanation of its methodology and limitations. It
     should be noted that in spite of the multiple methods used by
     the major sources, a number of similar  and consistent results and
     themes emerged from among them.

     Based  on the review, there are a number of key findings have
     implications for the redesign of the fuel economy label, as well as
     the educational campaign designed to aid consumers in identifying
     and choosing more fuel-efficient vehicles.

        •   The length of the vehicle buying cycle is contracting as
           consumers  obtain more information  sooner  from  the
           Internet. By the  time U.S. consumers enter  a dealership,
           they are closer to  purchasing a vehicle than ever before. The
           Internet has emerged as one of the most important sources
           of information for consumers interested in  purchasing a
           vehicle. To gather information they visit manufacturer and
           dealer Web sites  and rely on consumer-to-consumer tools
           like reviews and blogs. Consumers  are also increasingly
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                                                interested in purchasing vehicles online. Consequently, the
                                                information on the redesigned fuel economy label, which is
                                                intended to inform them about a vehicle's performance in
                                                regard to several metrics (such as fuel consumption, cost,
                                                and environmental impact), should also be available online.

                                                Considering  that in  the  consumer  surveys  reviewed
                                                consumers consistently stated that  the most important
                                                factors that influence vehicle choice  are reliability, safety,
                                                price, and fuel economy  (not necessarily in that  order),
                                                the fuel  economy label and  educational campaign will
                                                need to  acknowledge the place that fuel economy plays
                                                in the purchase process and identify  ways to 'be  heard' as
                                                consumers make their decisions.

                                                Consumer vehicle purchasing is also influenced by how a
                                                vehicle satisfies the practical and emotional needs of the
                                                consumer.  Age, gender, income, household size, urban
                                                or suburban living, as well  as availability of other travel
                                                options,  all play a part in what type of vehicle a consumer
                                                decides to purchase, as do  the psychographic aspects of
                                                'what a vehicle says about me.' This suggests that to be most
                                                effective, the educational campaign should be tailored to
                                                specific demographic market segments, while also making
                                                the purchase of fuel-efficient  vehicles a 'cool' statement
                                                about  the consumer. Acknowledging  what is important
                                                in the vehicle purchase process to  specific demographic
                                                segments, as well as to what consumers' think of as 'cool',
                                                can serve as a gateway to getting their attention. Finally,
                                                demographic and psychographic influences not only help
                                                in understanding the  appeal  of particular vehicles,  but
                                                also point the way towards potential messaging to assist
                                                consumers in identifying fuel-efficient vehicles.

                                                A major challenge will be explaining the functioning of
                                                advanced  technology   vehicles  to   consumers.  Overall,
                                                consumers lack  information  on  "green"  vehicles and
                                                technologies to really  understand the  differences and be
                                                able to  make  comparisons across   brands, models, and
                                                technologies.  Identifying  easy-to-understand   ways  to
                                                explain advanced technology vehicles, how they  function,
                                                and the  fuel efficiency of such vehicles will need to be
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              determined before an effective educational campaign can
              be designed. The redesigned fuel economy labels will be an
              important starting point for this since it is being designed
              to allow consumers to make informed comparisons among
              vehicle types.

              Lastly, the results  of  the  literature regarding consumer
              education  campaigns  related  to  helping  consumers
              better understand  the benefits  of purchasing  a more
              environmentally friendly vehicle can serve as an important
              starting  point for  the agencies'  educational  campaign.
              Although it does not appear from the literature that these
              campaigns have evaluated outcomes, they can still provide
              good  information,  especially  if key staff members from
              those  campaigns are  interviewed to  learn  about what
              worked and didn't work from their perspectives.
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     Attachment   1   -  Summaries


     of   Major  Studies


     Evidence from the Maine Light-Duty Vehicle Market: Are Eco-
     Campaigns Effective? was prepared by Eleanor Santiago Bacani
     in 2008 as a thesis for a Master of Science in Resource Economics
     and Policy at The University of Maine. The goal of the study was
     to investigate whether eco-marketing campaigns have been effective
     in improving the likelihood of ownership of vehicles  with higher
     environmental performance, as well as looking at the effects of
     demographics and gas prices.  The study focused on the light duty
     vehicle  market in Maine. The researcher conducted regression
     analysis using data from the Maine Vehicle Registration Database
     between 2004 and 2007, data sets from EPA Green Vehicle Guides
     for model years 2004 to 2007 (to obtain environmental information),
     U.S. Census (town-level demographics), and gas price information.
     Results suggest that eco-marketing campaigns do not appear to have
     had a statistically significant effect on the likelihood of owning SUVs
     with higher environmental performance. In addition, the study found
     that households have differing reactions to the various pollutants
     associated with vehicles in some vehicle  classes, suggesting  that
     policy efforts should be directed at informing the general public
     of air pollution scores and greenhouse gas scores when purchasing
     a vehicle to maximize the effectiveness  of future eco-marketing
     initiatives. The general conclusion is that the eco-composition of
     the  light-duty vehicle market is improving over time  because of
     the increased number of vehicle models with higher environmental
     performance that are available in the market today. The  results
     of this study are only relevant to light-duty vehicles purchasers in
     Maine between 2004 and 2007, and the author stated that due to
     sufficient information the findings of this study would need further
     research to be validated. Regardless, it does provide a case study of
     how vehicle  purchases are impacted by eco-marketing campaigns.
     These findings were used to support the discussion in this literature
     review report of existing consumer education campaigns.
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                                         Energy Trends: New Hybrids Breaking  Out of the Niche? was
                                         prepared by Booz & Company in 2004.  The report is part of an
                                         occasional series highlighting emerging trends in the global energy
                                         sector.  The  report  looks  at the emergence of gasoline/electric
                                         hybrids in their infancy in 2004 and analyzes hurdles to broader
                                         market acceptance. The article concludes that if long wait times and
                                         premium prices persist, consumers will walk away from this new
                                         technology. In addition, new market entrants need to match the
                                         reliability and performance standards set by hybrid leaders Toyota
                                         and Honda. However, hybrids serve as one part of the long-term
                                         trend towards creation of a more efficient vehicle fleet. The results
                                         of this report provide  information relevant to  consumer vehicle
                                         purchasing decisions during the early emergence of gasoline/electric
                                         hybrid vehicles. The conclusions made in this report were used to
                                         support the discussion in this literature review report of barriers to
                                         increasing the market share of green vehicles.

                                         Batteries for Electric Cars:  Challenges,  Opportunities,  and the
                                         Outlook  to 2020 was prepared by The Boston Consulting Group
                                         in 2010. The paper looks at the impact of the development and cost
                                         of various types of  batteries on the emerging market for electric
                                         cars, analyzing the  amount of progress anticipated by 2020, and
                                         the barriers that will need to  be overcome in order to achieve
                                         widespread commercial adoption of  electric vehicles. The report
                                         draws on Boston Consulting Group's work with automotive OEMs
                                         (original equipment  manufacturers) and suppliers and on a detailed
                                         analysis of the intellectual property landscape. The researchers also
                                         created a battery cost model  to project future costs  and conducted
                                         50 interviews with battery suppliers, automotive OEMs, university
                                         researchers,  start-up companies working on leading-edge battery
                                         technologies, and government  agencies  across  Asia,  the United
                                         States, and Western  Europe. The paper concludes that long battery
                                         charging  times are  a technical  challenge and commercial barrier
                                         that must be addressed and that without a major breakthrough in
                                         battery technologies, it is unlikely that fully electric vehicles that
                                         are as convenient as internal combustion engine  vehicles  (meaning
                                         that  they can travel up to 500 km/312  miles on a single charge
                                         and can recharge in  minutes) will be available for the mass market
                                         by 2020. Further, the paper concludes that the cost of batteries
                                         will play a critical role in determining the commercial viability of
                                         electric cars and  that in the short- to medium-term, early adopters
                                         and government incentives are likely  to drive demand for electric
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      vehicles. For mass  market  adoption, total  cost  of ownership
      becomes a factor. Consumers will weigh an electric vehicle's savings
      (generated by lower operating costs  relative to gasoline) against
      the higher upfront purchase  price. A combination of high fuel
      prices and government purchase incentives is needed for electric
      vehicles to make financial sense to the consumer. The findings in
      this report help explain the current and projected U.S. market for
      electric car batteries. The conclusions made in this paper were used
      to support the discussion in this literature review report of barriers
      to increasing the market share of green vehicles.

      The Comeback of the Electric  Car: How Real, How Soon and
      What Must Happen Next? was prepared  by the Boston Consulting
      Group in 2009. The  paper  evaluates the  viability  of available
      technologies  for efficient, low-CO2  emitting  power trains and
      presents  a view on  the most likely  market scenarios for  2020,
      with  a discussion of the implications for major stakeholders. The
      authors analyzed current scientific findings on energy consumption,
      oil reserves, and CO2 emissions, as well as technological options
      for alternative  propulsion concepts  in  addition to interviewing
      OEMs, suppliers, battery  manufacturers, power companies, and
      conducting consumer research. The report concludes that electric
      cars are a critical component of efforts to reduce  CO2 emissions
      through increased vehicle efficiency, but  a total cost of ownership
      advantage  is a  prerequisite for widespread adoption of electric
      vehicles. Without government incentives to encourage consumers
      to purchase  electric vehicles  and power companies and private
      investors to provide the infrastructure needed to support electric
      vehicles at an affordable  price, electric  vehicles will not succeed
      beyond serving  a niche market. This paper represents the views of
      its authors on the electric  car market based on a variety of sources
      based on varied methodologies. The conclusions in this paper were
      used  to support the discussion in this literature review report of
      fuel-efficient/low emission vehicle options,  and the  barriers  to
      increasing the market share of green vehicles.

      Electric Vehicles: A Force for the Future was prepared by Capgemini
      in 2009. The report explores challenges to widespread acceptance
      of the electric vehicle. An  explanation of the methodology used to
      prepare this report is not provided. The report identifies challenges
      to widespread acceptance of the electric  vehicle including battery
      performance,  recharging  infrastructure  investment,  market
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                                         acceptance,  price,  existence of  other  alternatives,  ecological
                                         value,  and technological  maturity. The report concludes  that
                                         collaboration is  key to electric vehicle  development, including
                                         vehicle manufacturers, suppliers, dealers, other retailers, consumers,
                                         electric/utility companies,  and governments. The conclusions  in
                                         this report were  used to support the discussions in this literature
                                         review report of reasons  for buying  fuel efficient/low emission
                                         vehicles, barriers to increasing the market share of green vehicles,
                                         and vehicle choice among green vehicles.

                                         Cars Online 05/06: Creating Opportunities for Revenue Growth
                                         and Cost Reduction was  prepared by Capgemini in  2005. The
                                         purpose of the study was  to: 1) compare consumers' automotive
                                         needs,  demands  and  preferences  across  the  buying  cycle;  2)
                                         explore the factors that drive automotive buying behavior and
                                         impact consumers' relationships with manufacturers and dealers;
                                         3)  address lead  management, B2C web  strategy and aftersales/
                                         servicing; and 4) examine the similarities and  differences among
                                         the countries studied in order to provide a picture of the dynamics
                                         of  individual markets. For this study, Capgemini  surveyed almost
                                         2,700 consumers via telephone in five countries: China, France,
                                         Germany, the United  Kingdom  and the United States.  The
                                         composition of the consumer sample in each country was based on
                                         projectable national samples representative of the population from
                                         the standpoint of region,  age and gender. Nearly  all  consumers
                                         surveyed were in-market—that is, intending to purchase or lease a
                                         new or used vehicle in the next 12 months. In addition, almost 230
                                         dealer interviews were conducted in the five countries along with
                                         interviews at nearly 25 manufacturer headquarters or national sales
                                         offices. European, U.S. and Asian brands were represented among
                                         the consumers, dealers and manufacturers surveyed. Relevant main
                                         findings of the  study included:  consumers are  becoming  more
                                         sophisticated and are using the Internet to gain more information
                                         prior to purchasing new vehicles, and demographic differences are
                                         more significant  especially between the youngest and  oldest age
                                         groups of vehicle buyers  in  terms  of what information they use
                                         to  make purchasing decisions, how they obtain this information,
                                         and how they make their vehicle purchasing decisions. The study
                                         findings are based on a demographically representative sample  of
                                         consumers planning to purchase a car within the next 12 months.
                                         While the results  are informative, as they include information from
                                         countries besides the U.S., they  are not exclusively representative
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      of the U.S. market. Regardless, the study does provide information
      on trends that is relevant as all countries (except China) are mature
      car purchasing  populations.  The findings in this study were used
      to support the  discussion in this literature review report of  the
      emergence of the web as an information source, the vehicle buying
      cycle, and how  demographics impact vehicle purchasing decisions.

      Cars Online 06/07: Understanding the Dynamics of Consumer
      Buying Behaviour and  Customer  Loyalty was  prepared  by
      Capgemini in 2006. The purpose of the study was to: 1) explore
      the factors  that drive  automotive buying behavior and impact
      consumers' relationships with manufacturers and dealers, address
      lead management, B2C Web strategy  and consumer loyalty, and
      examine the  similarities and  differences among studied countries
      to provide a picture of the  dynamics of individual  markets. For
      this study, Capgemini surveyed more than 2,600 consumers in five
      countries: China, France, Germany, the United Kingdom and  the
      United States. The composition  of the consumer  sample in each
      country was based on projectable national samples representative
      of the population from the standpoint of region, age and gender. All
      consumers surveyed were in-market—that is, intending to  purchase
      or lease a new  or used vehicle in the  next 18 months. The main
      findings of the  study included: consumers are increasingly driven
      by their hearts  as well as their  heads when it comes to vehicle
      purchasing; customer loyalty is  decreasing as  consumers  expect
      more information faster from manufacturers and dealerships; post-
      sales communications is important to repurchase of same brand
      and/or from  same dealership; manufacturers and  dealers need to
      work together closely to meet consumer needs;  and vehicle buyers
      are using the web in a more targeted fashion. The study findings are
      based on  a  demographically representative sample of consumers
      planning to purchase a car within the next 18 months. While  the
      results are informative, as they include information from countries
      besides the U.S., they are not exclusively representative of the U.S.
      market. Regardless, the study does provide information on trends
      that is  relevant as  all  countries (except China)  are mature  car
      purchasing populations. The results from this study  were used to
      support the discussion in this literature review report of the role of
      psychographics  and the growing importance of the web in vehicles
      purchasing decisions.
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                                          Inside  the  Customer/Dealer Relationship: A Qualitative Study
                                          Examining the Shift of Power and the Influence of the Internet on the
                                          Vehicle Buying Process  in Dealerships was prepared by Capgemini
                                          in 2006. The purpose of the study was to provide  a close-up  look
                                          at the relationship between consumers and dealerships and how this
                                          relationship changes as  consumers become better informed through
                                          use of the Internet. The study was directed at vehicles dealers to help
                                          them better prepare to serve better informed consumers. The study
                                          was based on qualitative research, consisting of observations and
                                          interviews with consumers and dealers, in both North America (U.S.,
                                          Canada) and Europe (France, UK) at car dealerships  representing
                                          12 North American, European and Asian mid-market  brands. This
                                          approach provided the opportunity to observe both what was said
                                          and what was done in  order to understand behavioral trends and
                                          practices. The main findings of this study were: greater transparency
                                          is essential  to improving the customer/dealer relationship because
                                          consumers have access to a  seeming bottomless well of information
                                          from the Internet; the more knowledgeable consumers become about
                                          the vehicle buying process, the more the balance of power shifts in their
                                          favor; consumers increasingly demand a personalized and customized
                                          approach during the vehicle buying process; customers want to be seen
                                          as individuals, as people in their own right who cannot be reduced to
                                          a box in a grid; and the customer/dealer relationship is not a one-size-
                                          fits-all formula , it can vary considerably depending on a consumer's
                                          degree of advance knowledge. The results of this qualitative study are
                                          informative, as they include information from customers and dealers
                                          in the U.S., Canada, France, and the U.K., but are not representative
                                          of the U.S.  market. Regardless,  the study provides  information on
                                          trends related to  how consumers gather information to inform  their
                                          vehicle purchasing decisions and  consumer/dealer  relationships  in
                                          mature car purchasing countries. The findings from this study were
                                          used to support the discussion in this literature review report of how
                                          the Internet is being a more important source of information during
                                          the vehicle purchasing process.

                                          Cars Online 07/08: Responding to Changing Consumer Trends and
                                          Buy ing Behaviour was prepared by Capgemini in 2007. The purpose
                                          of the study was to provide insights to help vehicle manufacturers
                                          and dealers develop and execute more effective strategies in sales,
                                          marketing,  advertising, aftersales  service, customer  relationship
                                          management,  and manufacturer/dealer  collaboration.  For  this
                                          study, Capgemini  surveyed more  than 2,600 consumers  in five
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      countries: China, France, Germany, the United Kingdom and the
      United States. The composition of the consumer  sample in  each
      country was based on projectable national samples representative
      of the population from the standpoint of region, age and gender.
      All consumers surveyed were  in-market—that is, intending  to
      purchase or lease a new or used vehicle in the next  18 months. The
      main findings  from this study include: consumer interest in online
      purchasing is growing as consumers become more sophisticated in
      use of the web; online tools such as search engines, blogs, and web
      forums are becoming key information sources for vehicle buyers;
      consumers are more interested  in  purchasing  "green" vehicles;
      vehicle buyers want their information fast, if don't get it they will
      switch dealers, brands, or both;  and personalized communications
      have a significant impact on repurchase decision. The study findings
      are based on a demographically representative sample of consumers
      planning to purchase a car within the next 18 months. While the
      results are informative, as they include information from countries
      besides the U.S., they are not exclusively representative of the U.S.
      market. Regardless, the  study does provide great information on
      trends that is  relevant as all countries (except China)  are mature
      car purchasing  populations.  Information from this  study  was
      used to support discussion in this literature review report of the
      vehicle purchasing cycle, information sources and  the use of the
      web in vehicle purchasing, how psychographics influence vehicle
      purchases, and other factors that influence vehicle purchase such as
      reliability, safety, price, and fuel  economy.

      Cars  Online  08/09: 10th Annual Global  Automotive  Study:
      Tracking  Consumer Buying  Behavior  in  Both Mature  and
      Emerging Markets  was  prepared by Capgemini  in  2008.  The
      purpose of the study was  to provide automotive  manufacturers
      and dealers with insights  into  changing consumer dynamics  in
      both mature and developing markets, and to help the industry gain
      a better understanding of how to successfully anticipate evolving
      consumer needs and demands. The  study was based on a survey
      of more than  3,100 consumers in eight countries: Brazil, China,
      France, Germany, India, Russia, the United Kingdom and the
      United States. The composition of the consumer  sample in  each
      country was based on projectable national samples representative
      of the population from the standpoint of region, age and gender.
      All consumers surveyed were in-market (20% plan to buy or lease
      a vehicle within three months; 25% in three to six months; 40% in
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                                         six to 12 months; and 15% in 12 to 18 months). The main findings
                                         of the study included: fuel economy is as important a factor in a
                                         consumer's choice of vehicle as are safety and reliability; consumers'
                                         demand for online vehicle buying continues to grow (in 2008, 44%
                                         of consumers said  they were likely or very likely to purchase a
                                         car entirely over the  Internet if that capability were available,  up
                                         from 20% the  previous year); consumers are confident in their
                                         knowledge about green vehicles and are increasingly likely to own
                                         fuel efficient and alternative-fuel cars, although consumers are not
                                         prepared to pay a high premium to go  green - 85% of respondents
                                         expect to pay less than 10% extra for a fuel-efficient or alternative-
                                         fuel car; consumers are increasingly demanding  about the  speed
                                         of response  they expect from  dealers and manufacturers; most
                                         consumers are satisfied with the vehicle buying process, but they
                                         see plenty  of room  for improvement; and consumers said that less
                                         haggling and pressure by dealer salespeople would increase their
                                         vehicle buying satisfaction level. The study findings are based on a
                                         demographically representative sample of  consumers planning  to
                                         purchase a car  within the next 18 months. While the results are
                                         informative, as they include information from countries besides the
                                         U.S., they  are not  exclusively  representative of the U.S. market.
                                         Regardless, the study does provide great  information  on trends
                                         in car purchasing behaviors. Study results  were split out between
                                         those for mature and those  for emerging markets. Those mature
                                         market results were used to support the discussion in this literature
                                         review report of the growing importance of the Internet in vehicle
                                         purchasing decisions, and the reasons for buying green vehicles.

                                         Cars Online 09/10:  Understanding Consumer Buying  Behavior
                                         in a Volatile Market was prepared by Capgemini in 2009. The
                                         purpose of the study was to  look  at online buying of vehicles
                                         and  parts/accessories,  alternative-fuel vehicles,   and  aftersales/
                                         servicing.  The  study  also looked  at what consumers saw as the
                                         biggest changes  they expect to make  in how they shop for and
                                         buy vehicles in the  coming years. The study was based on a survey
                                         of more than 3,000  consumers in eight countries: Brazil,  China,
                                         France,  Germany,  India, Russia,  the  United  Kingdom, and the
                                         United States. The  composition of the consumer  sample in each
                                         country was based  on projectable national samples representative
                                         of the population in terms of region, age and gender. All consumers
                                         surveyed were in-market (24%  plan to  buy or lease a vehicle within
                                         three months; 29% in four to six months; 11%  in seven to nine
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      months; and 36% in 10 to  12 months). The main findings of the
      study relevant to this literature review were: usage of the web as a
      key information source during the vehicle buying process continues
      to increase with almost 90% of consumers today (2009) using the
      Internet to research vehicles, up from 61% in 2005; consumers
      want to buy vehicles and parts and accessories online due to lower
      prices  and an  alternative  to the  traditional dealer  model with
      nearly 40% of respondents saying they  would like to buy a  car
      over the Internet; green vehicle ownership  continues to  rise as
      environmental concerns grow, with 41% of consumers saying they
      currently own a  fuel-efficient or alternative-fuel vehicle, up from
      36% the year before, and  another 30% saying they  plan  to buy
      a fuel-efficient  or alternative-fuel  vehicle;  as the duration of  the
      vehicle buying cycle contracts, automotive companies have  less
      time to influence purchases as consumers  can  quickly and easily
      get vast amounts of information from the Internet; and a number
      of indicators point  to  a growing desire  for improved ease and
      speed  of transaction, consumers expect a dealer to be responsive
      and almost one-quarter of respondents point to ease and speed of
      transaction as the key reason for buying a vehicle online, and 30%
      say it  is the  driving factor  behind their desire to purchase parts
      and accessories  over the web. The study findings are based on a
      demographically representative sample of  consumers  planning to
      purchase a car within the next 18 months. While the results  are
      informative, as they include information from countries besides the
      U.S., they are not exclusively representative of the U.S. market.
      Regardless, the study does provide great information  on trends in
      car purchasing behaviors. The results of this study were used to
      support the discussion in this literature review report of the growing
      importance of the Internet in vehicle purchasing, the vehicle  buying
      cycle, the reasons for buying green vehicles.

      The Relationship of Vehicle Type Choice to Personality, Lifestyle,
      Attitudinal, and Demographic Variable was prepared by Choo and
      Mokhtarian in 2002. The purpose of the study was to explore how
      travel attitude, personality, lifestyle, and mobility impact individual
      vehicle type choices. The data is based  on a 1998  mail-out/mail-
      back-  survey of 1,904 residents of three different neighborhoods
      in the  San Francisco Bay area representing suburban and urban
      areas.  Based on  the  data,  the authors  developed a disaggregate
      discrete choice model to be  able to estimate  the effect  of  key
      variables on the probability of choosing vehicle types. The model
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                                         determined that specific vehicle types have distinct characteristics
                                         with respect to travel attitude, personality and lifestyle. Based on
                                         their research, the authors concluded that in addition to traditional
                                         demographics, travel  attitude, personality, lifestyle, and mobility
                                         factors have significant impact on individual's vehicles type choices.
                                         The findings  of this study are based on the three neighborhoods
                                         surveyed in the San  Francisco Bay area, and  are therefore not
                                         representative of the U.S.  populations as a whole. Regardless,
                                         the researchers carefully selected these  three neighborhoods to be
                                         representative of countless other similar neighborhoods in the U.S.
                                         These findings provide relevant information on how demographics
                                         influence vehicle choices. These findings were used to support the
                                         discussion in this literature review report  of how psychographics
                                         impact vehicle purchasing choices.

                                         Automotive Gen Y Survey Findings  was prepared  by  Deloitte
                                         in 2008. The  goal of the study was to report  findings from the
                                         Connecting  with Gen Y:  Making Cars  Cool Again survey.  It
                                         provides information to prepare the auto industry for Generation Y
                                         by shedding insight into what captured the automotive imagination
                                         of this dynamic age group. The information was based on a survey
                                         administered to  a randomly drawn panel  of 1,006 individuals  in
                                         the U.S. between the ages of 17 and 28  who had previously agreed
                                         to participate  in online surveys. The sample was evenly dispersed
                                         across geographic regions. The main findings included:

                                            •     Safety and comfort were the most important considerations
                                                 for the  Gen  Y  respondents when choosing cars.  Gas
                                                 mileage, price, and performance were the most important
                                                 factors in the purchase decision. The factors  named  most
                                                 often  as among the top three reasons that a vehicle was
                                                 cool were exterior styling (44%), affordability (40%) and
                                                 being  environmentally friendly  (35%).

                                            •     Almost two-thirds (63%) perceived the cost of a vehicle  as
                                                 an indicator of quality.

                                            •     Close to half (49%) of respondents preferred foreign vehicle
                                                 brands, compared to only one-quarter who preferred U.S.
                                                 brands.
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         •    Over one-fourth (27%) said that they expected to be driving
              the same brand in five years and stated that their current
              brand had a range of models to accommodate their future
              needs and that it was affordable. Another 27% said that
              they did not expect to be driving the same brand and stated
              that their current vehicle was all they could afford or that
              it had been given to them. Further, 45% reported that they
              were not sure whether they would be driving the same brand,
              and stated that the decision would depend on their personal
              finances, their lifestyle, and the available incentives.

         •    The majority (80%) said they are willing to pay more for
              a car that is environmentally friendly. Of those, 62% also
              viewed vehicles produced  in an environmentally friendly
              factory as a determining factor in their decision.

      These findings are not representative of U.S. population since the
      survey was  administered to online panel members between the
      ages of 17 and  28 who  had agreed to participate in such online
      surveys. However, the results were used to support the discussion
      in this  literature review  report  of  those  factors  that impact
      vehicle  purchasing such  as price, fuel economy, demographics,
      psychographics, and the reasons  for buying green vehicles.

      Connecting with Gen Y Making the Short List was prepared by
      Deloitte in 2010 as a follow-up to Connecting with Gen Y: Making
      Cars Cool Again. The goal of this study was to take a deeper look
      at Generation Y's attitudes and perceptions of vehicles and the
      auto industry. It was based on a survey administered to a randomly
      drawn panel of 1,100 individuals in the U.S., between  the ages
      of 18 and 30, who had previously agreed to participate in online
      survey. The main findings included:

         •    Gas  mileage  and vehicle affordability  emerged as  the
              most important considerations for the Gen Y respondents
              purchasing cars.

         •    Over 63% believed that  used vehicles were a greater  value
              than  new vehicles and they were more than three times as
              likely to purchase a used vehicle over a new one.
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                                                 Over half (53%) stated it was important that the vehicle
                                                 be manufactured in an American factory no matter what
                                                 brand it was.

                                                 Over two-fifths (42%) reported they expected to be driving
                                                 the same vehicle brand five years later. This was a 15%
                                                 increase in  brand loyalty from 2008 wherein only 27%
                                                 indicated that they expected to be driving the same brand
                                                 five years later.

                                                 Over three-fifths (64%)  stated that  they were willing to
                                                 pay more for  a vehicle that was environmentally friendly
                                                 and  saves money  on  energy costs. Close to three-fourths
                                                 (73%)  reported that  the environment was an extremely
                                                 important factor when purchasing a vehicle. Half (50%)
                                                 believed that the type of vehicle they drove directly affected
                                                 the environment.

                                                 Close to three-fifths (58%) reported that they did not look
                                                 for advice or information on blogs or social media forums
                                                 before  purchasing a  vehicle. Further,  over  three-fifths
                                                 (64%)  reported that  they  did not look for  information
                                                 about a brand or model on social networking sites (such as
                                                 Facebook, etc.) when shopping for a vehicle. Instead, the
                                                 majority (80%) tended to turn to on-line  search engines
                                                 (Google or Yahoo!) to search for information on vehicles
                                                 and they trusted auto manufacturers' sites the most.

                                                 Over three-fifths (62%) reported that they preferred the 'no
                                                 haggle'  method when  purchasing a vehicle. The majority
                                                 (85%) reported that they would prefer to  know the final
                                                 selling price upfront (by eliminating vehicle incentives from
                                                 the vehicle purchase equation) and more  than 60% stated
                                                 they would prefer to  skip pricing negotiations altogether
                                                 with  a  salesperson. Additionally,  they indicated that they
                                                 would  prefer  to get the information they  need over  the
                                                 Internet from the dealer rather  than having face-to-face
                                                 conversations  with salespeople.
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      These findings are not representative of U.S. population since the
      survey was administered to online panel  members between the
      ages of 18 and 30 who  had agreed to participate in such online
      surveys. However, the results were used to  support the discussion
      in  this literature review  report  of  those factors that  impact
      vehicle  purchasing such as  price, fuel economy, demographics,
      psychographics, and the reasons for buying green vehicles.

      Gen Y+ Sustainability was written by Michigan State University in
      collaboration with Deloitte in 2010. The goal of the paper was to
      provide an understanding of Gen Y's understanding of sustainable
      technologies, the  degree to  which Gen Y cares about sustainability
      and if they are willing  to pay to embrace these ideas, and the
      "perceived monetary  value"  of these  sustainable technologies.
      The paper used data from the 2009 Deloitte Automotive Group
      Generation Y Survey, focus groups and conjoint analysis (conducted
      on a nationally-representative sample of 200 Gen Y respondents)
      to  explain Gen Y's  "green" mindset. The  main takeaways from
      this paper were: Gen Y is becoming more stable and homogenous
      as  it  matures into adulthood (as against the popular belief that
      Gen Y is thought of as  autonomous and  highly individualistic);
      educating consumers and communicating common industry wide
      sustainability standards is  paramount for the auto industry (Gen
      Y lacked clear understanding of  the  different types  of  "clean"
      energy);  Gen Y's  value of sustainability and green technologies is
      tied to dollar savings (both environmental and economic advantage
      must be communicated  whereby environmental logic must have
      economic logic as its backbone); and MPG is not a sustainable
      differentiator of value proposition to differentiate between vehicles
      (small MPG differences  between vehicles  were of little value to
      consumers).

      These findings are not  representative  of  U.S. population  since
      Deloitte's  survey was  administered  to online  panel  members
      between the ages of 18 and 30 who had agreed to participate in
      such  online surveys. The conclusions in this study were  used to
      support the discussion in this literature review report of the role of
      demographics in  vehicle choice, reasons for buying green vehicles,
      barriers to increasing market  share of green vehicles, and vehicle
      choice among green vehicles.
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                                         A New Era: Accelerating Toward 2020 - An Automotive Industry
                                         Transformed was prepared by Deloitte in 2009. The goal of the
                                         report was  to offer  Deloitte Touche Tohmatsu's  (DTT)  senior
                                         automotive  leaders' perspectives on  the structural  changes and
                                         major customer, technology,  and  people  trends  expected to
                                         transform the  auto industry  over  the  next decade. The  report
                                         highlighted the following trends in the U.S.:

                                            •    The United States is one of  the six markets (others are
                                                 Western Europe, Japan, Korea, China and India) that will
                                                 dominate as the center of design and manufacturing for
                                                 original equipment manufacturers and their suppliers.

                                            •    U.S. auto consumers will be more cost conscious and will
                                                 look for value of money and safety as the most important
                                                 features.

                                            •    The median age of the population in United States will go
                                                 up and car manufacturers will need to address the changing
                                                 priorities of older drivers in order to remain competitive.

                                            •    Environmental considerations will weigh heavily on the
                                                 auto industry toward  2020  and there will be a  fierce
                                                 competition to  develop and produce electric vehicles
                                                 spurred by both customer  demand   and government
                                                 incentives.

                                         This report represents the views of  Deloitte's automotive practice
                                         based on their work and  experience in the field. The conclusions
                                         in this report were used to support the discussion in this literature
                                         review report  of the vehicle  buying cycle, how  safety impacts
                                         vehicle  choices, fuel-efficient/low emissions vehicle  options, and
                                         reasons for buying green vehicles.

                                         Gauging Interest for Plug-In Hybrid and Electric Vehicles in the US
                                         was prepared by Ernst and Young in 2010. The goal  of the survey
                                         is to understand consumer awareness of electric vehicle technologies
                                         and reveal the factors that may influence them to purchase an electric
                                         vehicle. The  survey  was conducted with 1,000 U.S. licensed drivers
                                         across all 50  states. The  survey  found that public  awareness of
                                         emerging powertrain technology remains very weak across the United
                                         States, and the rising price of fuel is the main factor driving interest
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      in electric vehicles, with concerns about energy security and climate
      change growing in importance. The largest concerns in purchasing an
      electric vehicle are vehicle cost and driving and battery range, although
      most consumers do not need to cover long distances regularly. These
      findings may not  be representative of U.S. licensed drivers since the
      report does not clearly indicate how the sample was drawn. They were
      used to support the discussion in this literature review report of the
      reasons for buying fuel efficient/low emission vehicles, and barriers to
      increasing the market share of green vehicles.

      Evaluating  the Consumer Response to  Fuel Economy: A Review
      of Literature was prepared by Helfand and Wolverton in  2009.
      The purposed of report was to review literature on the role of
      fuel economy in  consumer's vehicle purchasing decisions, review
      consumer vehicle choice models  focusing on  the role  of fuel
      economy, examine consumer and producer behavior in the market
      for fuel economy, and assess the potential contributions of consumer
      vehicle  choice modeling to regulatory analysis. The main  findings
      of the literature review were: consumer vehicle choice models can
      used to help estimate how regulatory changes will impact consumer
      behavior, however, the literature review also noted the wide variance
      in these models on the value consumers place on fuel economy;
      consumers  continue to under-value  energy  efficiency;  producers
      appear  to provide less  fuel economy than consumers  are willing
      to buy; and while consumers pay attention to fuel economy when
      they purchase vehicles, there is more to  learn about how to model
      the role of fuel economy in consumers' decisions. The results of the
      study were based on the authors' review of relevant literature on fuel
      economy and vehicle choice models. The findings from this literature
      review  were used in this literature review report to  support the
      discussion of how fuel economy impact vehicle purchasing decisions.

      Providing   Consumers  with Web-Based Information  on  the
      Environmental Effects of Automobiles was prepared by Nye, Greene,
      Hopson, and Saulsbury in 2003. Findings are based on focus groups
      conducted in Knoxville, TN and Los Angeles, CA with seven to ten
      participants per group and lasting two hours. The focus groups were
      comprised of respondents between 18 and 64 years of age  who (1)
      gathered information using the  Internet, (2) participated in one or
      more "environmentally friendly" activities, and (3) were in the market
      for a new or used vehicle within 6 months. The purpose of the focus
      groups was  to explore  and understand how participants responded
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                                          to the different ratings and measurements of environmental effects
                                          provided by four websites: www.fueleconomy.gov, www.epa.gov/
                                          greenvehicles, American Council for and Energy Efficient Economy
                                          (ACEEE) www.greencars.com, and  California Air Resources Board
                                          (GARB), www.arb.ca.gov/msprog/ccbg/ccbg.htm (California group
                                          only). Participants were asked to view websites prior to the focus
                                          group. The focus groups  revealed that while participants  in both
                                          cities understood some of the environmental effects of producing
                                          and operating automobiles, they rarely factored these effects into the
                                          decision process  when purchasing a new or used vehicle and until
                                          consumers understand that the environmental effects are issues that
                                          affect them personally (such as safety or cost of fuel) they are not
                                          as likely to factor environmental concerns into the buying equation.
                                          Most participants would prefer some kind of overall environmental
                                          score that they could trust, and that would be applicable across the
                                          country and across all vehicles. There was a great deal of skepticism
                                          about the motives and actions of the government, auto manufacturers
                                          and auto dealers. Participants would use environmental information
                                          if it were readily available (where they normally go for information,
                                          such as Consumer Reports or other automotive magazines). Website
                                          content is important, but needs to be simple and quickly accessible,
                                          i.e., each number or rating system should be  fully explained within
                                          the chart or on the same page. Focus groups provide qualitative data
                                          based on a structured set of questions. The results become meaningful
                                          when participants in multiple groups do or do not come to similar
                                          conclusions. Focus group  results can be used to provide qualitative
                                          insights  on particular issues and can not  be used  to represent the
                                          views of a larger  population demographic and geographic area. The
                                          conclusions of these focus groups were used to support the discussion
                                          in this literature review report of the reasons for buying fuel efficient/
                                          low emission vehicles.

                                          Capitalizing on  Change: The Electric Future of the Automotive
                                          Industry was prepared by Price Waterhouse Coopers Automotive
                                          Practice in 2009. The report is part  of the Global Automotive
                                          Perspectives services, which provides an industry  analysis of top-
                                          of-mind issues facing automotive executives. The report  analyzes
                                          the  impact of electric vehicles  on the automotive industry. The
                                          report identifies  several challenges that may slow and/or impede
                                          the market penetration of electric vehicles, including limited driving
                                          ranges,  lengthy  battery charge times, inadequate infrastructure
                                          (lack of charging station  network), and higher upfront costs. The
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      report concludes that short-term gains from incentives combined
      with strategic large-scale investment are required to make electric
      powertrains a viable consumer  option and achieve effective cost
      competition  with  traditional  powertrain technology. Current
      business models  will adapt to the change, with fleets being the
      likely wide-scale introductory channel. This report is based on the
      work and experience of the PriceWaterhouseCoopers Automotive
      practice, and represents the views of the  authors. Its conclusions
      were used to support the discussion in this literature review report
      of the barriers to increasing the market share of green vehicles.

      Technologies  and  Policies  for  Controlling  Greenhouse  Gas
      Emissions from the U.S. Automobile and Light Truck Fleet was
      prepared by Steve Plotkin of the Center for Transportation Research
      at the Argonne National Laboratory. The paper focuses on policies
      and technologies  for  increasing  vehicle  energy efficiency,  with
      a focus on the light-duty vehicle fleet. The report concludes that
      while it is technologically feasible to improve the fuel efficiency of
      the U.S. auto and light vehicle truck fleets, many of the available
      technologies require trade-offs that manufacturers are unwilling to
      or unable to meet in today's market and regulatory environment.
      The efficiency of the light-duty vehicle fleet will remain essentially
      stagnant over time in  the absence  of an  unforeseen  change in
      market conditions  or strong new policy measures, such as more
      stringent CAFE standards, significantly higher gasoline taxes, or
      gasoline price increased caused by sustained increases in world oil
      prices. This paper represents the author's interpretation of a variety
      of industry  and  academic sources on this subject. The author's
      conclusions  were used to support the discussion in this literature
      review report of existing consumer education campaigns.

      Automobile  Buyer  Decisions  about Fuel Economy  and  Fuel
      Efficiency was prepared by Turrentine and Kurani in 2004. The
      methodology used for this study was semi-structured interviews with
      57 households across nine lifestyle sectors, such as hybrid vehicle
      buyers, financial analysts, and off-road enthusiasts. The strongest
      finding from the interviews was that consumers do pay attention to
      the price of fuel on the day they buy it, but do not consider the costs
      of fuel over time. Households interviewed were unable to determine
      the potential fuel savings of buying a more fuel efficient vehicle
      and in  most cases overestimated the potential savings thinking
      they could recover an  investment of several thousands dollars in
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                                         a couple of years. The authors offer two hypotheses: 1) consumers
                                         do not pay attention to fuel costs because of the low price of fuel
                                         and the limited fuel consumption instrumentation; and 2) vehicles
                                         carry too many other attributes of high value to consumers which
                                         minimizes the value of fuel efficiency. Overall, the authors conclude
                                         that consumers do not behave in economic rational way in regards
                                         to fuel economy. They lack the basic building blocks  needed to
                                         make calculated  decision about better fuel economy because they
                                         do not keep track of fuel costs over time, and do not make vehicle
                                         purchasing decisions based on potential payback from better fuel
                                         economy. The  results of this study are attributable only to the 57
                                         interviewed households. They become meaningful and interesting
                                         when  the  findings  become consistent across multiple households
                                         and lifestyle  sectors. For our  purposes, the results provide an
                                         interesting case study on how households think about fuel economy
                                         and their own use and the cost of fuel. The study findings were used
                                         to support the discussion in this literature report of the role of fuel
                                         economy in vehicle purchasing decisions.

                                         Car Buyers and  Fuel Economy? was prepared by Turrentine and
                                         Kurani in 2006. The goal of the study was to investigate how U.S.
                                         consumers  thought  and behaved with respect to automotive fuel
                                         economy.  It was based  on the same  information  used for  their
                                         2004 study (see  above) - Automobile Buyer Decisions about Fuel
                                         Economy and Fuel Efficiency. The main findings were that none of
                                         the households analyzed their fuel costs in a systematic way in their
                                         automobile or gasoline purchases, and almost none of the households
                                         tracked gasoline  costs over time or  considered  them explicitly in
                                         household budgets. While many  of the households knew the cost of
                                         their last tank of  gasoline and the unit price of gasoline on that day,
                                         they rapidly forgot such accurate information and replaced it with
                                         typical information. Such loss of information resulted in the lack
                                         of basic knowledge needed to make economically rational decisions
                                         while buying a vehicle. As a result, they made large errors estimating
                                         gasoline costs and savings over  time. In addition, the study found
                                         that consumers valued fuel economy not only from the cost savings
                                         perspective but also attached symbolic value to it. The paper is based
                                         the results  of the  Turrentine and Kurani 2004 study described above
                                         and is subject to  the same limitations. The conclusions of this paper
                                         were used  to support the discussion in this literature report of how
                                         fuel economy impacts vehicle purchasing decisions.
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                                        Additional works read

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                                        Choo, S., & Mokhtarian, P.(2004). What type of vehicle do people
                                        drive: The role of attitude and lifestyle in influencing vehicle type
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                                        Flees, L, & Senturia, T. (2008). After-Sales Service Key
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                                        Garms, M. (2009). Managing the Lengthening Consumer
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                                        Jager, M., & Wheeler, S. (2005). "I Love What You Do For
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                                        Kelley Blue Book. (2008). Leading New-Car Interior and Exterior
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      Newcomb, K. (2007). Google: Search Key to Auto-Buying Cycle.
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      Noblet,C.,Teisl, M.,  & Rubin,].  (2006). Factors affecting
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                                         Teisl, M., Rubin, J., Noblet, C., Cayting, L., Morrill, M., Brown,
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                                         The Boston Consulting  Group. (2008).Envisioning an Uncertain
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      Online Infomediaries and Price Discrimination: Evidence from
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