LexisNexis® Risk Solutions Maps Brand Loyalty of U.S. Vehicle Owners
The U.S. automotive industry capped off 2023 with new vehicles sales up, posting year over year gains throughout the last 12 months. Supply chain constraints seem to be a distant memory as inventory levels have bounced back to surplus levels, thanks to high borrowing rates and minimal sales incentives for consumers.
Vehicle buyers must deal with several factors, including financing and desired build availability, as they consider a new vehicle purchase in 2024, while OEMs need to focus on ways to communicate products and offers to retain current customers.
LexisNexis® Risk Solutions conducted an Automotive Brand Loyalty study of 2023 data that revealed a 51.3% overall loyalty rate for new vehicle brand loyalty. This means almost half of the current owners left their car brand for a different one for their next purchase. Brands that are successful in retaining their customers will better reduce their dependency on conquesting new owners. In the process, those OEMs can create greater customer lifetime value.
The Garage
The best place to begin to understand an owner’s loyalty to a brand is in their garage. Taking that as a starting point, LexisNexis Risk Solutions developed the Automotive Brand Loyalty study based on data from 107 million car garages in the U.S.
The primary goal of the study was to gain a perspective on customer retention in the industry’s new and used vehicle markets in order to understand the repurchase behavior of vehicle owners as they move from one vehicle to the next.
We identified currently and previously owned vehicles for each of the 107 million garages, which represent 96% of vehicle garages in the U.S. To gather the data, LexisNexis Risk Solutions proprietary linking technology was used in combination with our unique identifier, LexID®, which allows us to resolve, match, and manage information for more than 276 million U.S. consumer identities.
We then connected the vehicle ownership data to vehicles purchased between January 1, 2023 to December 31, 2023, and analyzed the resulting datasets using a loyalty methodology developed in-house by our data scientists.
Loyalty Rate
For the Automotive Brand Loyalty study, we indexed purchased vehicles against the vehicles in the garages to look for a match at the model, brand, and/or OEM level. When we found a match, we paired the vehicles together, and labeled the relationship as model, brand, and/or OEM loyal.
The data and the methodology allowed us to establish a loyalty rate, which is the percentage of garages that acquire a vehicle of the same model, brand, or OEM. For example, a loyalty rate over 50% indicates that more buyers are repurchasing from a brand they already own rather than from a competing brand.
Trade-ins & First-time Buyers
The Automotive Brand Loyalty study also identified disposal/replacement purchases, to indicate when a garage disposed of or removed a vehicle to replace it with another one. Our analysis set the disposal time window from 30 days before to 30 days after the purchase date.
In addition, the study identified empty garages which are made up of either first-time buyers or market returners. These groups included those that did not have a vehicle in the garage for at least 30 days prior to purchase of one.
The information assets within LexisNexis Risk Solutions related to the study are updated daily, enabling us to create weekly time intervals that look at each of the 52 weeks in the sales year. We will be releasing future updates to the study as we progress through the 2024 sales year.
To learn more about the performance of specific OEMs, brands, or models, please contact LexisNexis Risk Solutions.
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