Consumers are holding on to their cars longer according to a recent study by automotive industry analyst Polk. On average, car owners in 2012 had their vehicles two years longer than consumers surveyed in 2001.
The reasons for this are twofold. Most obviously, the recent recession has had car owners tightening their belts and putting off expensive car purchases. But perhaps more interestingly, automakers are producing higher-quality, longer-life vehicles which are lasting on average 11.2 years, according to Polk.
This new trend doesn’t seem to have impacted overall car sales for the short term. Auto sales growth was bullish in 2012 and Edmunds.com forecasts sales of 15 million light vehicles in 2013—a four percent increase over 2012. With the economy on a slow uptick, an increase in new drivers on our roads, and an influx of fresh models in popular segments, there’s reason to believe that car sales will continue to increase.
But over the long term it’s important for auto manufacturers to pay attention to the buying (or not-buying) habits of consumers. If drivers are keeping their old cars longer—for whatever reasons—and the trend continues, it will necessarily impact how car manufacturers steer their business and retain customers.
Generally speaking, it’s much easier and far less costly to retain existing customers than to attract new ones, but conversely, studies have shown that increased periods of car ownership negatively impact customer loyalty.
In a separate study, Polk found that after the third year of owning a new vehicle make loyalty and manufacturer loyalty decline and stay at a reduced level.
This might seem counter-intuitive until you think about what happens to your car (and your feelings towards it) after you’ve had it for a few years. Problems occur, things start breaking, there are extra expenses and inconveniences.
When this happens, Polk found, the positive brand experience erodes and come time to purchase a new vehicle consumers are likely to look for a new brand in order to satisfy the desire to have an entirely new experience from a different automaker.
It follows then that ensuring customer loyalty and maintaining the lead in a highly competitive market requires today’s auto manufacturers to not only produce cutting edge designs with the latest technology and software features, but also prove their value to the owner throughout the entire ownership experience.
For auto manufacturers, product planning is no longer confined to what customers want in tomorrow’s vehicle, but extends to the consumer’s service experience at the dealership too. Polk has shown that loyalty to a brand can be twice as high among customers using the dealership’s service offerings compared to customers who do not buy maintenance or repair services from the brand’s franchised network.
The auto landscape is changing. In a world where car designs have become less exciting and more samey, the auto industry must look closely at new ways to influence brand loyalty. Services and maintenance is an obvious area for growth. As vehicle lifespan continues to increase, manufacturers will win loyalty by meeting the needs of consumers who hold onto their cars for longer.
How long have you had your current vehicle? What influences your decision to purchase a new or used car?