A Blog by Jonathan Low

 

Jul 28, 2018

Which Car Brands Have the Most - and Least - Loyal Customers?

Neither the most or least popular brands - Lexus and VW, respectively - are native to the US, although the most popular marque is the Chevy Corvette. Which says something about the global nature of the auto market. JL


Price Economics and CarMax report:

On average, people are not very loyal to their car brands. Among customers who traded in a car, just 19.4% of them (buy) the same brand. The brand with the most loyal owners is Lexus, followed by Mercedes-Benz and Ford. The brand with the least loyal owners is Volkswagen, followed by Mazda and Volvo. The type of vehicle with the most loyal purchasers? The SUV: 61% of CarMax SUV owners get another SUV, the largest margin for re-purchase of any vehicle type.
For many Americans, buying a car is one of the most important purchases in their lifetimes. And the features of a car can even reflect your personality: are you outdoorsy with an all-wheel-drive, an industrious worker with a large truck, or a speedster in a sports car?
How loyal are people to their brand of car? Perhaps you had a great experience with your car and you’ll buy that brand for the rest of your life. Or what if you care most about getting practicality and features, and would happily drive any brand?
We analyzed data from Priceonomics customer CarMax to answer the question of how loyal people are to their car brands. Using this data set, we explored which cars people own at trade-in and what they purchase as their next car. Do they stay with the same brand or not? Are people loyal to the same type of car they used to drive (i.e., do SUV owners keep buying SUVs or do they switch to sedans)?
Based on the data, we found that the brand with the most loyal owners is Lexus, followed by Mercedes-Benz and then Ford. The brand with the least loyal owners is Volkswagen, followed by Mazda and Volvo. A Lexus owner is four times more likely to buy another Lexus at CarMax than a Volkswagen owner is to buy another Volkswagen at CarMax.
And the type of vehicle with the most loyal purchasers? The SUV: 61 percent of CarMax SUV owners get another SUV, the largest margin for re-purchase of any vehicle type.
***
To calculate car brand loyalty, we looked at every CarMax purchase from January 1, 2017 through December 31, 2017 that also had a trade-in vehicle. We then compared the brand of the purchase with the brand of the trade-in to calculate loyalty.
On average, people are not very loyal to their car brands. Among our customers who traded in a car, just 19.4 percent of them continue on with the same brand. The rest try something different.

Data source: CarMax
With that context in mind, the loyalty rate among different car brands can vary substantially. So which car manufacturers have the most loyal owners? The following chart shows the repurchase rate at CarMax of each major car brand. The list is ordered from brands with the most to least loyal followings.

Data source: CarMax
Lexus, a luxury brand perennially honored for its reliability and high customer satisfaction, takes the top spot with the most loyal owners. 30.4 percent of people that trade-in Lexuses at CarMax go on to choose another Lexus. In second place is Mercedes-Benz, a company also well known for its luxury vehicles and customer satisfaction.
Car loyalty isn’t just for owners of luxury automobiles. Toyota and Ford each make the top five in terms of repeat-buyers.
People may be loyal to their car brands to varying degrees, but how loyal are they to the particular car they drive? The following list shows the makes and models with the highest repurchase rate based on purchase/trade in data at CarMax from January 1, 2017 through December 31, 2017.

Data source: CarMax
Given the opportunity to buy almost any car, 30.7 percent of Corvette owners go on to purchase another Corvette. Drivers are also loyal to SUVs from Lexus and Cadillac; trucks from Ford, Dodge, and Chevrolet; and minivans from Kia, Toyota, and Chrysler.
Lastly, we thought we’d look at vehicle type. If someone drives an SUV, sedan, truck, or another type of car, how loyal are they to continue to repurchase that type of car. The final chart shows the percentage of owners who are the most (and least) loyal to their type of car at CarMax from January 1, 2017 through December 31, 2017.

Data source: CarMax
By a large margin, SUV owners are most likely to continue to buy the same style of car at CarMax; 61 percent are satisfied enough with that style of vehicle to get another. Sedans are the body type with the next-highest repurchase rate — 47.5 percent.
Two-door vehicles tend to have the lowest repurchase rate; just 5.9 percent of two-door hatchback owners repurchase and just 8.7 percent of two-door truck owners go on to buy another two-door truck. Notably, four-door passenger vans (minivans) and four-door wagons also have low repurchase rates.
***
Americans may love their cars, but they also like switching cars. After trading in their old car, over 80% of CarMax buyers decide to try a new brand. However, customers who buy a Lexus and Mercedes-Benz are the most brand-loyal. And customers who drive Corvettes and SUVs are also likely to stick with that kind of car.

25 comments:

Anonymous said...

None of this data is globally reliable. This only accounts for used car sales on a trade-in over a 1 year period. Completely different consumer habits from people who trade at manufacturer dealerships and not enough time to account for multiple purchases by the same consumer. This only speaks to model popularity of the given year.

Jon Low said...

Point taken. Though what would be even more interesting is examining the differences between this data and other, both to see how broadly applicable this might be and, what the differences are with consumer purchases from other formats

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