For Automakers, Brand Loyalty Hits The Skids

October 22, 2009
Rusty car [via]

Rusty car [via]

Not so long ago, brand loyalty played a major role in keeping the auto industry healthy. Many of our parents bought vehicles from one particular manufacturer, and they often inherited such preferences from their own parents. Here in the U.S., brand perception was frequently rooted in national pride: 40 years after VJ Day, my grandparents refused to so much as ride in a Japanese vehicle.

For manufacturers, that kind of brand loyalty made marketing easy and economical: why spend thousands of dollars trying to convince buyers that a particular car was right for them, when all they really needed to see was the Ford or Chevy or Chrysler badge on the hood? In such an environment, marketing was more a matter of turning on the lights and firing up the cash register.

Unfortunately for automakers, those days are likely long gone. As recently as 1980, 80% of U.S. auto purchases were made by repeat customers, but according to CNW Marketing Research, the figure has plummeted to 20% today.

Now, a dip in brand loyalty is to be expected duringĀ  an economic slump like the one we're in today. In These economic times, shoppers are significantly more bargain-conscious, and as a result, they're more than willing to cross the street for a better deal.

However, the shift away from brand loyalty began long before the recession, and CNW attributes much of it to rapidly changing consumer tastes -- tastes that sprawling companies like GM haven't been nimble enough to address. The problem has been exacerbated by an increasingly poor perception of America's Big Three automakers: the reputations of GM and Chrysler in particular have all been dinged by dodgy quality in recent years and, more recently, by the recent bankruptcy/bailout debacle.

But perhaps the biggest factor in brand loyalty's demise has been the rise of new marques like Hyundai and Kia and the increasing segmentation of the auto market. Consumers have many more brands to choose from these days, and each speaks to a different personality type. As we mentioned earlier this week, there's a Honda personality profile, a Scion personality profile, one for Bentley, another for Lexus, and so on down the line. It's no secret that folks define themselves, in part, by the vehicle they drive, so when buyers are able to hone that self-definition with niche-y brands like MINI, big-tent manufacturers like GM can have a hard time holding the public's attention. (As another example of this phenomenon, think of clunky TV networks like ABC and NBC compared to increasing number of targeted cable channels. Which do you want to watch?)

Bottom line: in these days of long-tail markets and increasing choice on the lots, brand loyalty may be a thing of the past. While that's bad news for automakers, it's likely good news for consumers: at the very least, it means that automakers need to pay a little more attention to those of us doing the shopping.


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