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Brand loyalty plays reduced, but critical, role in car-shopping

Car shoppers are faced with dozens of brands and hundreds of models, and the parity among brands has never been higher.

Published March 28, 2014

Toronto Star for Wheels.ca

By the time car shoppers visit a dealership, they have usually narrowed their choice of models and brands to a select few. So, what criteria do they use when deciding on a particular brand?

From the 1950s until the 1970s, brand loyalty was largely a matter of tradition. If your parents purchased a Chevy or a Ford, you would buy a similar brand out of a sense of tradition. As a Time article recently noted, switching auto brands was like changing one’s religion or political stripes.

Brand loyalty changed dramatically in the 1980s. New auto makers (Toyota, Nissan, Hyundai, Honda, Kia, Mazda) entered the Canadian market and greatly expanded the range of options. Market share became more fragmented, as did brand loyalties.

With more manufacturers vying for market share, it led to greater competition among brands, more choices for consumers, and improved quality, design, reliability, performance and fuel efficiency.

Today, car shoppers are faced with dozens of brands and hundreds of models, and the parity among brands has never been higher. Gone are the days when a single car maker is vastly superior to its competitors in any category.

Over the years, buyers have become increasingly attuned to the different brands and what they represent. Auto makers have done an exceptional job building their brands and differentiating themselves in the marketplace.

For instance, when we think of safety, certain automakers spring to mind. Same when we think about reliability, trade-in value, premium luxury or family convenience.

These descriptions denote specific values associated with different brands and are hugely influential for consumers when deciding what model to buy.

A big part of brand loyalty lies with new-car dealerships and their relationships with customers in sales, service, parts and collision repairs.

A customer’s interaction with the dealership is critical in forming (and maintaining) an impression of the brand.

A great dealership experience can create powerful brand loyalty, while a bad experience can have the opposite effect.

A 2013 report by R. L. Polk & Company (a research and marketing company) suggested that the average new-vehicle brand loyalty has increased to 52 per cent, up more than 2 percentage points over the same period last year.

With nearly 50 per cent of the market up for grabs, automakers and dealerships will highlight the differences between them, even if those differences are relatively minor.

One auto maker will introduce a model boasting marginally better fuel economy than its nearest competitor. That slight advantage will be trumpeted from the rooftops, until another competitor introduces a model that gets even better mileage, and then it’s their turn to command the spotlight.

Another factor in determining brand loyalty is the length of time people keep their vehicles. Two decades ago, people traded in their cars every four or five years, while, today, the average age of a vehicle on the road in Canada is nine years.

During that nine-year period, the average motorist will be exposed to hundreds of thousands of messages from competing auto brands, so your loyalty to a particular brand will be challenged and tested. Plus, your driving needs may have changed.

In the end, many factors determine what brand of car you will choose: performance, driving needs, affordability, incentives, warranty, rewards programs, brand reputation, existing relationships with a dealership, etc.

One thing automakers can no longer count on is a blind loyalty that is passed from one generation to another. Those days are gone forever.

This column represents the views of TADA. Email president@tada.ca or visit tada.ca. Benny Leung, president of the Trillium Automobile Dealers Association, is a new-car dealer in the GTA.

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