Car buyers have their preferred automaker. The auto industry's brand loyalty rate, the rate at which buyers come back to the same company to buy their next car, has stayed steady so far this year, a study by S&P Global revealed.
That's an improvement over the previous years, which showed consecutive declines as the pandemic forced buyers to look further afield for vehicles that fit their needs. Most gains were made in luxury brand loyalty.
However, a closer examination of the data shows that there are indicators that automakers should be worried about as they expand their portfolios into electric vehicle (EV) territory.
Though three out of four current EV households stick with an EV for their next vehicle, the fuel type loyalty isn't nearly as high once Tesla and its customers are removed. That's a problem for many traditional automakers, who don't want to scare buyers away, either from their own brands or the powertrain type.
Without Tesla considered, the loyalty average around 75 percent. Without Tesla in the equation, the number of buyers that go back to EVs for their next car after they own one hovers around 50 percent, according to S&P Global.
There is an important caveat to note. S&P Global warns that the data does not necessarily measure whether an EV has been replaced by another EV. The new purchase, in other words, could be a replacement for a different household vehicle.
S&P also notes that the percentage of consumers considering an EV overall has fallen from 81 percent in 2021 to 52 percent in 2023. Expectedly, buyers noted range, pricing and infrastructure as their main three barriers to purchase.
"We know EV buyers are more open to brands they haven't considered in the past when opting for their first EV. Our experience, as with all the other traditional OEMs, is that there is less loyalty than with ICE vehicles," a Volkswagen spokesperson told Newsweek, noting that 82 percent of non-Tesla EV buyers are coming from ICE vehicles.
"We think that loyalty will bounce back once brands have a robust portfolio of EVs. Currently, for instance, there are a limited number of midsize battery-electric SUVs on the market," the spokesperson said.
EV adopters are at risk of outgrowing their current model. Data from S&P Global shows that some families size out of their current EV and don't like any of the bigger electric options. Kia, Honda, Acura and Cadillac are trying to improve those options with the models like EV9, Prologue, ZDX and Lyriq, respectively.
Charging remains an obstacle for adopters, influencing their choice to remain EV owners. Public charger improvements have been the focus of federal government investment as part of the Inflation Reduction Act. Automakers like General Motors, Volkswagen and Mercedes-Benz are also supporting more installations through investments of their own.
"We realize that driving an electric Mercedes-Benz vehicle comes with the basic need to charge it, and we're making sure that this is a convenient and fast experience for our customers. Thus, we are elevating the technical implementation of the North American Charging Standard (NACS), giving Mercedes-Benz drivers access to more than 12,000 Tesla Superchargers across North America beginning in 2024," a Mercedes-Benz representative told Newsweek. It's also teaming up with highway convenience group Buc-ee's to provide more charging options.
In many cases, new EVs are far more expensive than the vehicles they are replacing. The average EV cost an average of $53,469 in July 2023, vs. gas-powered vehicles at $48,334, according to Kelley Blue Book.
Nissan had the strongest loyalty to EVs with 63.2 percent of Leaf buyers purchasing another EV and Chevrolet customers were second. For individual models, only 37 percent of Ford Mustang Mach-E owners bought another EV, versus 45.8 percent going to internal combustion (ICE) vehicles. S&P found that a large chunk of buyers went to Ford's bigger models, "suggesting that vehicle type and capability were more important than the fuel used."
"A main driver of EV loyalty is a simple truth – once most drivers make the switch to electric, they don't switch back. With the Leaf, Nissan helped bust the myths and misconceptions around electric cars and proved that zero-emissions mobility could be brought into everyday driving," Trisha Jung, senior director, Nissan EV Strategy and Transformation told Newsweek. The company began selling the Ariya, a midsize SUV that allows buyers to step up from the Leaf, in the last year.
Nissan has worked with governments, municipalities, energy partners and its dealer network developing a charging infrastructure, making it easier for customers to integrate EVs into their daily lives.
Some automakers and dealers are addressing the cost proposition head-on. Tesla and Ford dropped prices on their EVs this year. Steep discounts are available on the BMW iX and Mercedes-Benz EQ models.
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November 27, 2023 at 05:00PM
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Automakers Struggle to Keep EV Buyers Satisfied and Loyal - Newsweek
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