The latest results from the 27th annual Automotive Loyalty Awards by S&P Global Mobility present a concerning trend for traditional automakers. Brand loyalty has steadily dropped, declining from 54.6% in 2019 to 50.2% in 2022. This downward trend points to a much deeper dilemma, prompting the thoughtful to question the industry’s trajectory. Let’s look at some reasons that may be denting loyalty.
The Pricey Aftermath of the Pandemic
The economic turbulence caused by the pandemic brought with it inflated prices. Some dealerships, responding to supply constraints and surging demand, foolishly increased vehicle prices, often significantly.
OEMs aren’t above their own pricing manipulation. GM wants to keep its sales prices closer to MSRP and profit margins high by keeping production low.
While this may be understandable from a short-term business perspective, this move has alienated many loyal customers who feel they’re being taken advantage of in an already challenging time.
The ICE Customer: Forgotten, But Not Gone
There is an incentivized momentum behind electric vehicles. However, amid this manufactured EV enthusiasm, a significant portion of the consumer base – those average-income Americans loyal to affordable ICE vehicles – feels left behind.
Reuters says, “boosting U.S. EV sales above the current 7% market share level will be more costly and difficult than expected, even with federal and state subsidies.”
So there’s a potential 93% of customers who won’t necessarily seek out EVs. How can consumers be loyal if they can’t buy what they want? And there’s growing sentiment that the affordable, and reliable ICE vehicle is being sidelined as if it’s part of a plan to take away the average customer’s personal transportation entirely.
The Perils of Electric Vehicle Volatility
With its notable loyalty figures, Tesla offers a promising view of EVs thanks to the vision of Elon Musk. Yet, the broader EV market has its challenges.
Consumers face not only the typical hurdles associated with adopting new technology but also significant price volatility. While it may be acceptable in consumer electronics, such fluctuations in the automotive realm, like sudden significant price drops, only serve to dishearten and dissuade potential loyalists.
Diversity on the Rise, But Are We Listening?
The auto market’s evolving consumer base, notably with an uptick in ethnic buyers, is not just a footnote. It’s a clarion call for brands to adapt and address diverse needs. Brand loyalty in this age requires more than just lip service and a photo; it demands genuine engagement with varied consumer preferences, from ICE to EV and beyond.
A Plea for Balance in Power Options
Governmental intervention, particularly the pronounced push towards EVs, warrants scrutiny. While the aim of promoting sustainable transportation is commendable, it’s vital to recognize the significance of choice in a market that’s divorced from an agenda.
OEMs should champion a balanced approach, recognizing the value of not just EVs but also alternative technologies like hydrogen and support of biofuels.
Focusing solely on one, at the detriment of others, won’t cultivate loyalty but might rather stifle it. To mindlessly follow a narrative never leads to a good result.
Navigating the Crossroads of Brand Loyalty
The declining brand loyalty statistics are more than numbers; they reflect profound shifts and challenges within the automotive industry. As we steer toward the future, it’s imperative to remember the origins and values that shaped the industry.
A balanced, inclusive, “something for everyone” approach has historically been more than just a wise strategy; it’s a roadmap that caters to all, fostering a stable, dedicated consumer base and paving the way for a more loyal future.
