The Truth About Consumers Digest

Edward Niedermeyer
by Edward Niedermeyer

With strong new auto safety legislation being debated in congress,the role and scope of government regulation in the auto industry is becoming a hotly-contested issue. But one important consideration is being left out of the discussion: the role of private “regulation” of the auto industry. Even as the new legislation was being drafted, we were treated to an object lesson in non-governmental regulation when the non-profit Consumer Reports issued a “do not buy” warning for the Lexus GX after it exhibited lift-off oversteer on a test course. Because CR performs independent testing on a wide variety of dealer-example vehicles, it was able to detect this error, which prompted Toyota to stop sales and production of the model until a fix was released. Throughout the incident, NHTSA played second fiddle to CR, merely checking the non-profit’s work. The lesson: a subscriber-based, non-profit is the real front line of US auto regulation. But, as the Wall Street Journal [sub] reports, Consumer Reports is being shadowed by another organization called Consumers Digest… and you don’t want to make the mistake of confusing the one with the other.

Consumer Reports is owned by the not-for-profit Consumers Union, and it jealously guards its credibility. CR buys all the vehicles it tests to ensure that they are not OEM-fettled for flattering performance, and refuses to allow its awards to appear in manufacturer advertising. As head of testing David Champion puts it to the WSJ,

We do not want to be beholden to the manufacturers in any way. We don’t want to be seen as selling our names to manufacturers

The same can not be said for its doppelganger, Consumers Digest. Like CR, CD puts out a regular report with “best buy” recommendations of certain vehicles. Like CR, the CD publication runs no advertising, but instead of relying on consumer subscriptions, CD has a very different source of revenue: licensing its awards for advertising purposes. As an example, the WSJ points out that GM received no fewer than 15 CD “Best Buy” awards, and GM has paid the magazine to use those ads in its marketing and advertising efforts. Though GM refused to reveal how much it paid CD to license its 2010 awards, but CD says the traditional fee is $35k for the first award and $25k for each award thereafter.

Of course, CD swears that this troubling business model in no way affects the decision to award “Best Buy” kudos to a given manufacturer. Editor Rich Dzierwa tells the WSJ that there is

no pressure on the editorial staff to consider products, to consider vehicles because either they have been licensees or because there is a possibility that they will be. Licensing comes after our review process

Of course there’s evidence that this isn’t the whole story, namely that CD’s award page lists all winners of its “Best Buy” award but only offers links with further information for models that have paid CD licensing fees.

Not that GM is sweating the appearance of being the major benefactor of an award mill. GM executive director of marketing Paul Edwards tells the WSJ:

We had done some research in terms of what resonates [with consumers] and what doesn’t, and Consumers Digest scores near the top

Now, why would that be? Would it be because Consumers Digest is widely available and read by millions? Not likely, considering the WSJ’s revelation that CD

has no subscribers, runs no ads and is only available in certain bookstores and retail shops

Could this under-earned “resonance with consumers” have something to do with the fact that the name “Consumers Digest” sounds incredibly similar to the name “Consumer Reports,” possibly the best-known source of reliability and quality data in the country? There sure isn’t an overabundance of alternate explanations.

Granted, Consumers Digest isn’t the only company out there peddling awards and surveys to automaker marketing departments. According to an unnamed automaker,

J.D. Power charges as much as $300,000 for copies of a survey, and the same amount to use the awards in ads

And there are plenty of other examples of firms that generate marketing materials for a fee, while insisting that the fees in no way affect the outcome of their surveys and awards. What makes the Consumers Digest example so especially galling though, is the similarity between its name and Consumer Reports. Given that CR is the closest thing to a private auto regulator in this country (and the only “regulator” that regularly tests random vehicles), this would be akin to founding a fuel efficiency-rating organization named The Environmental Protection Association, and accepting fees from automakers to feature the “EPA ratings” it generates in advertisements.

Luckily, private regulation doesn’t come down to a single agency, but rather relies on whole networks of private actors to inform consumers and citizens. By informing the public of the differences between CR and CD, the WSJ (and now, TTAC) are themselves regulating the regulators, separating the wheat (CR) from the chaff (CD). Ultimately though, the best reliability data comes from consumers themselves as well as their non-profit watchdogs. TTAC contributor Michael Karesh may not have a dedicated test track or the budget to regularly buy vehicles for testing purposes, but his TrueDelta site solicits data from the actual owners of vehicles, providing an instant, unfiltered and broad sense of a model’s reliability profile. Databases like TrueDelta, as well as well-funded, non-profit regulators like CR are crucial to maintaining a well-informed car-buying public, which in turn is crucial to healthy market function. By exposing the less-scrupulous operators in the field of automotive awareness, we hope TTAC is contributing to this end as well, in its own distinct way.

Edward Niedermeyer
Edward Niedermeyer

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  • Northview Northview on May 11, 2010

    The dealer told me I had better give my new car a good rating on the maker's survey.

    • Rob Finfrock Rob Finfrock on May 11, 2010

      The dealer I bought my Grand Am from in 2004 initially bribed me with a free tank of gas. I held out for (and received) two tanks of gas, and a coupon for a complimentary detail. And we wonder why GM got in trouble, LOL. By comparison, the Mazda store I bought from two years later said they'd give me a tank of free gas when I returned the survey -- already filled out, and sealed in its envelope. I watched the sales rep put it in the outgoing mailbox. They also washed the car without being asked.

  • Scottdb Scottdb on May 11, 2010

    C'mon, folks. Volkswagon Routan a "Best Buy"?!? Credibility Fail.

    • Also Tom Also Tom on May 13, 2010

      Yes. There's a possible validity test: how many current Chrysler products are a "best buy" or "recommended"?

  • 1995 SC As this is another car with Toyota badging that they didn't actually build, perhaps this is the new Supra.
  • ToolGuy Weather was cooler yesterday and there was a slight noise on startup several hundred miles from home. We better add 'water pump' to the watch list for the daily driver. Can you remind me when we get home? Thanks.
  • ToolGuy Is it pronounced BMW (-"uh") or BMW (-"eh")?
  • Tassos This makes zero sense. IF Stellantis' dismal showing is indeed HIS fault, why keep him another 14 months AT LEAST? The Billions of extra losses will be 100 times more than the few millions they would give him for early termination. But I am pretty sure it is NOT his fault, but the DISMAL PRODUCT he had to work with. ..................Maybe it will take more than 14 months to find a DECENT REPLACEMENT for him?
  • 3SpeedAutomatic 66 yr old retiree. Had ‘12 Ford Escape at $780 each six months. Recently replaced with ‘22 Passport $900 each six months. Liability at max ($250k), plus comp/collision on each due to many in Louisiana without auto insurance. Could not afford uninsured motorists for that would double premium.Latest scam are those with temporary license plates on older cars. Sign that they don’t have insurance. Temporary tags are easily duplicated. Getting out of hand. 🚗🚗🚗
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