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brand loyalty

The decline in brand loyalty has allowed newcomer Kia to make its mark in Canada.

Once upon a time, the make of car a person bought spoke volumes about how he or she wanted to be perceived.

Take my grandpa, for example. Born in 1928, he had a successful career as manager of a small-town beer store. I've known this about him for as long as I can remember: Joseph I. Hatt was a Mercury Man.

The genealogy of his driveway includes a long line of Cougars, which eventually gave way to a Grand Marquis. When Ford wound down production of Mercury, grandpa did the logical thing: he bought Ford's Crown Victoria, the Grand Marquis' twin. Next was a series of Lincoln Town Cars, which prevailed until the mathematical combo of grandpa's age and the length of the cars became treacherous.

Next he did the unthinkable and traded in for a Kia, then a fledgling brand in the Canadian market.

For me, this was the first sign of brand loyalty's death knell.

But the auto sector has long been attuned to its echo. The scramble is on to unearth the antidote to what industry experts say is a widespread erosion propelled mainly by buyers' unprecedented access to inside information – on purchasing, pricing, performance and every other detail imaginable – that has diminished brand lustre.

"Thirty years ago, automobile customers knew much, much, much less. They just automatically went in and bought another of what they had before," said Tom Libby, a market loyalty expert for IHS Automotive, a U.S.-based consulting firm. "Now, the huge amount of information available is changing the retail buying process. There are less automatic repurchases – it is hurting loyalty."

In other words, consumers are now far less emotional – and more rational – when they embark on an auto-buying journey.

"I've got no brand loyalty. It's all about quality and price," said Peter Cammara, a Mazda3 driver who was doing research for his next buy at February's Toronto auto show. On his list were models made by Chevrolet, Volkswagen, Mazda and Kia, brands Cammara said offered "value for my money."

More than ever, said Peter Hatges, Canadian automotive head for accounting giant KPMG, which recently released its annual assessment of the state of the auto industry, brand loyalty is in decline. "People are willing to try something different," he said, adding: "That's why Kia is so successful."

Having only been available for sale in Canada since 1999, the South Korean auto maker celebrated its 10th anniversary by claiming the No. 1 slot in the ranking of consumer conquests and defections, according to IHS Automotive, and Polk Data. That means more buyers migrated to new-kid-on-the-block Kia from other auto makers than any other brand in 2009, a pattern that held until 2013.

The fact that more people lease than before also increases the likelihood consumers will migrate to a new brand, said Craig Little, a salesman with Audi Downtown, in Toronto.

"One of the reasons to lease is they get to change [cars] every four years. It doesn't matter what their income is," he said.

"If any brand can offer something better at the same or a better price, people are willing to look elsewhere."

There are lots of opportunities to inspire loyalty with serial leasers, though.

"Leases require stronger links between the customer and dealer," Libby said. "Not only will the customer have to take the vehicle back to the dealer at the end of the lease, they're more likely to have it serviced at dealerships."

The key, Libby said, is to ensure an ongoing and open dialogue with the customer. And the service experience must be exceptional.

"There [are] data that [show] service experience influences loyalty," he said. "It's a huge influence either way. If the service experience is good, it can have a positive impact. But if it's not … it increases the risk [the customer] will walk."

One of the best strategies for keeping a buyer's eye from wandering, Libby said, is to offer a broad lineup of vehicles. "If you own a certain product but want another body type – say you have a sedan but want a minivan or convertible or a pickup – you can do that within certain brands like Ford, Chevrolet, Toyota. You cannot do it for Porsche."

Indeed, it is Ford, North America's oldest auto maker, that has retained a stranglehold on the top ranking for consumer loyalty in the United States since 2009. That's in part due to the breadth of its offering, but also to the company's commitment to offering sophisticated in-vehicle technology packages at affordable prices.

"Technology in cars is going a very long way," said Hatges of KPMG. "North American consumers are looking at vehicles as an extension of the environment they're accustomed to at home or work."

Still, brand loyalty isn't completely dead.

"We've been GM for quite a while," Penni MacVicar said in February while she and her husband, Doug, perused a fleet of new Cadillacs. "I've been happy," Doug said, adding: "You get the allegiance, and then a reputation."

f Doug abandoned the brand now, Penni said, he'd be mocked by his friends. "You could never have a Ford," she said to him, with a grin.

New vehicle makes with highest loyalty in the U.S.

Year

Make

Loyalty (%)

2013

Ford

63

2012

Ford

61.3

2011

Ford

62.3

2010

Ford

60.3

2009

Toyota

56.3

2008

Toyota

58.2

 

Make with highest conquest/defection ratio

Year

Make

Defection ratio

2013

Subaru

2.19

2012

Kia

2.36

2011

Kia

3.2

2010

Kia

2.85

2009

Kia

2.32

2008

Mini

2.88

Source: IHS Automotive with Polk registration data

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