Wednesday, November 2, 2011

Below are excerpts from an article in Automotive News about how buyer’s loyalties are “loosening.”  This is good info for us looking to bring this category back to pre-recession levels.

Buyers' Loyalties Loosen
Imports, Domestics Have Billions at Stake

Owners of Japanese-brand vehicles buy Japanese-brand vehicles. Owners of domestic-brand vehicles buy domestics. So says auto industry wisdom.   But lately, that wisdom isn't such a sure bet.

Consumers have shown a recent willingness to cross-shop outside their traditional habits, according to market monitors. Prodded and lured in one direction by such factors as inventory shortages at import leaders Toyota and Honda, and shooed in the opposite direction by disappearing brands such as Pontiac, Saturn and Mercury, some consumers find themselves unanchored.

Compete Inc., an automotive market research firm in Boston, finds that the tendency of Japanese import-brand shoppers to cross-shop Chevrolet, Ford and Dodge has trended steadily upward since the first quarter of 2010.

Similarly, J.D. Power and Associates reports that the percentage of auto shoppers who traded in an Asian import-brand vehicle and bought another one has declined slightly. Asian-brand loyalty dropped from a consistent 80% at the beginning of 2010 to 76% in third quarter 2011.

These may be modest changes, but they leave the industry uncertain.

"There is clearly a new sense of patriotism out there," he adds. "We can hear it when we talk to customers."

Lee thinks Ford, in particular, is benefiting from this trend, but patriotism alone won't sell cars: "It's not necessarily causing people to buy Fords; it's causing them to shop Ford. What's causing people to buy Ford is good products."

"We're seeing some customers coming into our Toyota store and our Honda store, not finding what they want because inventory has been so low, and going off to look elsewhere," Lee says, noting that his typical 200- to 250-vehicle Toyota inventory stands at 45 units. "But are people going out to buy a Toyota Highlander and buying a Jeep Cherokee instead? I don't think that's happening."

"What's happening," he says, "is that the domestic manufacturers are delivering better-quality products right now, with better styling and fuel efficiency. Customers want to see it. I don't care what you bought in the past.

Lincoln Merrihew, managing director for transportation at market researcher Compete, believes the domestic brands are partially benefiting from picking up "the leftovers" of domestic brands that were killed -- Saturn, Pontiac, Hummer and Mercury.

But he cites Compete shopper data to say that there is also organic growth. Combined Detroit 3 market share is up more than 2 points for the first nine months of this year, while Japanese-brand share is down nearly 4 points.

Honda loyalty stands out

Honda shoppers appear to be the most import-loyal of the Japanese market leaders. Compete reports that in December 2009, a Chevrolet, Ford or Dodge vehicle was a seventh-place choice for Honda shoppers. By July, those choices had risen, but only to fifth.

Nissan intenders ventured to a Chevrolet, Ford or Dodge vehicle as their sixth choice in late 2009, according to Compete. By this summer, those choices had risen to about 3.5.

(Source: Automotive News, 10/17/11)