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During the past several years loyalty has emerged as one of the
most watched metrics in the US new vehicle industry, along with
market share and profitability. There are at least three reasons
for this increased focus on loyalty. First, during the 2020
calendar year, a third of all US new vehicle retail registrations
were for loyal households. Second, loyalty begets loyalty, meaning
that a loyal household becomes more loyal with its next
acquisition, and the growth continues after that. Lastly, the
industry is no longer growing as it did several years ago, and in
fact total new vehicle registrations declined year-over-year in
both 2019 and 2020. To stem this trend and protect share, a top
priority needs to be retaining existing customers.
One of the highest visibility loyalty metrics is brand loyalty,
measuring the percentage of return-to-market households that
acquire the same brand again. IHS Markit registration data indicate
that at least three strategies drive this metric, including the
breadth of a brand's product portfolio, the brand's retail lease
penetration (% of retail transactions that are leases), and the
degree of collaboration between a brand and its captive finance
arm. The influence of product portfolio is illustrated by the chart
below, in which brand portfolio (number of nameplates) and brand
loyalty for mainstream brands are both charted; the correlation
coefficient between these two metrics is a robust .74.
Although brand loyalty is probably the most closely watched
loyalty metric, IHS Markit registration data provide loyalty at
many other levels as well. These include manufacturer loyalty,
model loyalty, fuel type loyalty, body style loyalty, and segment
loyalty. The leaders in each of these additional loyalty levels in
the 2020 calendar year are shown below.
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Dec 01
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