My father was the shining star of automotive brand loyalty. He would only consider a Dodge product for his new car purchase. Over the years, he owned a Dodge Matador, a couple of Dodge Darts, a Dodge Coronet, and a Dodge Omni. My youngest brother today has a purple Dodge Charger, and my nephew drives a Dodge Lancer with nearly 200,000 miles on it. Our family wasn’t alone: brand loyalty was common several decades ago, as consumers put their faith in specific companies and their products to fulfill their family’s needs.
A lot has changed in autos since I learned to drive in that midnight blue Dodge Coronet. To meet long-term climate mitigation targets, transportation researchers have outlined that 80–90% of new vehicle sales need to have zero tailpipe GHG emissions by 2050. The growing sales of electric vehicles (EVs) across Europe have already resulted in a significant drop in CO₂ emissions, so there have been fewer human casualties, reduced public health issues, and less environmental damage than in the previous several decades. As part of their effort to curb CO2 emissions, many automotive companies are embracing EVs and an accompanying green branding approach, including updated architecture and manufacturing approaches to meet the requirements of government mpg requirements.
Brand loyalty and customer retention are symbiotic and hover in the periphery of every auto marketing message. The long-held understanding is that it’s not enough just to attract new customers, even when higher brand visibility leads them into showrooms. A first time customer must be cultivated and brought into the family so that the automaker’s long-term profits are assured.
Supply chain issues that accompanied Covid-19 affected brand loyalty when longtime customers failed to find the models they wanted at dealerships, according to S&P Global Mobility data. Such loyalty plunged in mid-2020 along with mere days’ supply of vehicles. A tenuous legacy automaker hold was evident over the last 2 years. With numerous models from which to choose, mainstream brands Ford and Chevrolet still led in loyalty in the first 4 months of 2023. Then again, jumping automotive ship was especially noticeable in the luxury segment during the same time period, one exception stood out: Tesla.
The Tesla Effect on Brand Loyalty
Tesla was the only brand that kept more brand loyalty than it lost. 68% of its owners, when returning to market, bought another Tesla. BMW, Mercedes-Benz, and Lexus have been impacted significantly by the customer flow over to Tesla, the S%P Global Mobility data revealed. Tesla’s definition of luxury hasn’t been about typical high end seat fabrics — it shifted the conversation to powertrain and in-vehicle technologies. Premium brand migrations to Tesla in 2023 versus 2022 are as follows:
BMW: 7.5% compared to 6.8%
Mercedes-Benz: 8.9% compared to 7.8%
Lexus: 7.2% compared to 5.8%
On the consumer side of the sales aisle, more car buyers than ever are conscious that the switch to EVs will help to decrease global pollution and fossil fuel consumption. An historic tendency to focus on one automotive brand above its competitors is no longer as salient. Yet it seems also evident that what’s being termed “green trust” plays a mediating role in the effects of brand associations — green perceived quality derived from a familiar and trusted brand does positively influence the likelihood of an EV purchase. While not solely the reason that consumers choose one EV brand over another, green trust arises from an automaker’s reputation, credibility, benevolence, and ability for environmental performance. It is a powerful motivating factor for a consumer purchase and not to be overlooked by the auto industry.
Partially, this green trust trend may be a result of younger auto consumers’ attitudes. In the first nine months of 2022, 44.1% of all EV buyers were under age 45 — in comparison, 35.5% of buyers were from this age group for all new vehicles purchased — which for automakers translates to many more new vehicle purchases in the future.
Another aspect of brand loyalty ennui emerges from legacy carmakers, original equipment manufacturers (OEMs), and replacement parts makers, among others, who were slow to join the EV revolution. They failed to acknowledge that the transformation of the personal transportation sector to all-electric vehicles was definitely reshaping the auto industry. What went wrong? Legacy automakers could have embraced advancements in connectivity and automation technologies, data analysis, and the rise of new mobility services. But they didn’t see the need to make those moves, at least not in the immediate future.
They thought they had lots of time.
And now they’re playing catch-up. Trillions of dollars are being delegated to refit and build factories, train workers, write software, upgrade dealerships, and more. The rise of EVs means that new types of car components like electric motors, lithium batteries, chargers, and controllers are becoming the jargon of cars. Tesla is so far ahead that, even with mercurial Elon Musk at the helm, the all-electric car company has operated in a different sphere than established automakers like General Motors and Ford Motor, as the New York Times noted. The reason? Tesla’s “superior command of technology and its own supply chain.”
What’s the Future for Legacy Automakers & Brand Loyalty?
EVs are reshaping automotive brand loyalty. Data analysis indicates that EVs from newer brands like Tesla and Rivian are quite appealing to EV-oriented customers. The former go-to brands like Chevy and Honda are in the process of reinventing themselves as players in transportation electrification. Early data from Edmund’s shows that EVs are giving automakers the opportunity to redefine their brands in the eyes of consumers. Indeed, a close read of Edmunds’ sales and trade-in data through November, 2022 for 3 EVs from mainstream brands — the Ford Mustang Mach-E, Hyundai Ioniq 5, and Kia EV6 — revealed that EVs were not merely redefining transportation. They are “powering a seismic shift in consumer perception of the automotive giants that manufacture them that could create a competitive edge in the years to come.”
Edmunds added that “it is notable that Ford — known for its big trucks and SUVs — is drawing in a higher dollar amount for a vehicle that has one of the smallest footprints in its lineup.”
EVs have a package of technology advantage over most of their competition. With prominent acceleration and dependable straight-line performance, they’re fun to drive and quite an allure for many buyers. With features like hands-free driving, over-the-air software updates, bigger infotainment systems, and keyless entry, tomorrow has arrived for EVs.
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