Ending consecutive periods of year-over-year declines, brand
loyalty movement among U.S consumers halted in the first half of
2023, according to S&P Global Mobility analysis of new vehicle
registration data.
The industry's brand loyalty rate of 50.6% was identical to the
same period in 2022, despite a 7% increase in return-to-market
volume among consumers. The lack of change in loyalty is a positive
sign for the industry, which had been facing sharp decreases in
loyalty due to pandemic-related inventory shortages.
A primary contributor to halting declines were luxury brands,
which saw a 2.7 percentage point (PP) increase in brand loyalty
year-over-year. The mainstream sector, which accounts for the
largest source of consumer return-to-market volume, saw brand
loyalty decline by 0.4 PP over the same period. Inconsistent
improvements in available inventory were the primary factors in
loyalty gains and losses for the first half of 2023.
“Rising inventory levels are helping to curb the loyalty
declines we've seen in previous years,” said Vince Palomarez,
associate director, Loyalty product management at S&P Global
Mobility. “However, the distribution of inventory recovery varies
by auto manufacturer, making it difficult to see any significant
gains. Some brands were able to benefit from inventory recovery
while others were unable to.”
Conquest volume benefited year-over-year, as a result of
loyalty's stagnation, rebounding from 2022's decline. Volume for
the first half of 2023 saw a 7% increase versus the same timeframe
in 2022 as consumers were left to search outside of their normal
channels to find a vehicle if inventory levels were low.
“The last few years have shown that if a consumer has a need for
a certain type of vehicle, they are not going to wait for their
preferred brand to supply it,” said Tom Libby, associate director
for loyalty solutions and industry analysis at S&P Global
Mobility. “This has opened the door for more brands to capture
market share from traditional leaders. Years of investment in
quality and technology among the industry has evened the playing
field, and we are seeing some of the smaller brands take advantage
of that.”
Among individual brands, Tesla remains the leader with a loyalty
rate of 68.4% for the first half of 2023. While all models in
Tesla's lineup have high retention rates, the Model 3 stands out as
the clear leader with more than 74% of its returning consumers
remaining loyal to the brand – mostly by acquiring a Model Y.
“Tesla has proven it has a strong connection with its customers,
despite increasing competition in the BEV market,” said Palomarez.
“Calculated price drops and timely incentive offerings have helped
to boost interest and keep the brand's positive momentum
going.”
Additional mid-year highlights:
- General Motors is ahead of last year's pace in loyalty to
Manufacturer, leading all multi-brand manufacturers for the first
half of 2023 - Buick and Land Rover are among the highest year-over-year
gainers in brand loyalty, improving rates by more than 10 PPs - The Lincoln Nautilus and Ford F-Series are the leaders in model
loyalty
S&P Global Mobility experts will share more detail on the
mid-year analysis during our next Loyalty webinar
on October 5 at 1:00 p.m. ET.
(a replay will be available to those who register)
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