Shortages continue to affect loyalty
While loyalty rates have increased slightly since its last quarterly assessment, S&P Global Mobility says inventory shortages are still affecting brand loyalty.
When there is less to choose from, “you have a higher probability that the household that returns to the market will not see what they want at their existing brand,” Libby said. That’s when customers defect to another brand, and in the last three months more households are defecting than staying loyal, the report shows. But another study contradicts that conclusion. In its Tuesday brand loyalty release, J.D. Power said the opposite, citing supply issues as helpful to brand loyalty.
S&P Global Mobility recommends brands protect their loyalty base by using targeted marketing tools as supply issues persist.
“Your existing customers — that’s your bread and butter. That pays your rent,” Libby said. “So you need to do whatever is necessary to keep them.”
Tesla’s unique stronghold over consumers continues
Returning this quarter is S&P Global Mobility’s findings that point to Tesla’s strength, which is a key takeaway for brands.
The loyalty review also looked at manufacturer loyalty year-over-year, with Tesla triumphing over General Motors this year following GM consistently holding the top spot since 2015.
“Tesla, remember, is a manufacturer and a brand, so they benefit, frankly, from only having one brand which does very, very well,” Libby said.
GM is now second, followed by Hyundai, Ford and Toyota.
With the highest loyalty rate of 67 percent, Libby wanted to see who Tesla is taking buyers from.
“If you say, ‘OK, who is Tesla hurting the most?,’ putting aside the newcomers, it’s the European brands,” he said. Around 7 percent of buyers who defect from Mercedes-Benz, Audi, BMW and Porsche go to Tesla next, Libby added.
“The EV tsunami is coming’
Two Tesla models — the Model Y at 26.2 percent and the Model 3 at 24.7 percent — make up more than half of all EV registrations in July, according to S&P Global Mobility. The Chevrolet Bolt at 6.9 percent is the third most registered EV. Tesla appeals to both mainstream and luxury brands, the webinar presentation pointed out.
The webinar’s fourth and final takeaway warned brands to “develop and implement strategies to counter Tesla’s strength.”
“It’s sort of a common comment that, over time, ‘Tesla will go down,'” Libby said. “Well, we haven’t seen that yet. And also, Mr. Musk, he’s not one to sort of sit still, sit back and smoke a cigarette, so you want to, basically, you want to be prepared that he’s going to continue to be aggressive with new products.”
As the EV market grows, it’s important for brands to study the consumer profiles of all customers — EV, hybrid and gasoline buyers. When an EV customer contacts your dealership, Libby said to be as ready as possible.
“The EV tsunami is coming,” he said. “It’s just started. We are just seeing the tip of the iceberg. The number of models coming is going to be overwhelming within the next couple of years. Be ready for it.”