Editorial: The Truth About J.D. Power's Vehicle Launch Index (VLI)

Michael Karesh
by Michael Karesh

Earlier this week, J.D. Power gave the automotive world a new score to ponder: the Vehicle Launch Index (VLI). This addition to the survey giant’s quality canon aims to measure how well manufacturers launch new or redesigned models. It’s a worthy endeavor; a new model’s success in its first few months often predicts its long-term sales and profitability. But what do these new J.D. Power scores tell us? In the immortal words of Jeff Spicoli: I don’t know.

This first set of VLI scores includes 27 models introduced in the first ten months of 2008. The top scorer: the Hyundai Genesis. The bottom scorer: the Toyota Matrix. Speaking to Automotive News [sub], J.D. Power Senior Vice President Gary Dilts characterized the Hyundai luxury sedan’s launch as “flawless;” a characterization that captured the media’s immediate attention and pleased the Korean automaker to no end. The rear wheel-drive sedan’s score: 689 out of 1,000. Flawless? On a curve?

That’s only the first of many VLI oddities. The VW Routan falls just three points shy of the 582-point average. The slow-selling German-engineered (or not) minivan had a decent launch—who knew? The Audi A4 ranks much lower, tying with the now-defunct Pontiac G8. So should Volkswagen of America aim for more launches like the Routan’s, and fewer like the A4’s? Meanwhile, the Ford Flex, which has had an agonizingly slow start and (according to J.D. Power’s IQS) poor initial quality, ranks near the top of the VLI.

How can models that are selling poorly or that have poor initial quality attain decent, even high scores for their launch/re-launch? Drilling down, J.D. Power’s VLI scores include turn rate, vehicle revenue, dealer gross profit, incentive spend, credit quality, residual value, customer appeal and initial quality.

J.D. Power’s famous Initial Quality Survey (IQS) combines two totally different elements: design quality and mechanical quality. As a result, the line between them is muddled. In fact, it’s still not entirely clear what a particular IQS score represents.

With the VLI, J.D. Power has taken this lack of clarity to a whole new level. Where the IQS has two subscores, the VLI has [at least] eight. So when looking at any particular score, it’s impossible to say what it represents. The Ford Flex and VW Routan did well at . . . some things. The Audi A4 blew it with . . . maybe the same things. Maybe something else. Who knows?

These model subscores aren’t the only part of the VLI that J.D. Power’s keeping from public scrunity. The actual formula has also been kept under wraps. Nothing is said about how the variables and weights in this secret formula were determined—except that the formula followed from “carefully analyzing more than 90 vehicle launches.”

Without knowing this formula, it’s far from clear how much weight each factor receives. Judging from the scores, initial quality doesn’t carry much weight. Nor does how close a model comes to achieving its sales targets. Maybe all eight-plus factors are equally weighted, such that none of them carries much weight by itself?

One thing is clear: the VLI isn’t evaluating launches from a car buyer’s perspective.

Car buyers, who’ve learned to be wary of buying a new model in its first year, are focused on their need for information on a vehicle’s initial reliability. “Appeal” they can judge with their own eyes. They couldn’t care less about dealer profitability and inventory turns (whatever that is). Car buyers’ needs would be much better served by a metric that focuses on initial reliability and that provides this information as quickly as possible. [Fair disclosure: Mr. Karesh’s TrueDelta offers a Car Reliability Survey offers that information.]

Of course, it should come as no surprise that a J.D. Power-crafted metric would focus on the manufacturer’s needs. J.D. Power earns its millions by serving manufacturers, not by serving car buyers. Their M.O.: persuade manufacturers that they need a high score based on a proprietary formula, then sell them the data and consulting services that will help them boost their scores.

In the official press release, J.D. Power offers some tips to its corporate benfactors gratis: set realistic prices, set realistic sales targets, style the vehicle well, and achieve high initial quality. (Notable by their absence: advertising and PR.) Of course, everyone in the biz already knows this much; much as everyone knows that the way to lose weight is to eat less and exercise more. The hard part isn’t knowing what should be done, but doing it.

Meanwhile, J.D. gets another service to sell to the biz, while auto industry execs get more hardware for their ego shelf and another bullet point for their resume. Well good for them. But the VLI’s yet another example of car biz navel gazing, a metric that marginalizes a central, well-established fact: the customer comes first.

Michael Karesh
Michael Karesh

Michael Karesh lives in West Bloomfield, Michigan, with his wife and three children. In 2003 he received a Ph.D. from the University of Chicago. While in Chicago he worked at the National Opinion Research Center, a leader in the field of survey research. For his doctoral thesis, he spent a year-and-a-half inside an automaker studying how and how well it understood consumers when developing new products. While pursuing the degree he taught consumer behavior and product development at Oakland University. Since 1999, he has contributed auto reviews to Epinions, where he is currently one of two people in charge of the autos section. Since earning the degree he has continued to care for his children (school, gymnastics, tae-kwan-do...) and write reviews for Epinions and, more recently, The Truth About Cars while developing TrueDelta, a vehicle reliability and price comparison site.

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  • Mpresley Mpresley on Jul 25, 2009

    In my city, downtown (Orlando, Fl), I see a ton of VW sedans (Golf, Jedi, and Passat) along with two tons of A4. I've never seen a Routan, and hope I never do. On the other hand, for my own perverse and depraved purposes, I would not mind owning the life-sized cardboard cutout of Ms Shields that the local VW dealer has hidden in an obscure corner of his showroom.

  • Lug Nuts Lug Nuts on Jul 27, 2009

    @paulie: And, doesn’t the Genesis ONLY sell 1K to 2,000 cars a month? Is this a great introduction? Consider it's a brand new, near-luxury sedan from Hyundai (Hyundai!), with an introduction during the worst recession in decades. It seems rather remarkable that Hyundai is able to sell 1K-2K units/month. That speaks volumes about how much the public perception of Hyundai has changed for the better. Acura and Buick (and perhaps BMW and MB) are green with envy.

  • EBFlex At the summer property putting boats in the water, leveling boat lifts, cleaning the lots for summer, etc. Typical cabin stuff in the most beautiful place on the planet
  • Lou_BC I've I spent the past few days in what we refer to as "the lower mainland". I see Tesla's everywhere and virtually every other brand of EV. I was in downtown Vancouver along side a Rivian R1T. A Rivian R1S came off as side street and was following it. I saw one other R1S. 18% of new vehicles in BC are EV'S. It tends to match what I saw out my windshield. I only saw 2 fullsized pickups. One was a cool '91 3/4 ton regular cab. I ran across 2 Tacoma's. Not many Jeeps. There were plenty of Porches, Mercedes, and BMW's. I saw 2 Aston Martin DBX707's. It's been fun car watching other than the stress of driving in big city urban traffic. I'd rather dodge 146,000 pound 9 axle logging trucks on one lane roads.
  • IBx1 Never got the appeal of these; it looks like there was a Soviet mandate to create a car with two doors and a roof that could be configured in different ways.
  • CAMeyer Considering how many voters will be voting for Trump because they remember that gas prices were low in 2020–never mind the pandemic—this seems like a wise move.
  • The Oracle Been out on the boat on Lake James (NC) and cooking up some hella good food here with friends at the lake place.