Car manufacturers love to tout the their major auto industry awards in advertisements. You can hear the deep-voiced announcer now: “Ranked highest in Initial Quality by J.D. Power & Associates for three years in a row.” And while the accolades sound great, parsing what they really mean for shoppers can be complicated.
Major awards may evaluate a car’s safety testing, performance, value for price, tech features, and owner satisfaction, just to name a few factors. These are all critical car-buying considerations for many drivers, but consumers need to be mindful of letting any one award carry too much weight in their own evaluation of a vehicle, and must pay attention to what each award actually measures. Here’s our rundown of some of the most high-profile auto industry awards and how consumers can use them to aid in an informed car-buying decision.
Major Auto Industry Awards:
- J.D. Power & Associates: A marketing firm that gives out several awards to the auto industry each year. Their “Power Circle Ratings”—for quality, performance, design and dependability—are awarded based on surveys of new-car owners.
- Consumers Digest: A magazine with no subscribers and no ads that is only available in select bookstores and shops. Though commonly associated with Consumer Reports or Consumer Digest Weekly, it has no affiliation with either. Consumers Digest bases their “Best Buys” awards on surveys and the impressions of reviewers who test-drive automakers’ loaner vehicles.
- Motor Trend: A magazine with long-standing auto industry clout. Their “Car of the Year Award” is one of the oldest and most recognized auto industry awards, and is given to the best new or significantly updated car each year.
- Kelley Blue Book: A trusted automotive research and valuation company. Their “Best Buy Awards” name the highest-value vehicles each model year. KBB evaluates every vehicle themselves using multiple data points like fuel efficiency, insurance costs, and depreciation.
- Consumer Reports: A non-profit, completely independent magazine that purchases and tests each vehicle it rates. Consumer Reports names yearly “Top Picks” for both new and used cars, and gives yearly “Car Brand Report Cards.”
The Cost of Entry
Most auto industry award organizations and publications are for-profit businesses. In many cases, their income comes from the very auto manufacturers they are ranking and recommending, which some critics claim is a conflict of interest. For instance, rumors swirl that some publications “strongly encourage” their award winners to buy ad space, and some award organizations charge auto manufacturers hefty fees just to be considered. The fact that money changes hands between some automakers and some award programs doesn’t mean they can’t be trusted, but it’s important to understand just how involved auto manufacturers are in each award:
- The Wall Street Journal reports that J.D. Power sells the findings from their surveys to automakers for $300,000, and then charges the same price for companies who want to advertise the fact that they’ve won.
- Consumers Digest has a similar situation: they charge automakers licensing fees for featuring their awards in their marketing campaigns: $35,000 for the first award and $25,000 for the second. While Consumers Digest lists all award recipients, they only offer full reviews and information about why the award was given to manufacturers who’ve paid the fee.
- Kelley Blue Book does not appear to charge automakers for reviews, nor do they seem to prevent manufacturers from featuring their awards in car ads.
- Consumer Reports is truly independent: they’ve been called “the closest thing to a private auto regulator in this country (and the only ‘regulator’ that regularly tests random vehicles).” They do not accept auto industry payment or free cars, and they do not allow their awards to be used in advertisements. In fact, Consumer Reports purchases each car they rate independently, so they can ensure the cars they test are exactly the same as models consumers would purchase.
How Car Shoppers Can Use the Awards to Inform their Purchase
Even though some awards aren’t completely free from auto industry influence, they can still be useful to car shoppers since most major awards detail vehicle specs, safety testing, performance, and measure both short- and long-term owner satisfaction.
All awards are not created equally, however. Drivers should pay attention to what each one actually measures. For example, J.D. Power’s Initial Quality Award measures owner-reported problems during the first 90 days, while their Dependability Award measures the previous 12 months of problems for cars that are three years old. Both are useful measures, but perhaps not quite as expansive as their titles suggest.
Do Awards Impact Insurance Premiums?
In short, no. Auto industry awards offer car buyers important information about stand-out features, long-term reliability, and how expensive a particular car might prove to be long-term, so the amount of awards might correlate with variances in insurance premiums, but the awards themselves do not impact car insurance premiums. And although insurance companies certainly consider a vehicle’s features, safety ratings, and other factors as they matter to your premium, your vehicle identification number (VIN) is sufficient to verify those details — no award data necessary.
Consumers should also consider the value of awards and ratings as they shop for car insurance. A.M. Best rates the financial solvency of an insurance company, informing consumers of the insurer’s ability to pay claims, and J.D. Power & Associates evaluates satisfaction levels for insurance companies’ claims, billing and payments, price, policy offerings, and other interactions. See Quoted’s Car Insurance Buying Guide for more info.
The bottom line? Never buy a car solely because of its prestigious-sounding award. Auto industry awards can offer useful information to car shoppers, but they should be just some of many criteria drivers use to make such a high-cost purchase.