Luxury Brands Struggle to Retain Customer Loyalty while Tesla, Maserati and Genesis See Steady Climb
Loyalty to a company’s brand is critical to the success of any company, but it is especially vital in an […]
Loyalty to a company’s brand is critical to the success of any company, but it is especially vital in an industry as cutthroat as the automotive sector.
When it comes down to it, measuring consumer loyalty to a brand comes down to determining what proportion of customers opt for the same brand when trading in or purchasing their next car.
One can easily understand that certain brands do better than others, and a new study conducted in this subject highlights some extremely intriguing trends that have taken place over the previous two years.
According to Tom Libby, associate director and loyalty principle at S&P Global Mobility, Tesla maintains a considerable degree of brand loyalty and is still a prominent factor among luxury car companies. This comes as absolutely no surprise to anyone.
According to a story in Automobile News, Libby conducted a study on automotive brand loyalty in the wake of the industry’s prolonged inventory shortages. The study looked at consumers who selected the same brand when purchasing a new car between January 2020 and April 2022.
Tesla Leads All in the Luxury Market
Tesla, together with Maserati and Genesis, are the three luxury companies that witnessed a gain in consumer loyalty during a time when brand loyalty is decreasing, down 4.5 percent to 46.3 percent for the luxury market, and down 2.7 percent to 52.1 percent for the mainstream segment.
If you remove Tesla from the premium market, you’ll find that customer loyalty drops by an extra percentage point, which is roughly twice as much as it does for mainstream businesses.
In the meantime, Tesla was one of three premium brands that did not witness a loss in loyalty during the same period; on the contrary, the electric vehicle manufacturer’s brand loyalty climbed by roughly 4 percentage points during this period.
The only brands with a growth rate that was faster than Tesla’s was Maserati and Genesis, both of which are considerably smaller companies.
Libby asserts that this accomplishment was not the result of Tesla poaching consumers from competing companies.
The company’s conquest/defection ratio, which indicates the number of consumers leaving the brand in favor of Tesla divided by the number of customers joining Tesla, was low in comparison to both premium and mainstream competitors.
Tesla is depending on the loyalty of its current customers to fuel its expansion rather than recruiting customers from other companies.
For instance, the Model 3, the brand’s most well-known nameplate, had its customer loyalty rate increase by more than 7.5 percentage points, reaching an average of 62.2 percent.
Genesis and Maserati Follow Suit
In a market like the United States, where big profits may be made from a very small volume of consumers, the fact that Genesis and Maserati have relatively low sales figures in the country is what’s behind their impressive financial results. In 2021, Genesis achieved sales of 49,621 automobiles while Maserati had sales of 7,615. In comparison, Tesla sold 313,400 electric vehicles, which makes the company’s 4 percent improvement in customer loyalty a far more important achievement.
The Tesla Model 3 is now the company’s second most popular vehicle behind the Model S. Libby also stated that Tesla’s conquest/defection ratio, which evaluates the number of people converting to Tesla split by the number of customers abandoning the company, was low in comparison to both premium and mainstream competitors.
Tesla’s success is not being driven by customer acquisition at the expense of other businesses but rather by customer loyalty. Consider the Tesla Vehicle 3, which is the company’s second most popular model after the Model Y. Of those who purchase a Model 3, 62.2 percent already own another Tesla, which is an increase of more than 7.5 percent. The overall level of brand loyalty among Tesla purchasers reached 73.1 percent in March 2022, representing a significant increase from the 49.1 percent recorded the previous year.
In an interview with Automotive News, he stated, “They adore the brand, and they’re purchasing another one.” “This is a worrisome trend for the rest of the business, and honestly, it’s ominous. It’s something that needs to be confronted, and it has to be acknowledged.”
The Upcoming Challenges
Even though several of its goods are getting on in years, the company nonetheless had quite excellent figures.
In 2023, General Motors plans to introduce the Chevrolet Silverado EV. At the very least, the results of this one survey suggest that customer loyalty to Tesla is still rather high. It remains to be seen whether this holds in light of the oncoming deluge of electric vehicles that is about to reach the market. There hasn’t been any evidence to suggest that Tesla has any intention of modernizing the appearance of its goods any time shortly.
The long-delayed manufacturing of the Cybertruck has not yet begun, despite assurances that it will do so in 2023, which is a delay of two years compared to the first established timetable.
This has made it possible for the market to flourish despite Tesla, as seen by the fact that the GMC Hummer EV Pickup, the Rivian R1T, and the Ford F-150 Lightning are all now on sale, and the Chevrolet Silverado EV is anticipated to be released sometime during the following year.
Nevertheless, the results of this study show that Tesla will benefit from customer loyalty.
However, further insights about customer commitment to brands will be provided by the annual J.D. Power U.S. Automotive Brand Loyalty Study, which is scheduled for publication in the latter part of this year.