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As the U.S. auto industry readies itself for its most transformative period in history, according to the 2018 Edmunds Trade-In Loyalty Report, Toyota, Subaru, and Honda customers have exhibited the most brand loyalty.
“Both Toyota and Honda have built reputations for quality and reliability that resonate with purchasers who are looking to keep their vehicle for an extended period of time,” the report says. “Their full model lines do a good job of keeping customers in the family. But not only that, the two automakers also report the highest model-to-model loyalty rates in many segments. Camry and Accord stand at the very top of the midsize segment while their SUVs are also near the top of their respective segments.”
Jeremy Acevedo, Manager of Industry Analysis for Edmunds, told Loyalty360 that Toyota and Honda have been able to maintain a devoted base of car shoppers, “even as record numbers of shoppers flock to SUVs. Subaru has built a lineup that’s anchored by capable and economical SUVs that hit a sweet spot for their loyalists.”
The report examined more than 13.9 million vehicle transactions between 2007 and 2017, examining the percentages of vehicles traded in to purchase a new vehicle. Lease returns were excluded from the study.
“The biggest takeaway is that people’s tastes in vehicles are changing at rates that we’ve never seen and automakers need to focus on keeping buyers in the brand,” Acevedo explained. “Luxury SUVs have really shaken the luxury segment up. Buyers considering moving from a car to an SUV are a prime opportunity to capture owners from competing brands.”
Instability in the short term could severely jeopardize the future success of automakers, the report notes.
“Due to the glut of new SUVs on the market and the creation of new segment niches, automakers are faced with the immediate challenge of maintaining a base of buyers at a time when nameplate loyalty no longer holds the weight it once did,” the report says. “While it’s critical for automakers to continue to demonstrate that they’re looking toward an electric and autonomous future, they must avoid being too farsighted. With sales continuing to cool off from record highs, customer loyalty is of the utmost importance to automakers in order to maintain current sales and market share—and to fund their expensive visions for the future. Automakers today must address the issue of preserving loyalty as shopper demand shifts away from cars to ensure they are viable players in the future.”
How can automakers best deal with shifting consumer sentiment?
“Having a strong lineup of vehicles of all sizes is the only real strategy,” Acevedo says. “Being able to hold onto car customers, or providing them the opportunity to make the jump into an SUV on the same dealer lot is what the top performers have in common. We’ve seen manufacturers go with a few different approaches. FCA [Fiat Chrysler Automobiles], for example, is shuttering several car nameplates to focus their efforts on trucks and SUVs to capitalize on shifting shopper preference. Automakers have also raised the bar on car styling to keep buyers in the fold. The Camry and Accord stand out as models that have foregone more pedestrian designs for some edgier sheet metal.”
Acevedo noted that leasing has grown considerably in the past few years and does facilitate the opportunity of repeat business.
“While lease returns were not part of our loyalty study, leasing does at least give lessors the first shot at winning repeat business,” Acevedo added. “There are a number of tactics deployed to keep people in the brand, from pull-ahead programs to waiving disposition fees. Many more that I’m unaware of, too, I’m sure.”
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