Insurance Incentive Hikes Car Sales 23 Percent

Two-thirds of buyers say auto insurance incentive prompted them to buy a VW



BETHPAGE, N.Y., April 11 /PRNewswire/ -- The first test of an incentive in

which an automaker paid the insurance on every new car in the pilot concluded

March 31 with a 23 percent rise in year-to-year sales. Two-thirds of buyers

said the insurance package was influential in their purchase decision.

The results were announced today by Creative Innovators Associates, LLC, a

Long Island consulting and marketing firm that invented and is patenting the

In The Car (ITC)(TM) incentive program, with information provided by

Volkswagen of America Inc., which piloted the unique incentive.

Volkswagen provided one year of insurance underwritten by Nationwide

Mutual Insurance Company and its affiliated companies. Insurance for every

new Golf, New Beetle and New Beetle Convertible purchased or leased in

Illinois and Wisconsin from January 4 through March 31, 2005. Proof of

residency and a valid driver's license in either state were the only

requirements.

Volkswagen reported that year-to-year sales of the three models rose 23

percent in Wisconsin and Illinois during the three-month pilot, compared to a

decline of 15 percent on those models nationally.

Creative Innovators' agency call center, which handled the initial

customer and dealer contact, polled the drivers of the covered VWs and found:



* Two-thirds said the ITC(TM) incentive "greatly" or "somewhat"

influenced their decision to purchase the car.

* Creative Innovators' forecast that the incentive would attract a wide

range of buyers -- not just young, high-risk males -- was borne out:

Two thirds of the primary drivers are between the ages of 30 and 64.

* The incentive attracted male and female drivers in nearly identical

numbers.

* More than half the primary drivers are married.



"We designed the In The Car(TM) incentive to move the focus away from

rebates, which diminish a car's resale value, and to put the spotlight on

something the customer truly needs and values: insurance," said Bob Wallach,

managing member of Creative Innovators and inventor of the program. "Our

statistics show insurance is the second most expensive element in new-car

ownership."

The pilot also showed that the ITC(TM) incentive was effective in

targeting specific models on a state-by-state basis, Wallach said. Creative

Innovators strategically focuses on segmented incentive programs, which

deliver cost-effective sales.

"Our patent-pending processes and systems can certainly adapt to a

mass-market approach, but we believe that the auto industry currently needs

laser-sharp marketing programs, and that is where the expertise of Creative

Innovators Associates lies," he said. "Our trend analysis shows that

targeted, segmented incentives will inevitably prove to be the most efficient

and least costly growth strategy for auto marketers."

Analysis from automotive research leader Edmunds.com indicates that

regional incentives are inherently more cost-effective than national

incentives. Successful national programs must be generous enough to

dramatically draw consumer attention in every market, while regional

incentives can be tailored to fit more specific buyer demographics and

tendencies.

"The ITC(TM) pilot showed us that consumers recognized the value of

insurance-added incentive," Wallach said. "Rebates ultimately hurt the resale

value of their cars and only a fraction of buyers qualify for zero percent

financing offers. In The Car(TM) insurance includes virtually all buyers of

the targeted models."

"It is important to consider all ownership costs of a vehicle, not just

the purchase price," according to Phil Reed, author of Edmunds.com's

Strategies for Smart Car Buyers. "Depreciation can be an unexpected blow to

those who take advantage of large cash rebates and want to sell the vehicle a

short while later."

Nationwide Insurance, VW and Creative Innovators continue to analyze the

results of the pilot and explore options to continue their collaboration.

"Nationwide is now conducting a more thorough analysis of the program,

which we anticipate will take some time to complete," said Bonny Parker, Vice

President of Standard Auto Product Management for Nationwide. "However, we

are quite pleased with the initial results of the In The Car pilot."

Wallach praised the team that launched the pilot: "The results of this

pilot exceeded our expectations. It proved our back-shop systems. Dealers

told us they were pleased by the training, the effectiveness of the incentive

and the no-hassle buying experience, in which they were able to hand a

customer a temporary insurance certificate in less than five minutes.

"Through the hard work and creativity of Volkswagen and Nationwide, we

executed a truly innovative method of marketing vehicles," he continued. "The

results validated what we believed all along: that ITC(TM) can revolutionize

the way car insurance is sold."