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Product portfolio influence on brand loyalty

07 August 2015 Tom Libby

As the growth of the US new vehicle industry begins to slow after five-plus years of substantial year-over-year increases, the only way for manufacturers to continue to increase volume and share will be to conquest owners from competitive brands. The flip side of this dynamic is that every brand needs to do everything possible to protect itself including retaining its existing customers.

There is hard data showing that there are at least three drivers of owner loyalty, including maximizing lease penetration, maximizing the use of captive finance arms whenever possible, and bringing purchasers back to the in-network service department as much as possible. There is also general agreement that a fourth factor, product portfolio, plays a key role in owner loyalty to a brand. Using IHS registration and loyalty data, we are now able to show definitively that a brand's product portfolio is indeed linked to the brand's loyalty results. As shown in the chart below, there is a strong correlation (correlation coefficient = .7) between brand loyalty and brand product portfolio. Those makes with a broad product portfolio, whether luxury or non-luxury, tend to have higher overall make loyalty than those with a more restricted choice of products.

Note that some makes do not completely follow this trend. Subaru, Lincoln, Porsche, Land Rover and Tesla have relatively few product offerings given their brand results. In contrast, BMW, Audi, Volkswagen and Dodge have more products on the market than one would normally expect given their brand loyalty results.

Brand Loyalty and Model Count - May 2015 CYTD

Tom Libby is manager, loyalty practice and industry analysis, IHS Automotive
Posted August 7, 2015

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