By Jamie LaReau, Crain News Service
DETROIT (Nov. 6, 2014) — Owners of Dodge vehicles keep them longer than those who own Fords, but Ford tops all automotive brands in terms of owner loyalty.
Those two facts are related.
The longer a customer owns a vehicle, the less likely he or she is to buy that same brand again, an Experian Automotive study found.
Experian, a Chicago-area data analysis company, said consumers who owned their vehicle for 12 months would purchase their next vehicle in the same brand 57 percent of the time. But for consumers who owned a vehicle for 12 years, the loyalty to the brand dropped to 34 percent.
The most significant drop in brand loyalty occurred after 36 months, dropping by nearly 10 percentage points, Experian said.
“Leases with their fixed-length ownership cycle are typically strong contributors to brand loyalty,” said Brad Smith, director of automotive market statistics for Experian Automotive, in a statement. But that applies only to leases with shorter terms.
In the first quarter, the most recent period for which data was available, the average length of ownership was 93 months, or about 8 years, and the average brand-loyalty rate was nearly 50 percent.
Both increased from a year earlier, when the average length of ownership was 92 months and the average brand-loyalty rate was 48 percent. But the two factors generally don't reinforce each other.
Why do consumers become less loyal over time? Because, Mr. Smith said, things change. A brand's lineup changes, while a consumer's budget or credit score can change.
“Additionally, the increase in time between dealer interactions, whether they are for sales or service, increases the probability of a customer defecting to the competition,” he said.
After Ford, Subaru has the second-highest loyalty rating among automotive brands in the U.S., according to Experian.
Prompt a trade-in
Subaru dealer Adam Arens said he aggressively offers to buy his customers' Subaru vehicles just two or three years into their ownership and get them into a new Subaru for a lower monthly payment.
Mr. Arens wants to preserve the relationship he has with that customer. It also allows him to restock his used-vehicle inventory with late-model cars, which helps pump up used-car sales and brings service and maintenance work on those cars.
“So as long as you're maintaining a relationship with the customer, the car is the car,” said Mr. Arens, president of Patriot Subaru near Portland, Maine, and North Attleboro, Mass. “If the car has 45,000 miles on it and needs tires, it still needs tires when traded in, so the service work is always there. There's no negative to trading somebody early as far as I'm concerned.”