Surveying a Research Rivalry : Car analyses: An upstart rival contends that industry giant J. D. Power & Associates is trying to drive it out of business with a lawsuit.

J.D. Power & Associates in Agoura Hills is nearly synonymous with car research, a distinction Power has earned by publishing customer-satisfaction surveys and other analyses for the world’s auto makers for more than a decade.

But that isn’t stopping a smaller rival, AutoPacific Group Inc. in Santa Ana, from trying to muscle in on parts of Power’s business.

So far, AutoPacific, with about $2 million in annual revenue, is still only one-tenth Power’s size, and it does not compete with Power’s stronghold on the market for ranking cars by owners’ preferences. It’s those surveys that provide Power with much of its publicity, because auto makers that score well often tout Power’s tally in their advertising.

Instead, AutoPacific focuses on researching cars and forecasting industry sales and production trends for the manufacturers and others within the industry--a field in which Power also competes.

Last summer AutoPacific scored a coup by hiring one of Power’s best-known analysts, Christopher W. Cedergren, and his associate Steven L. Morrison. AutoPacific’s founder and president, George C. Peterson, is himself a former Power executive. So now his firm is armed with three ex-Power analysts competing against their old boss, J. David Power III, who started J. D. Power & Associates in 1968.

The defection of Cedergren and Morrison, moreover, has led to a legal fight between the firms. In November, Power sued AutoPacific in Los Angeles Superior Court, alleging that Cedergren and Morrison took confidential Power documents, computer disks and other data and used the information in AutoPacific’s research. The suit seeks at least $750,000 in damages.

Peterson said some data was taken but later returned at Power’s request. He denies any wrongdoing by his firm or his employees, and said “not one nano-byte” of the data was used in any AutoPacific report.

Peterson, 44, also conceded that AutoPacific is being hurt financially because of the suit, and said that is exactly what Power wants. He asserted that Power is using the courts to destroy AutoPacific because his company has become another respected voice in the industry.

“I guarantee you their objective is to put AutoPacific Group out of business by forcing us to pay onerous legal expenses,” Peterson said. “A lot of it has to do with the public face, just the fact that Chris left. Until Chris came on board we were probably just a fly on their hide,” he said. “Now our presence is substantially higher. I think they took it personally.”

Power, who is also majority owner of his firm, declined comment. But the firm’s lawyer, Michael K. Grace, said Peterson’s assertions were “baseless.”

Grace said Power twice tried to settle the dispute--before and after the suit was filed--but to no avail. (Peterson called Power’s second offer “ludicrous.”) Grace also said the relative sizes of Power and AutoPacific are not at issue. Power “has to ensure that the materials are not going to be used in an anti-competitive way,” Grace said.

Peterson started AutoPacific in 1986, but in a halfhearted way. A former planning manager and engineer at Ford Motor Co., he moved to Power’s company in 1983 and became vice president of automotive programs. But in late 1985, Peterson said, he and several other people were laid off when Power went through a restructuring.

While pondering his next step, Peterson developed what would become AutoPacific’s first major product: The Competitive Battleground, an exhaustive yet easy-to-read overview of the car industry’s strategies for the next five years.

“I walked into people’s offices and said, ‘I don’t know if I want a job or if I want to sell you this,’ ” Peterson recalled. He eventually chose the latter.

The Competitive Battleground is published each quarter and costs about $9,000 to $10,000 a year, Peterson said. AutoPacific also sells a companion forecasting guide--costing about $17,500 a year--that analyzes every vehicle sold in the industry and its five-year outlook.

For instance, if the firm is evaluating Ford’s minivan, it will find out “exactly where it’s going to be produced, when it’s going to be produced, to determine what the plant capacities are going to be and to provide assessment of the strategic implications for other vehicles in the Ford lineup,” Peterson said.

AutoPacific’s research is bought by U.S. car makers, the American arms of the Japanese and European car makers, auto-parts distributors and advertising agencies, he said. Peterson has only six full-time employees, who operate out of a house AutoPacific owns. (By comparison, Power has 150 full-time employees.) Both Cedergren and his new boss, Peterson, are car buffs--Peterson owns an Acura Legend and a Mazda Miata, and Cedergren drives a BMW 535.

Joel Pitcoff, Ford’s manager of research and analysis, said the auto maker buys AutoPacific’s analyses even though Ford relies mostly on its own staff for forecasting trends. “You can’t afford to let yourself become too dependent on a single source,” he said.

Like Power, AutoPacific also evaluates individual vehicles for manufacturers, so-called “proprietary research” the public never hears about.

To do that, AutoPacific leads focus groups and conducts clinics and mail and telephone surveys to gauge the public’s reaction to certain models. The firm will ask for drivers’ opinions about a car’s outside and inside styling, its performance and comparison to rival cars in its class, sometimes by lining up the different cars and asking the respondents to make comparisons.

Not surprisingly, Power provides similar services. Which begs the question: What does AutoPacific offer that Power doesn’t? Peterson said it is more detailed knowledge of each car and truck and their sales prospects, and presentation in a more simplified form. The car-by-car forecast, for instance, reflects research “no one has done,” Peterson asserted.

“The auto industry is very big, it has a tremendous need for information presented in a way that the companies can use it,” Peterson said. “That’s what we’ve prided ourselves on, to take this information overload and provide an analysis the client can use.”

Patricia Patano, marketing director for special projects at Power, said, “I’m surprised they’d make that kind of statement given that they don’t know what we’re doing at present.” Besides, she added, “We’re looking at our last product as our biggest competition.”

Regardless, the car makers are reading AutoPacific’s research along with studies by Power and other car researchers such as Autofacts in West Chester, Pa. “Each one offers certain strengths,” said Tom Rossi, a spokesman at Mazda’s U. S. base in Irvine. Mazda’s researchers, he said, believe “AutoPacific seems to be a little better on product-specific stuff,” meaning its research about individual cars.

Cedergren used to work for Peterson at Power in the mid-1980s, and after eight years with Power he joined AutoPacific. Cedergren, 37, won’t comment on the lawsuit, but said his departure was initially amicable.

AutoPacific is “a situation where I tend to be more my own boss,” said Cedergren. In recent years Power has gotten bigger and branched into surveys for other industries--the company now ranks personal computers by customer satisfaction, for instance. “I prefer the environment of a smaller company,” Cedergren said.

Peterson said Cedergren didn’t get a big raise to join AutoPacific. But Cedergren does share in the profits of the firm’s forecasting guide, so “his compensation is directly related to the success of the product,” Peterson said.

But the more immediate question is whether AutoPacific can survive the cost of defending the lawsuit. Peterson said it can.

“I’m just about the only former Power employee who has ever gone on to build his own business that successfully competed in any way with what J.D. Power & Associates does,” he said. “We can handle it.”