Brand Loyalty Is Declining For Most Luxury Automakers

    As of late, brand Loyalty is declining for most luxury automakers. Widespread reductions in loyalty could be caused by ongoing supply chain problems and several other factors.

    Brand Loyalty Is Declining For Most Luxury Automakers

    According to recent research from S&P Global Mobility, brand loyalty—defined as the proportion of customers who return to the same brand for their subsequent vehicle—is declining in the luxury market.

    The findings of this study, which runs from January 2020 to April 2022, were depicted in this infographic by Marcus Lu of Visual Capitalist.

    Brand Loyalty Is Declining For Most Luxury Automakers 2

    Brand Loyalty Losers

    Over the years, brand loyalty has decreased for the following companies.

    We have also included each brand’s score from the J.D. Power 2022 Initial Quality Study for perspective. This is calculated using the number of issues per 100 automobiles (PP100) that arise within the first 90 days of ownership.

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    Brand Loyalty Is Declining For Most Luxury Automakers 3

    Despite having a higher than average PP100 rating, Land Rover saw the largest decline in customer loyalty. One possible explanation is timing; the Range Rover, the flagship model of the company, has been in its fourth generation since 2012. Despite a new fifth generation being recently unveiled for the 2022 model year, the SUV has essentially become outdated.

    In terms of customer loyalty, the two Volkswagen Group brands Audi and Porsche also performed poorly. This comes as a bit of a surprise considering the range of gasoline and electric versions available from both brands. Many rivals, like Acura, Lexus, and Maserati, have not yet introduced an EV.

    Brand Loyalty Winners

    As illustrated below, three brands have been able to defy the trend.

    Brand Loyalty Is Declining For Most Luxury Automakers 4

    Tesla and Apple are comparable to each other in that they both have fervently loyal supporters.

    For instance, 62% of buyers/households that returned to the market and had previously owned a Model 3 bought a new Tesla between March 2021 and April 2022. That is a remarkable figure, especially in light of Tesla’s track record of poor construction quality.

    Maserati seems to be in the exact same situation. Even though the Italian manufacturer has the weakest PP100 in the luxury class, brand loyalty has increased by 4.3 percentage points. Build quality might not be as important as we assume.

    Another Factor to Consider

    Widespread reductions in loyalty may also be caused by ongoing supply chain problems. Customers can move to a different brand that has vehicles in stock rather than having to wait many months (or, in the case of EVs, years).

    We are still monitoring it week to week, but up to now basically worldwide, we had no issues running production.

    – JOERG BURZER, MERCEDES-BENZ

    Despite current economic difficulties, many automakers have indicated that their supply concerns are getting better. For instance, rising inflation has led to record-high new car prices. This could have a detrimental effect on the market for new cars when coupled with rising interest rates (cost of borrowing).

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