Gen Why: Auto Brand Loyalty Declining

Loyalty has long been a business virtue. Loyal customers are considered valuable because their allegiance means lower marketing costs and, therefore, higher profits. They are also susceptible to trade-up appeals. But nothing is forever.

Auto purchasers were particularly prone to repurchase the same brand. However, younger buyers, particularly Gen Y, are less inclined to blindly follow their forebears. There could be many factors such as lack of jobs, urbanization, living at home with mom and dad so that borrowing the family car obviates the need to purchase one's own. The primary reason seems to be that they have other priorities -like the latest technology. In fact, the auto brands with the highest loyalty ratings boasted iPod integration and Bluetooth smartphone connectivity. Which could signal an interesting new phase in product loyalty; devotion to technological innovation and the seamless integration thereof, rather than to a specific marque. And that could signal a fascinating opportunity for creative brand equity building. JL

Mark Miller reports in Brand Channel:

It used to be that car owners tended to stick with one brand for an extended period of time. You bought Toyota in 1975, you buy Toyota in 1997. You bought Ford in 1982, you buy Ford in 2011.

But times have changed and a new study shows that automotive brand loyalty is on the decline, while consumers simultaneously show a new love for whatever the latest multimedia technology happens to be,
Research firm GfK Automotive's Automotive Intentions and Purchases study, a monthly survey dating back to the early 1980s, found 48 percent of respondents in 2011 plan to buy the same brand of car as they currently own,” FOX reports. “That's down 7 percentage points over the past decade.”

The loyalty factor is lowest in those aged 15-45, according to Doug Scott, a senior vice president at GfK. Scott also pointed out another GfK study that showed that those in Gen Y “placed gadgets ahead of cars among must-have needs,” which is the "first time ever that the car came in second." (What's more, those gadget-obsessed youths are disengaged on the job, too.)

Interestingly, every car model that made GfK's top 15 U.S. sellers in October boasted USB/iPod integration and Bluetooth phone connectivity, including smartphone app platforms such as Chevrolet's MyLink and Ford's Sync AppLink.

The fact that Ford’s Sync “has had Bluetooth streaming audio since 2007” was a plus, as it “drives Ford's loyalty rates among Gen Y shoppers much higher than most Detroit and Japanese rivals,” according to Scott.