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Auto brand loyalty at a 10-year high

News, 02 July 2015
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SOUTHFIELD, MI: More than half (52.8%) of US car buyers kept to the same brand when buying a new vehicle in the first quarter of 2015, the highest loyalty rate for a decade, according to analysis of recent car sales.

IHS Automotive, a market intelligence provider for the industry, attributed the increase in loyalty to there being more models on the market as well as a 62% rise in the rate of vehicle leasing over the past 10 years.

Improved new vehicle quality was also a factor as were the discontinuation of some well-known brands during the economic downturn, good finance options and effective marketing.

"The increased number of different models within brands makes it easier for households that may need a different type of vehicle to maintain their loyalty," explained Tom Libby, manager of automotive loyalty and industry analysis at IHS Automotive.

"In addition, the increased popularity of leasing since the downturn has helped significantly as lessees are consistently more brand loyal compared to retail owners."

Several leading brands benefitted from these industry trends with all them experiencing high loyalty rates. They included: Chevrolet, GMC, Infiniti, Jeep, Land Rover, Lexus, Lincoln, Mazda, Mitsubishi, Nissan, Porsche, Subaru and Volvo.

The number of different car models sold in the US increased 12% since 2005 and the wider choice has increased the probability that new purchasers will remain loyal to a particular brand.

Furthermore, the number of brands has decreased since the recession, so former owners of discontinued brands, such as Pontiac, Mercury or Saturn, are now returning to market and being forced to switch to a surviving brand.

Manufacturers and marketers are well aware that retaining customer loyalty is more cost effective than having to win over new customers, the report said.

But it warned: "It is critical that they also continue their conquesting activities in order to compensate for the normal churn in their customer base." Most brands lost more customers than they kept in 2014, the report pointed out.

Good product, marketing and financing will be even more important in the battle to win new customers and the report advised brands to concentrate on understanding the ownership life cycle – being able to predict who will return to market and when.

Data sourced from IHS Automotive; additional content by Warc staff

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