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Brand Loyalty Decreases Over Time, But Maybe Not Dealership Profits.
Car Makers have always made large investments on ensuring that once you buy one of their 
vehicles you never consider anything else, and to accomplish this usually meant a focus, in part, on ensuring the buyer remained confident in their purchase and happy with their vehicle. But, is there a point at which that strategy begins to do more harm than good?
A recent KBB study on Brand Loyalty discovered that the longer someone holds on to a vehicle the lower the chances become that they will purchase from that same brand. Why? Well, KBB chose not to speculate but taking an educated guess, or maybe it’s just using a bit of common sense, the longer you drive a car increases the chances of mechanical wear, tear, and breakdown. At some point something is also going to break (Ironically)after the warranty for that specific problem ends, and who delivers that bad news? Usually the manufacturer.
As usual, this isn’t where the story ends. It should go without saying that although a customer holding on to a vehicle for a longer period of time is not good for sales, it is most certainly an opportunity for service, which is where dealers have shifted a significant amount of their focus as a result of shrinking upfront margins. The question, which obviously only the dealers themselves could answer, is: Is a consumer's value higher to dealers as a more frequent customer in the service department, or on the showroom floor? And if more profits are realized from service from long term car owners, is it worth losing them all together in the end? (Would love to hear Dealers opinions here)
The reality remains that there is apparently, somewhere, a “Point of No Return” along the journey of vehicle ownership as it relates to brand loyalty. Whether the Automakers or even the Dealers themselves can identify that time, or have any real control over it’s passing, may continue to remain to be seen or known until further research is completed.
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Is a “NO HAGGLE PRICE” a Good Deal to Win over Millennials?
No Haggle or Discount? What is the future of Car buying? In our opinion it isn’t a question of either or, it’s a how much of each is just the right mix. There is a segment of those who will forgo a serious bargain in return for a faster process and those who want to drive away knowing they got the best deal they could. The best ratio is probably determined by taking a look at the soon to be largest market of buyers, Millennials.
It is often assumed that millennials are the “Shopping Cart” consumer because their preferences are usually centered around simplicity and ease of use, tendencies that one would assume favor a “No Haggle” approach. But, what the Automotive Industry may be overlooking is that millennials are also the generation that grew up in the Great Recession, a difficult time brought on in great part by atypical spending with money that was too easy to get. They saw their parents become financially overexposed and many had to witness as their families lost much or most of what they had spent their lives accumulating. Needless to say, it was those types of experiences that shaped a generation that we now see favoring mobility and flexibility when it comes to financial decision-making and ownership.
The automotive industry doesn’t have to look very far to see these habits playing out as a recent JD Power survey discovered. They found that the millennial car buyer spends a week longer than a baby boomer deciding on which car to buy and then 4.5 hours longer during the process of buying it. For those who favor the “No Haggle” model whose biggest value proposition might be that of saving time, this could be something to be concerned about. However, millennials also asked more questions about credit and tended to favor bargain vehicles or deals which could favor a One Price model that provides an initial discount as part of its proposition.
In conclusion, Millennials care about the price they pay just as we can agree any generation does, but millennials may exceed any other in a concern for the ability to have choices and flexibility in coming to that price. One price, no matter how carefully worded, IS saying to your customer: “This is what we have determined to be a good price, take it or leave it”. Is taking that flexibility away from the millennial generation an overall winning proposition when they have demonstrated the willingness to put in more time and work for a better deal? Like the answers to most questions about the future, only time can tell…
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Autohitch
Fuel Prices on the Rise from Hurricane Harvey but Don’t Expect Suv & Truck Sales to Slide
It is September 2nd just one week after Hurricane Harvey made landfall and already fuel prices are on the move upward but don’t expect this to have any effect of larger vehicle sales.
The mainstream thought among automotive retailers has always 
been that an expected or realized increase in fuel prices will have a negative effect on larger vehicle sales, just how much is usually determined by the length of time prices remain high. However, Hurricane Harvey didn’t cause flooding in Virginia or Massachusetts, it caused flooding in Texas. It will be safe to assume that many of the vehicles replaced, both privately owned and commercial will be trucks and SUV’s. Also worth assuming is that car dealerships and rental agencies in Texas stock more large vehicles on average which means that’s what they will be replacing on their flooded lots.
Demand will surely be high for vehicles as Texans get back on their feet (If Texans ever are off their feet that is) and because they’re Texans expect demand for large vehicles to actually increase along side fuel prices.
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