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Why Brand Loyalty is Dropping

October 29, 2008

Automotive manufacturer loyalty levels—or how many vehicle customersrepeatedly buy the same brands—dropped from 49.1% in 1998 to 39.9% in 2008,according to data from an Experian study that showed various ironies in thearea of customer loyalty.

While the Toyota brand scores highest (59.8%) in consumer loyalty to an automotive nameplate,its kid-brother brand Scion scores lowest (19.8%).

Another irony is that customer satisfaction does not necessarily equalloyalty. The Lincoln and Jaguar brands scored highest in customer satisfaction, yet ranked 11th and14th respectively among 20 brands in loyalty.

That satisfaction-loyalty disconnect may stem from customer satisfactionscoring often being swayed by dealerships that “coach” buyers to rate themhighly on surveys sent to auto makers.

Scott Waldron, president of Experian Automotive, a division of Experianplc., an information-services company.

Another irony is that despite their economic disparity, the most-affluentcar buyers ($200,000 and over household income) and the least-affluent ($25,000and under) showed similar corporate loyalty levels — which on both ends werelower than allegiance demonstrated by consumers in middle income brackets.

Rich people have more auto brand choices open to them, Waldron says, whilethe least affluent are not particularly loyal because so few vehicle choicesare available to them.

The No.1 highest loyalty driver was leasing. Also, auto makers’ captivefinancing companies help boost consumer loyalty to the manufacturer and dealeralike, says the study. Captive financing gave a 20% loyalty boost to autocompanies and a 27% boost to dealers compared with financing from outsidesources.

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