Automotive Loyalty Reaches Highest Levels in a Decade, IHS Says
June 29 2015 - 12:50PM
Business Wire
Customer loyalty to automotive brands reached a 10-year high
during the first quarter of 2015, according to analysis from IHS
Automotive, a global provider of critical information and insight
to the automotive industry and part of IHS Inc. (NYSE: IHS).
Brand loyalty during first quarter 2015 was 52.8 percent, the
analysis found. Several brands also experienced 10-year highs in
loyalty rates, including Chevrolet, GMC, Infiniti, Jeep, Land
Rover, Lexus, Lincoln, Mazda, Mitsubishi, Nissan, Porsche, Subaru
and Volvo.
Key drivers of these record results include a number of factors,
said Tom Libby, manager of automotive loyalty and industry analysis
at IHS Automotive.
“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,” Libby said. “In addition, the increased
popularity of leasing since the downturn has helped significantly
as lessees are consistently more brand loyal compared to retail
owners.”
The number of models available in the U.S. market increased by
33 (12 percent) from 2005 to 2015, driven by major increases at
several luxury brands. Customers returning to market now have a
greater number of choices at the brand from which they purchased
their original vehicle, increasing the probability they will remain
brand loyal.
Industrywide, vehicle leasing has not been higher this decade
either, and has rebounded from its decade low of 13.9 percent of
the market in 2005 to 22.5 percent of the market so far in 2015, a
nearly 62 percent increase. Based on new vehicle registrations
analyzed by IHS Automotive, 24 of 32 segments reviewed had an
increase in lease penetration over the decade.
In several vehicle segments, there have been increases in
leasing penetration of more than 20 percentage points. This leasing
trend is due, in part, to greater cooperation between OEM captive
finance arms and their operating divisions.
Other contributors to higher loyalty rates include improved new
vehicle quality, which is keeping consumers happy with their
vehicle choice over time, implying higher loyalty and lower
defection rates. Marketers also are aware that it is more cost
effective to retain a customer than to conquest one, and therefore
OEMs are placing a greater focus on loyalty and customer
satisfaction over time.
Disloyal, by default
Consumers who returned to market for a new vehicle after driving
brands that have been discontinued – such as Pontiac, Hummer,
Mercury or Saturn, to name a few -- also account for some of the
uptick in loyalty. Based on IHS analysis, the number of households
returning to the market who had a discontinued brand in the garage
has declined by 49 percent from 2010 to 2014, from 240,208 to
123,388. This dwindling group of households was forced to be
disloyal and defect to another brand, since the brand of their
garaged vehicle was no longer on the market.
OEMs are seeing the benefits from their efforts in vehicle
content, expanded product lines and financing offerings to retain
their customers as the market has stabilized from the great
recession. Retention is critical for manufacturers to increase
their market share. While OEMs are experiencing increased
retention, it's critical that they also continue their conquesting
activities in order to compensate for the normal churn in their
customer base. In 2014, most brands lost more customers than they
kept.
In addition, conquesting owners of competitive products will
only get more difficult as the share of defectors declines.
Product, marketing and financing actions will take on additional
importance as brands attempt to conquest competitive owners. More
specifically, among other things, understanding ownership life
cycles, including the ability to predict which customers will
return to market - and when - will be key competitive advantages
moving forward.
About IHS Automotive loyalty methodology
Loyalty is determined when a household that owns a new vehicle
returns to market and purchases or leases another new vehicle of
the same make, model or manufacturer. IHS Automotive analyzes
loyalty throughout the year and regularly works with its customers
to effectively manage owner loyalty and conquest efforts through
in-depth research and analysis of automotive shopping behaviors,
related market influencers and conquest and retention
strategies.
About IHS Automotive
(www.ihs.com/automotive)
IHS Automotive, part of IHS Inc. (NYSE: IHS), offers clients the
most comprehensive content and deepest expertise and insight on the
automotive industry available anywhere in the world today. With the
2013 addition of Polk, IHS Automotive now provides expertise and
predictive insight across the entire automotive value chain from
product inception—across design and production—to the sales and
marketing efforts used to maximize potential in the marketplace. No
other source provides a more complete picture of the global
automotive industry. IHS is the leading source of information,
insight and analytics in critical areas that shape today’s business
landscape. IHS has been in business since 1959 and became a
publicly traded company on the New York Stock Exchange in 2005.
Headquartered in Englewood, Colorado, USA, IHS is committed to
sustainable, profitable growth and employs about 8,800 people in 32
countries around the world.
IHS is a registered trademark of IHS Inc. All other company and
product names may be trademarks of their respective owners. © 2015
IHS Inc. All rights reserved.
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email michelle.culver@ihs.com. To read our privacy policy,
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IHS AutomotiveNews Media Contact:Michelle Culver,
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