Consumers Respond to Automakers' Elimination of Models
13 May 1999
Consumers Respond to Automakers' Elimination of Models; Polk Study Indicates Discontinuing Vehicle Models Might Result in Permanent Loss of Customers DETROIT, May 13 -- Owners of discontinued vehicle models are
likely to demonstrate their discontent by permanently leaving a manufacturer
instead of purchasing a new model offered by that same maker, a study released
today by The Polk Company revealed. On average, the study found that
manufacturer loyalty was 21.4 percent lower for consumers who owned
discontinued models compared to owners of models currently produced. For
manufacturers with numerous discontinued models still in operation, the effect
on loyalty could be significant.
According to Polk data, more than 11 percent of all owners who were active
in the market during the 1998 model year disposed of a discontinued vehicle
(cut from production prior to the 1998 model year). For these owners, the
average repurchase rate from a manufacturer was 48.9 percent. In contrast,
62.2 percent of owners of models currently offered remained loyal to the
manufacturer. The study also found that owners of vehicles discontinued four
or more years prior to the 1998 model year only displayed a 42.8 percent
loyalty rate -- nearly 20 percentage points lower than the loyalty rate for
owners of current models.
"Manufacturers offering a vast array of vehicle models were much more
likely to be successful in retaining owners of discontinued models when they
returned to market," said Karen Piurkowski, Polk's director of loyalty. "This
was evidenced by General Motors, Ford and Toyota ranking among the leaders in
manufacturer loyalty by owners of discontinued models."
manufacturer LOYALTY RATE comparison*
Manufacturer Discontinued- Current-
Model Owners Model Owners
General Motors Corp. 66.9% 71.4%
Ford Motor Co. 56.2% 69.8%
Jaguar 47.1% 33.2%
Toyota Corp. 43.7% 60.1%
Volvo 41.4% 44.3%
AVERAGE 48.9% 62.2%
* Top five manufacturers based on discontinued-model owner loyalty.
"We also found that manufacturers with a stronger brand image, such as
Jaguar and Volvo, were more likely to be successful in retaining owners of
discontinued models," Piurkowski said. "If a strong brand image is lacking,
customers might feel abandoned when their model is no longer offered. The
long-standing debate over what defines a 'brand' hits home in these cases,"
she added. "For many, loyalty to the brand means the actual vehicle they have
an affinity to -- it's the physical product, not necessarily the overall
company. When the vehicle is no longer offered, consumers are forced to
evaluate all options available in the current market, instead of just
returning to the manufacturer for a different model."
Polk's study also revealed that owners of discontinued vehicle models
begin their new-vehicle shopping process differently than current-model
owners. More than one-third of discontinued-model owners in the study did not
shop at dealerships offering the same make as their previous vehicle. This
implies loyalty to a manufacturer might be hampered from the start. If owners
of discontinued vehicle models are not visiting a dealer that can sell them an
alternate vehicle offered by the same manufacturer, it becomes more of an
uphill battle to keep their business.
"We discovered that the majority of owners of discontinued models were
approached in the same manner as current-model owners during their ownership
experience," said Piurkowski. "There was no additional effort being made to
retain these customers as they became active in the new-vehicle market again."
Given the influence departing customers can have on future business,
decisions to develop separate strategies for retaining discontinued-model
owners could be money well spent by manufacturers.
"Owners of discontinued vehicle models might be the best candidates to
purchase the new, nostalgic models," Piurkowski said. "These owners should
also be given higher priority by manufacturers when they are executing
promotional strategies for current customers and by competing manufacturers
who are trying to conquest new customers. Automotive dealers can also target
owners of discontinued vehicles more effectively if they are keeping reliable
historical information in their customer databases," she added.
The data for this study was derived from Polk's Manufacturer Loyalty
Excelerator(TM) (MLEX) product using Polk's disposal loyalty methodology.
Introduced to the automotive industry in 1995, MLEX is used to determine
Polk's Loyalty Awards, to provide loyalty percentages for the entire
automotive industry; to allow for cross-industry comparisons of loyalty
behavior and to examine loyalty at various levels.
Polk provides multi-dimensional intelligence information solutions to
companies as a statistician for the motor vehicle industry; as a direct-
marketing resource; as a supplier of demographic and lifestyle data and
database-marketing services; as a publisher of city directories; and as a data
enabler for geographic information systems. Based in Southfield, Mich., Polk
is a privately held firm founded in 1870 that is expanding globally, currently
operating in the United States, Canada, England, France, Germany, Australia,
Spain, Holland and Costa Rica.
