Local company essential
to automobile industry
By Michael Binstock
Acorn Automotive Editor

Headquartered in Agoura Hills, directly across the freeway from The Acorn’s offices, is J.D. Power and Associates, one of the most influential companies in the auto industry. The company is used in advertising and as a standard for industry surveys, but very few outside the industry know much about J.D. Power.

J.D. (Dave) Power III set up his own marketing firm in 1968. Too often, according to Power, the client’s research department would "torture the data until it confessed," to get the kind of results management wanted to hear. What Dave Power wanted was the freedom to define marketing problems, produce solutions and provide management the information needed to achieve results.

Shortly after J.D. Power and Associates was founded, he received a tip on a Japanese company that was trying to market its cars in the U.S.-Toyota Motor Corp. The American staff in Toyota’s U.S. marketing department refused to see him. So he knocked on the door of a small building in the back, where Japanese staffers were handling the company’s forklift truck business. In short order, he was compiling reports.

Soon he was introduced to Tatsuro Toyoda, who later became the CEO of all Toyota operations.

When Toyoda asked where he kept the files for his new company, Power pointed to his head. An office didn’t exist at the time, he was operating from his kitchen table. In short order, he had a contract and a ticket to Japan.

In 1971, J.D. Power and Associates expanded to include other automotive companies and launched independent small-scale mail surveys on new products. The first one focused on the new Mazda rotary-engine car. Fourteen manufacturers from the U.S., Europe and Japan purchased the report. It was successful enough to warrant a follow-up study to gauge the acceptance of the product after one year of ownership.

It was that study that highlighted the "O ring" problem affecting the cooling system of the engine. The story of the O ring soon became front page news and established J.D. Power and Associates’ public credibility. In 1981, the company produced the first syndicated Customer Satisfaction Index (CSI)-a study that determined that quality was the key issue for customer satisfaction at that time. Other syndicated studies followed-in particular the Initial Quality Study (IQS) in 1989 that surveys customer attitudes after three months of ownership.