Is automotive brand loyalty declining?

A connection for life: Data confirms customers are car brand loyalists, but why do we stay so faithful?

The value of retaining customers: How can car brands create a connection for life?

What do Mercedes, BMW, Ford and Audi all have in common?

A strong, loyal customer base.

Exclusive consumer data suggests it’s become harder to pry drivers away from their beloved car brands, especially as they get older.

In fact, YouGov data collected exclusively by Carparison Leasing showed that vehicle brand ranks the third most important factor for customers when choosing their next vehicle. Of this sample, 47% felt this way and it was also slightly more important to men (49%) than it was to women (45%).

In the same YouGov survey, the top two most important factors for people when choosing their next car lease were safety and reliability.

How do vehicle brands create customer loyalty? Why do we stay loyal to manufacturers?

Vehicle brands want to create a long-term, positive and beneficial relationship with their customers.

It’s clear that automotive consumers are habitual buyers; they stick to what they know. Customers that repeatedly purchase from a brand develop an affinity towards it.

There are emotional elements to brand loyalty. If consumers experienced good customer service with the leasing company or dealership they went to, they’re bound to go back due to a positive encounter. Ultimately consumers want a sustained positive brand experience, so strengthening that emotional connection with consumers should be important to companies.

Many people also want a car that reflects their image and status, so the emotional element of desire comes into choosing a car too. For example, luxury brands typically have a higher proportion of loyalists due to quality, value, design and status.

It’s important to highlight that car brand loyalty has to be earned. Brands need to make it clear what the benefits of choosing them are, especially at the point of when their customer is considering which car they want next.

Why are younger people more open to trying new brands?

Of those who were quizzed during the survey, it was youngest age group, 25-34, who valued the vehicle brand the least at 42%. While still relatively high, it does represent a shift in mindset among younger drivers.

Younger people appear to be more willing to change than their older counterparts. They are more likely to shop around and be more open to trying new vehicle brands.

Why is this?

Due to the rise of internet browsing, an increase in the availability of sources of information and social media, younger people are more likely to do their own research.

There are so many more different sources when it comes to researching a car nowadays. People can use car reviews and comparison websites to see which vehicles are better or speak to car mechanics and specialists. People are increasingly using these platforms to pursue their own education about a brand’s vehicles.

Younger consumers are also more likely to want innovative features and new technology which a lot of the newer brands and luxury cars are bristled with.

They are more open to trying new or emerging brands because they might be first time buyers and don’t have that previous emotional connection with a brand.

Automotive loyalty challenges

Although data appears to show that consumers are brand loyalists, is brand loyalty in the automotive industry declining?

There are signs that brand loyalty is under threat and with the industry changing rapidly, it does make sense.

• Rise of the internet

As mentioned earlier, the rise of the internet and social media has meant that younger people are going to hear about newer brands and models sooner, creating more excitement and anticipation.

However, we all know that the internet and comparison websites have made it easier for consumers in general to research all their options, seek opinions and recommendations.

Is it possible the internet has encouraged disloyalty? As there’s more accessibility, people have more knowledge about different vehicles which means they have more choice.

But what does this mean for manufacturers?

More choice ultimately means manufacturers must create a lower price in order to stand out and compete.

• Affordability

There’s an increasing demand for affordability.

People’s spending habits are changing. Thanks to Brexit, the Covid-19 outbreak and the cost of living crisis, consumers are looking for switches and ways to save money because of the ever-increasing prices.

There’s a big rise of affordable, high-quality brands emerging and its these affordable vehicles that are going to be in more demand. The emergence of the MG4 is telling. It’s a quality EV with sharp looks and a comfortable drive. The MG4 is priced closely to its smaller alternatives making it one of the most affordable EVs around.

SKODA and Hyundai are also manufacturers that are worth keeping an eye on. They equip their base models with great technology, safety features and clever ideas that you’d need to pay extra for on other luxury vehicles.

These affordable manufacturers are becoming increasingly prevalent and demonstrate how you can get a lot more from vehicles nowadays for less money when compared to other brands.

• More competition

There’s a multitude of manufacturers and models to choose from and there are lots of new brands set to launch in the UK market. With so much to choose from, it’s easier for consumers to switch between brands.

With more competition and more demand, contrasts in stock levels and supply chain issues will make all the difference when choosing a vehicle, especially amongst business customers who are more likely to need a company car as soon as possible.

People might have to consider alternatives and they can now evaluate a wider range of vehicles before placing enquiries and making a purchase.

• Supply chain shortages

Although many people will have a car in mind when they look to buy their vehicle, the issue of a tight supply chain and lower-than-normal production can test even the most loyal customer.

Rather than waiting months or even years, customers might decide to switch to a different vehicle brand if they have a similar spec model in stock.

Look at these three long rangers: the BMW i4, the Polestar 2 and the Tesla Model 3 - all pretty impressive cars. The BMW i4 eDrive40 Sport has a claimed range of up to 365 miles, the ability to reach 62 mph in just 5.7 seconds and its on the road price is £49,995.

The Polestar 2 Long Range single motor has a range of up to 394 miles, can reach 60 mph in 5.9 seconds and starts at £48,950. The Tesla Model 3 can reach up to 374 miles, reach 60 mph in 4.2 seconds and costs £50,990.

The similarity between the three vehicles highlights the improved choice that customers can now choose from.

• EV race

With the 2030 ban on the sale of new petrol and diesel vehicles looming, the race to electrification is emerging and is likely to have shaken up brand loyalty.

In the world of electrification and progressive technologies, vehicle brands will need to keep pace while continuing to please their customers as well as encouraging future loyalty - especially with younger consumers.

There are plenty of automotive loyalty programs in place to help increase customer lifetime values for companies. Rewards can range from discounts, exclusive offers, prize draws, priority roadside assistance and much more.

There’s pressure from consumers for brands to produce ‘green’ cars, so for vehicle brands that are yet to release an EV, they are likely to miss out on a range of drivers. Yes, one of the main reasons people want to switch to an EV is because they’re cheaper to run, but some also feel that their EV symbolizes an environmentalist self-identity which appeals to many people. 

With plenty of newer EV disruptors set to enter the UK market over the next few years, there’s a lot of brand competition but there are ways that different EV brands are trying to stand out from one another.

NIO, for example, is a Chinese car manufacturer that have set their sights on changing the way we charge our cars. They’ve explored a battery-swap network that will make it easy for people to switch their batteries for a fully charged one which will be extremely attractive to EV drivers.

NIO also have a real emphasis on their NIO House showrooms, which aren’t just places to display their cars but a space to hang out too. They’re designed to be an open, welcoming space for their community to share memorable moments together. This links to the business value in strengthening emotional connections with consumers, so it looks like NIO know what they’re doing.

Where is automotive brand loyalty heading?

Despite our exclusive data, there are many challenges facing the automotive industry which suggest that automotive brand loyalty is fading amongst car buyers.

With ongoing supply issues, more competition, rising interest rates and the need for emotional interactions, brand loyalty winners are going to be those that create an affordable and personable brand with green and readily available vehicles.