Polk Introduces Pre-Owned Vehicle Loyalty Study
4 January 2000
Study Indicates Evidence of Brand Loyalty by Pre-Owned Vehicle Customers
DETROIT-- In a study that should suprise no one, nearly one-third of consumers
with pre-owned vehicles who purchased new vehicles during the first half of
the 1999 model year were loyal to their pre-owned brands, according to research
findings released today by The Polk Company.
"Our research reveals that a positive experience with a pre-owned vehicle
might eventually lead to a new-vehicle sale from the same brand," said Karen
Piurkowski, Polk's director of loyalty. "This is of particular importance to
automotive manufacturers that are trying to build owner loyalty through newly
developed, certified pre-owned vehicle programs."
This finding, and many others resulting from the in-depth analysis of
market activity by pre-owned vehicle owners, is now available in Polk's semi-
annual Pre-Owned Vehicle Loyalty Study. The study was designed to provide
insight into the loyalty behavior of consumers owning pre-owned vehicles who
purchase new vehicles during the model year. Polk provides the most in-depth
loyalty information available in the automotive industry today, with results
based on actual registration and lease transaction records. Nearly 1.6
million consumer records will be analyzed annually for this new study.
"Now that manufacturers have access to this study, which enables them to
understand loyalty behavior of pre-owned vehicle owners, their next step will
be to begin building loyalty rates through effective target marketing," said
Piurkowski.
According to Polk, pre-owned vehicle owners acquiring a new vehicle are
far less loyal to their model, make and manufacturer than are their new-
vehicle-owning counterparts. "There is room for improvement in developing
consumer loyalty, considering new-vehicle owner loyalty to make is nearly 50
percent higher than pre-owned vehicle owner loyalty."
AVERAGE LOYALTY RATES *
Pre-Owned New-Vehicle
Vehicle Owners Owners
Manufacturer Loyalty 46.3% 57.0%
Make Loyalty 32.6% 45.5%
Model Loyalty 12.1% 22.2%
Source: Polk
*Includes owners who purchased or leased a new vehicle during the first 6
months of the 1999 Model Year.
Targeting pre-owned vehicle owners might require a different marketing
strategy than targeting new-vehicle owners because of the noticeable
differences in demographics. Polk's data indicate that, in comparison to new-
vehicle owners, pre-owned vehicle owners are more likely to be younger, single
adults and/or have a lower household income.
"If manufacturers can capture the loyalty of these younger consumers as
they enter the new-vehicle market, they can increase long-term profits by
turning these buyers into lifetime customers," said Piurkowski.
DEMOGRAPHIC profile *
Pre-Owned New-Vehicle
Vehicle Owners Owners
Age of Head of Household:
Under Age 35 22.0% 13.4%
35 or Older 78.0% 86.6%
Estimated Household Income:
Less than $50,000 33.8% 26.7%
$50,000 or Higher 66.2% 73.4%
Source: Polk
*Includes owners who purchased or leased a new vehicle during the first 6
months of the 1999 Model Year.
Polk's research also shows that differences in loyalty exist between
vehicle-size class segments when comparing pre-owned vehicle owners to new-
vehicle owners. The most notable differences in loyalty exist in the luxury
car and large car segments, where loyalty was 20.2 percent and 18.5 percent
lower, respectively, for pre-owned vehicle owners than for new-vehicle owners.
VEHICLE SEGMENT LOYALTY *
Vehicle Segment: Pre-Owned Vehicle New-Vehicle Owner
Segment Loyalty Segment Loyalty
Pickup Truck 50.4% 49.8%
Sport Utility Vehicle 42.6% 48.4%
Small Car 35.5% 33.6%
Midsize Car 33.7% 43.0%
Minivan 29.8% 35.7%
Luxury Car 27.5% 47.7%
Sports Car 17.0% 19.7%
Full Size Van 14.0% 24.1%
Large Car 16.4% 34.9%
Source: Polk
*Includes owners who purchased or leased a new vehicle during the first 6
months of the 1999 Model Year.
"With the development of certified pre-owned vehicle programs increasing
among luxury manufacturers, this lack of segment loyalty presents a challenge
as the manufacturer tries to move pre-owned vehicle owners into new vehicles,"
said Piurkowski. "Automakers offering choices in other vehicle segments might
be most successful in retaining pre-owned vehicle owners as they move to new-
vehicle purchases or leases."
The Pre-Owned Vehicle Loyalty Study is offered as an extension of Polk's
Manufacturer Loyalty Excelerator(TM) (MLEX) study. First introduced to the
automotive industry in 1995, the MLEX study provides loyalty information to
manufacturers at many different levels. It is used to determine the winners
of the Polk Automotive 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, e.g., from the industry
level down to the vehicle line level. The MLEX study measures loyalty
throughout the entire model year so that manufacturers can keep abreast of
loyalty trends as they occur in the industry.
Polk provides multi-dimensional intelligence information solutions to
companies as the primary 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.