Strong U.S. New Vehicle Industry Pulls Used Vehicle Owners to New Products at Highest Rate in Six Years

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Thursday, September 4, 2014 10:49 am EDT

Public Company Information:

"Brand loyalty is something the automakers are putting a greater focus on as they expand product portfolios and competition intensifies"

SOUTHFIELD, Mich. (September 4, 2014) – An analysis of vehicle registration patterns through the first half of the year finds consumers that owned a vehicle that was purchased used   were responsible for nearly half of the new vehicles registered to individuals through June, according to IHS Automotive, part of IHS Inc. (NYSE: IHS) a leading source of critical information and insight to the global automotive industry.  IHS Automotive analysis confirms buyers owning a vehicle they purchased used could represent half of the total new vehicle market this year, if this trend were to continue. This contribution of used vehicle owners to the new vehicle marketplace is the highest in six years, the analysis said.

More than 3.2 million used vehicle owners returned to market and purchased a new vehicle during the first half of the year, IHS reported.  Of these owners, nearly 30 percent purchased a new vehicle of the same brand as their used car or truck.  New product activity is a key driver of brand loyalty when consumers move from a used to a new vehicle. The availability and appeal of the product offering makes the launch of all-new models and major re-designs of existing models a very important piece of the decision-making process. Brands that have had the most success in converting used owners to new and keeping them dedicated to that brand include Land Rover, Subaru, Mazda, Mitsubishi and Jeep, among others. 

“Brand loyalty is something the automakers are putting a greater focus on as they expand product portfolios and competition intensifies,” said Tom Libby, solutions consultant for the loyalty management practice at IHS Automotive.   

New to New Buyer Loyalty Remains Steady

New vehicle owners that returned to market during the first half of 2014 purchased a new vehicle of the same make nearly 51 percent of the time, based on an industry average, which is slightly higher than the same period last year.  Leaders in brand-level loyalty include Ford, Toyota, Mercedes-Benz, Chevrolet and Honda, all of which had loyalty rates of more than 54 percent.


Highest Make-Level Loyalty, June 2014 CYTD

Make Level Loyalty (%)

Ford

62.7

Toyota

58.2

Mercedes-Benz

57.9

Chevrolet

55.6

Honda

54.6

Source: IHS Automotive

Time Period: June 2014 CYTD

Loyalty Rates Vary by DMA®; NYC Leads among Large Markets

At the individual market level, loyalty rates among new to new vehicle owners vary from a high of nearly 62.5 percent in Lima, Ohio, to a low of 41.7 percent in Bend, Ore.  Among used vehicle owners purchasing new when returning to market, consumers in Buffalo, New York led the way with nearly 42 percent loyalty, compared to Eureka, Calif., with just 23.6 percent loyalty. 

Among the largest markets in the country, the New York City and Los Angeles DMAs represent the highest loyalty among both new-to-new and used-to-new vehicle buyers. It is also noteworthy that the 10 DMAs with the lowest make-level loyalty, on a new-to-new basis, are all in the western half of the U.S. The top five largest markets based on return to market volumes, and their loyalty rates are as follows:

New-to-New

Make Level Loyalty (%)

Used-to-New

Make Level Loyalty (%)

New York City

50.6

New York City

33.7

Los Angeles

47.5

Los Angeles

25.6

Detroit

61.6

Chicago

26.9

Philadelphia

52.0

Dallas/Fort Worth

28.8

Chicago

49.5

Philadelphia

25.9

Source: IHS Automotive

Time Period: Largest DMAs based on Return to Market Volumes, June 2014 CYTD

CPO Analysis to New Analysis

This month, IHS Automotive also will launch the capability to analyze the Certified Pre-Owned (CPO) market, including the movement of owners from CPO vehicles to new vehicles. This will allow vehicle manufacturers to further measure the strength of their CPO programs over traditional used vehicle programs.

About the Methodology

The Loyalty Management Practice at IHS Automotive determines loyalty when a household that owns a new vehicle returns to market and purchases or leases another new vehicle of the same model or make.  IHS Automotive tracks owner loyalty through analysis of complete registration data throughout the year and regularly works with its customers to effectively manage owner loyalty and conquest efforts through in-depth analysis of automotive shopping behaviors, related market influencers and development of retention and conquest strategies. 

IHS Automotive loyalty metrics do not require vehicle disposal; a new vehicle may indeed be an addition to a household’s fleet. Also, a household that purchased a used vehicle and returned to market and purchased a new vehicle, referred as a used-to-new transaction, may have a new vehicle in the garage.

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About IHS Automotive (www.ihs.com/automotive)

IHS Automotive, part of IHS Inc. (NYSE: IHS), offers clients the most comprehensive content and deepest expertise and insight on the automotive industry available anywhere in the world today. With last year’s addition of Polk, IHS Automotive now provides expertise and predictive insight across the entire automotive value chain from product inception—across design and production—to the sales and marketing efforts used to maximize potential in the marketplace. No other source provides a more complete picture of the global automotive industry.  IHS is the leading source of information, insight and analytics in critical areas that shape today’s business landscape.  IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs more than 8,000 people in 31 countries around the world.

IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners. © 2014 IHS Inc. All rights reserved.

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