Each year, J.D. Power produces a number of studies that help car dealers understand the shifting data surrounding the automotive market. Two recent studies looked at how important brand loyalty is, and which automakers are producing vehicles that most appeal to consumers. Dealerships can use the insights from these studies to better drive sales and improve their practices.
Brand Loyalty Tracked in New Study
This year, J.D. Power launched a new U.S. Automotive Brand Loyalty Study, which tracks an important metric for car dealers. Brand loyalty is important because the more loyal a customer is to a particular automaker, the more likely they are to become brand advocates – spreading the word about their preferred brand to friends and family members, as well as repurchasing or leasing another vehicle from the same manufacturer. This can mean big business for your store.
“Customer loyalty is perhaps the most important metric for manufacturers because it incorporates many factors that lead customers to become brand ambassadors,” said Tyson Jominy, Vice President of Data and Analytics at J.D. Power. “When a brand can connect emotionally with owners through the vehicle’s content, capabilities, or prestige level, owners are much more likely to come back and purchase that same brand again.”
The study used data from the Power Information Network to calculate whether an owner purchased the same brand when trading in a car for a new vehicle lease or purchase. Customer loyalty calculations were based on the percent of owners choosing the same brand when trading in or purchasing, using transaction data from June 2018 to May 2019.
Loyalty Higher for Mass Market Brands
The inaugural study found that Subaru not only ranks highest for brand loyalty among mass market brands, it ranks highest overall with a 61.5% loyalty rate. Lexus tops the luxury brand category, coming in at a 47.6% loyalty rate.
More than three percentage points separate Lexus from its highest competitor Mercedes-Benz (44.2%) on the luxury brand side, while less than a percent separates BMW (43.6%), Porsche (43.5%), and Audi (43.3%) to round out the top five.
Mass market brands had a better overall showing of loyalty, with seven automakers achieving loyalty rates above the top ranked luxury brand. Following Subaru’s impressive loyalty rate are:
- Toyota: 59.5%
- Honda: 57.7%
- Ram: 56.2%
- Ford: 54.0%
- Kia: 49.4%
- Chevrolet: 49.0%
Rankings Improve Due to Customer Satisfaction
Additionally, J.D. Power also performs an annual Automotive Performance, Execution and Layout (APEAL) Study. The 2019 APEAL Study showed that customer appeal of new cars has risen for the fifth year in a row.
A first in this year’s study: the gap between luxury and mass market vehicles is the lowest ever – just 35 points separate the two overall categories. The industry average APEAL score for luxury brands came in at 853, while the average for mass market brands stood at 818.
Satisfaction scores are based on a 1,000-point scale, and this year the overall industry score rose three points to 823. Twenty-two out of the 32 brands included in the APEAL Study saw improvement in customer satisfaction from just a year ago, with improved infotainment systems and more active safety features as leading reasons why.
“Every automaker is producing vehicles that consumers like, but some of them are doing it at a higher level than others,” said Dave Sargent, Vice President of Global Automotive at J.D. Power. “Satisfaction with new technology is improving, but infotainment remains an area where automakers can get better. Owners have higher satisfaction if their vehicle is equipped with safety features such as blind spot monitors, collision avoidance, and lane departure warning. This should serve as a positive sign for automakers…”
Key Findings of the 2019 APEAL Study
J.D. Power’s APEAL Study looks at 10 categories: exterior, seats, interior, driving dynamics, storage and space, engine/transmission, fuel economy, visibility and safety, and heating, ventilation, and air conditioning – all of which have improved from 2018’s study. Infotainment gained the most ground over last year, improving by 10 points, while visibility and safety increased six points over last year.
The margin between luxury and mass market appeal of 35 points isn't only the smallest gap since this study’s inception, it has narrowed by 15 points in the last three years.
Another gap that’s shrinking within the APEAL Study is the satisfaction gap between cars and SUVs. Between 2018 and 2019, there was an overall lack in improvement for cars, while SUV satisfaction grew by seven points. Cars, however, still outperform SUVs in two categories: fuel economy and engine/transmission.
The highest overall APEAL scores generally go to larger, more expensive vehicles rather than more affordable ones. Therefore, brand rankings depend on the types of models a manufacturer produces, and how well they're executed.
The highest overall luxury brand score went to Porsche at 891. BMW and Genesis tied for second at 868. The mass market segment is led by Ram with an APEAL score of 851. Dodge came in second at a score of 848, and MINI rounded out the top three with a score of 835.
The Benefits of Loyal Customers
Just as brand loyalty is important to automakers, customer loyalty should be important to your store. The improved customer satisfaction with cars, combined with the high levels of brand loyalty in the mass market segment, should give dealerships a feeling of confidence. Consumers like what they’re seeing and are continuing to return to brands that speak to them; executed properly, this loyalty could translate to additional profits.
At Auto Credit Express, we know a little something about loyalty. Knowing which brands people recommend and keep coming back for is a key part of the automotive lifecycle – one we want to help you take advantage of.
We’ve been an award-winning provider of subprime leads for over 20 years, and believe us when we tell you that subprime customers are some of the most loyal you can find. Everyone remembers the dealer that was able to get them the car loan they needed when the chips were down.
If you’re not taking advantage of the subprime market in your area, we want to help. Subprime isn’t all we have to offer, however. Through our partnership with CarsDirect Connect, we’re proud to offer new and used auto leads as well as a confident BDC service that can help prepare your prospects to walk through your door ready to buy.
To see how we can help you, simply call us at 888-535-2277 or fill out our online contact form and someone from our team will get in touch with you. Don’t hesitate any longer to take advantage of the sales potential in your neighborhood – get started with us today!