{"id":10581,"date":"2023-09-27T07:36:03","date_gmt":"2023-09-27T06:36:03","guid":{"rendered":"http:\/\/www.spglobal.com\/mobility\/en\/research-analysis\/fuel-for-thought-ev-marketing-challenges-vehicle-portfolio-grows.html"},"modified":"2023-09-27T07:36:03","modified_gmt":"2023-09-27T06:36:03","slug":"fuel-for-thought-too-many-toys-on-the-shelf","status":"publish","type":"post","link":"https:\/\/gamefootballmobileanimeiphone.com\/index.php\/2023\/09\/27\/fuel-for-thought-too-many-toys-on-the-shelf\/","title":{"rendered":"Fuel for Thought: Too many toys on the shelf"},"content":{"rendered":"

LISTEN TO A PODCAST ON THIS TOPIC
\nWITH S&amp;P GLOBAL MOBILITY EXPERTS<\/a><\/strong><\/p>\n

With internal-combustion and battery-electric
\nvehicles vying for showroom space and advertising dollars, peak
\nmodel complexity will transform marketing messaging and media
\nspend.<\/h3>\n

Today, US auto shoppers have nearly 450 vehicle
\nnameplates to consider. Within five years, that number will grow
\nconsiderably. With the arrival of electric vehicles across every
\nmainstream and luxury brand, approximately 650 models will be
\ncompeting for showroom space, lot space, digital space, marketing
\nbudget and most importantly, customer attention. This isn't just a
\nUS phenomenon; a similar equation will happen in the European
\nmarket \u2014 perhaps more so, as mainland Chinese automakers are
\nalready launching their EV-minded brands there as well.<\/p>\n

It's hard enough for consumers to keep track of
\nall the various vehicles vying for headspace with a portfolio that
\nmostly comprises internal-combustion engine (ICE) vehicles. But the
\npush for electrification is about to escalate that consumer
\nconfusion. How automakers and their advertising agencies respond to
\nthis challenge will determine how effectively \u2014 and profitably
\n\u2014 they manage the transition from ICE to battery-electric
\nvehicle (BEV).<\/p>\n

As early as 2026, S&amp;P Global Mobility
\nexpects the total of new EV models available to break 200 in the US
\nmarket, as the ICE new model count continues a steady decline. In
\nlate 2027\/early 2028, the total model count should be at its apex
\n\u2014 with the number of options across all propulsion system
\ndesigns approaching 650. The situation will be just as dramatic in
\nEurope.<\/p>\n

S&amp;P Global Mobility refers to this
\nsituation as Peak Model Complexity \u2014 and its impact on
\nmarketing throughout the funnel, across all initiatives, will be
\ntransformative.<\/p>\n

Market share parity by
\n2028<\/strong><\/p>\n

S&amp;P Global Mobility forecasts that the
\nthree propulsion system designs \u2014 EV, hybrid, and ICE \u2014
\nwill each account for between 29% and 36% market share by the end
\nof this decade. After that, EV share is expected to continue to
\ngrow while hybrid plateaus and then joins ICE in a continuous, but
\nslow, decline.<\/p>\n

\"\"<\/p>\n

The increased model count will cause a drop in
\nsales-per-nameplate figures: In 2018, the average sales volume per
\nnameplate in the US market was 49,000 units. That is expected to
\ndip to 36,000 by 2027. This requires some new thinking by OEMs,
\nwhich for decades have stated that a nameplate must sell between
\n40,000 and 60,000 units to be profitable.<\/p>\n

But this tectonic shift is happening already
\n\u2014 impacting production cycles, sales forecasting, supplier
\nrelationships and marketing budget allocation.<\/p>\n

The impact to profit margins, platform
\neconomics, operating expenses, product lifecycles and go-to-market
\ntiming will cut across all aspects of the auto business \u2014 from
\nnew and used car sales, to vehicle acquisition, parts and service.
\nRetailers and their marketers will need to do more with less, and
\nsooner than later.<\/p>\n

Every marketing campaign and initiative will
\nface this decision: Which message or offer should we serve to which
\ncustomer \u2014 EV, hybrid, or ICE?<\/p>\n

Obviously, big-hitter vehicles like the Ford
\nF-150 and Toyota RAV4 will continue to have strong marketing
\nbudgets. But if a company is adding four or more new electric
\nnameplates, and not deleting any internal combustion vehicles, they
\nneed to decide if there will be an incremental spend, or if some
\nvehicle's marketing budget will be adjusted.<\/p>\n

Already, many OEMs employ a “fire-and-forget”
\nmarketing strategy, where a new-product launch gets a big spend,
\nbut then ad dollars wither until a sales event comes along.
\nAutomakers are already stretched thin on covering their existing
\nICE model lines; what happens to the strategy when a slew of EVs
\n\u2014 and an EV branding campaign \u2014 are added to the mix?<\/p>\n

The situation may be even more accelerated in
\nthe European market, as the swing from ICE to BEV is already well
\nunderway. However, it seems the number of ICE nameplates are being
\nremoved from the market at the same pace as new BEVs are being
\nintroduced. But that doesn't eliminate the need to educate and
\nalert consumers to the arrival of differently named BEVs.<\/p>\n

\"\"<\/p>\n

Brand loyalty and nomads<\/strong><\/p>\n

The recent semiconductor supply chain crisis
\ncrimped vehicle inventories, which in turn triggered historic low
\nbrand loyalty levels for return-to-market households. Improving
\ninventories have provided a rebound to those loyalty levels.
\nHowever, the effects from two years of a constrained market remain
\nevident, and vehicle buying behaviors changed as a result.<\/p>\n

In US loyalty data collected in 2022, 53% of
\nshoppers were “nomads,”<\/a> meaning
\nthey had no brand affinity to the vehicle they disposed of or just
\nacquired. This rate approaches historic highs \u2014 that's a bad
\nthing for OEMs \u2014 and is important as these households defect to
\nanother brand. Nearly 6 of every 10 nomad shoppers are going to
\nswitch brands with their next vehicle purchase.<\/p>\n

Meanwhile, lease rates plummeted in 2022 to
\nless than 18% of new vehicle sales, down from 30% in 2018. This
\ndrop translates to about 1.5 million fewer households that are
\nregularly returning to market. And lease returns are some of the
\nmost brand loyal and valuable customers when considering:<\/p>\n