Ethnic share in the US light vehicle market reached a record 33% in September 2022. In other words, one of every th… https://t.co/10WcC7jVTj
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.
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.
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