Digital auto retailing is on the rise, but dealership appearance remains an important sales factor.
That point was made by S&P analyst Tom Libby during an online presentation at the recent S&P Global loyalty review.
“Dealers in a competitive market have to be sensitive to the physical appearance of their facilities,” he says. “No question, the digital world is gaining but given the nature of the business, OEMs (and dealers) are smart to have physical facility standards for their dealers.”
The report shows Ford and Chevrolet hold close one-two spots in a ranking of mainstream auto brands with the most loyal customers in the U.S.
On the luxury side, Tesla is the runaway leader in return customers.
Yet, overall automotive consumer loyalty isn’t what it used to be. A greater number of shoppers have hopped from one brand to another in recent years although things are improving, slightly.
If you’re big on brand loyalty, the S&P data – which covers January to September of this year – isn’t particularly great news.
“It’s been flat for a long time,” Libby says of brand loyalty. “It’s disappointing but we expect it to improve.”
Industry loyalty rates did bump up a bit in this year’s third quarter to 50.4%. That was the first increase since 54.1% in 2019.
And from May to September of this year, brand loyalty across the industry increased an average of 1 percentage point a month.
The mainstream top 10 loyalty ranking is as follows: Ford (58.7%), Chevrolet (57.3%), Toyota (53.5%), Subaru (52.9%), Kia (52.1%), Nissan (52%), Honda (51.9%), Hyundai (51.5%), GMC (46%) and Mazda (45.4%).
Of the luxury top 10, which is heavy on international brands, electric-vehicle maker Tesla owners are by far the most loyal at 68.8%.
“Tesla is pulling a lot of customers from other brands,” Libby says.
The rest of the upmarket pack ranks as follows: Mercedes-Benz (50%), BMW (49.1%), Volvo (47.4%), Lexus (47.2%), Cadillac (46.4%), Audi and Porsche (both at 44.5%), Acura (44.4%) and Lincoln (44.2%).
Buick didn’t make the top 10, but it outpaced the rest of the mainstream sector in year-over-year increase in brand loyalty (9.2%), Libby says.
Honda and Nissan saw increases of just over 3%. Losing ground were Mitsubishi and Jeep (4.6%),
For luxury brands, Land Rover, Infiniti, Acura, Volvo and Audi all saw year-over-year loyalty increases of 7 percentage points or higher.
Big-league automakers must play both defense and offense to keep current customers and lure new ones from competitors.
For dealers and manufacturers, the lesson is clear: It’s easier to keep customers than “conquest” new ones from other brands, Libby says. “But in general, you want a lot of both loyal and conquest customers.”
Brands such as Chevrolet and Honda, which traditionally have seen more sales come from return buyers, “are seeing an increase in inflow from conquest households,” Libby says.
Dealer advertising plays a role in brand loyalty, according to S&P Global.
The company reports that a 67% increase in dealer inventory advertised (2.7 million units) coincided with a 1.6 percentage point increase in industry brand loyalty from September of last year to September 2023.
Brands with certified pre-owned programs to resell off-lease vehicles “see a consistent lift in loyalty when buyers return to market and purchase new vehicles compared to non-CPO households,” Libby says.
