Automotive brand loyalty rate dips below 50% for third straight month
The shortage of automobiles available to retail customers –
triggered by the pandemic and semiconductor shortage – has resulted
in shoppers walking away from their favored brands in record
numbers. The link between loyalty and days’ supply is very strong,
and as inventories have fallen, so has loyalty.
New vehicle registration data indicate that household loyalties
at four strata – manufacturer, brand, segment, and model – all are
at their lowest levels since at least the start of 2019, according
to an S&P Global Mobility analysis.
Vehicle registration data for July 2022 – the most recent data
available – marked the third consecutive month in which households
returning to market were more likely to defect than remain loyal to
the brand in their garage.
Industry-wide brand loyalty in July was just 49.4%, the lowest
of any month in three years. Manufacturer loyalty of 55.9% also was
the lowest any-month level for the period.
Segment loyalty retreated to just 32.2% in July, down from 35.8%
three years ago, while model loyalty of 24% is down more than three
percentage points from three years ago. Both numbers were the
lowest any-month result in this time span.
As a result, owners who brands and dealers trust to return for
the same vehicle – and who have returned in the past – now
are defecting at a greater rate than they are returning. That puts
a brand’s market share and a dealer’s profits at risk. It is
incumbent on brands and dealers to proactively reach out to their
owner bases to minimize defections.
But these elevated defection rates also are an opportunity for
automakers already seeing a return to stronger inventories. OEMs
and dealers can take advantage of this landscape by reaching out to
the appropriate audiences to attract these more migratory
households. If a new or re-designed model is arriving with a
stronger product or value proposition than its competitors, in
sufficient numbers, this could be prime time for conquesting
customers.
—————————————————————————————–
This automotive insight is part of our monthly Top
10 Trends Industry Report.The Report findings are
taken from new and used registration and loyalty data.
The September report is now available, incorporating July 2022
CFI and LAT data. To download the report, please click below.
DOWNLOAD REPORT
This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.
