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As product mix shifts, loyalty dips

2 min read

Brand loyalty, one of the auto industry’s most vital measures of success, dipped last year as U.S. customers entertained new ideas about what kind of vehicle to drive, according to J.D. Power.

The decline in loyalty across the industry was modest — only one half of 1 percent by Power’s measurement. But it was a startling moment: Brand loyalty had been steadily rising for five years as automakers and dealers worked together to keep customers satisfied.

“What’s happening is that customers are leaving their segments,” said Tyson Jominy, senior director of Power’s PIN Consulting unit. “When you move to another vehicle segment, loyalty drops.”

Jominy delved into issues of shifting brand loyalties during Power’s annual franchise assessment review at the J.D. Power Automotive Summit here Thursday. But he declined to discuss specifics of the off-the-record presentation to dealers by a panel of industry data analysts.

Jominy said the historic shift from cars to light trucks is having a major impact on where shoppers are looking for their next vehicle.

“It’s all about who has the kind of vehicle I’m considering,” he said outside the presentation. “If I’m thinking about something completely different from what I’ve been driving, I’m much more open to what brand it is.”

He said brands moving out of the compact and midsize sedan segment face a challenge keeping customers loyal.

Conquesting opportunities are plentiful across the industry, he said.

“The two main drivers for conquesting are product and incentives,” Jominy said. “Lacking SUVs right now is a problem for a brand.”

He also said dealers are key to bolstering brand loyalty.

“It’s really about the product,” he said. “It starts with the product. But after that, the customer experience at the dealership is hugely important. You’ve got to provide a positive sales experience and a positive service experience to keep customers. We’re seeing dealers in some cities doing an amazing job of making a concerted effort to keep customers loyal. That’s what it takes.”

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