Dealership Marketing

The Automotive Industry in 2030: Say “Goodbye” to Brand Loyalty

Loyalty cash offers and branded incentive programs are the first things that come to my mind when the topic of customer loyalty comes up in our industry. But what if brand loyalty ceases to be an important part of the sales funnel?

The IBM Institute for Business Value recently put out its Automotive 2030 study that polled 11,500 consumers and 1,500 industry executives around the world. Consumers were asked questions around automotive brand loyalty, and their answers revealed that as the industry moves away from vehicle ownership and toward vehicle usage, like ridesharing, brand loyalty will decrease and factors like cost and convenience will have a greater pull on consumers in the marketplace.

By 2030, up to 15% of new vehicles sold to consumers could be fully autonomous. Without the brand name as a differentiator, how will automakers entice drivers to choose their brand?

The answer: technology.

From personalized rideshares to incredibly connected software systems, automakers’ value proposition will move from hard numbers like horsepower and torque to ease-of-use and in-vehicle features that elevate a consumer’s drive in a different way than what we’re currently used to.

Here’s the kicker, though. While customers will look for convenience and cost, they may be willing to pay more for certain features, like data-protection while riding, simple communication with the vehicle in use, or car seats or accessibility features for people with differing abilities.

And we can’t knock the loyalty programs of today – there is the possibility that these programs could transition into a marketplace based on automation. Enticing customers with loyalty points to choose a certain brand could work in a future of experience-based driving.

Think of the Lexus brand’s Rewards Program; preferred parking at sports games, suite and lounge access at theatres, and resort credits at various locations around the country? Sign me up! While Lexus stands out in a sea of different rewards programs across brands, I wouldn’t be surprised if others take note of their strategy as the market turns away from ownership and toward ridesharing.

Out of the 1,500 executives polled in the survey, 46% are expecting brand loyalty to provide a competitive advantage by the turn of 2030 compared to 69% now, and 80% of them are looking to digital services to differentiate their brands by incorporating integration with personal devices, giving the vehicle the ability to learn about its users, and more. Half of them said that "to succeed or even survive in the next ten years, they need to reinvent their organizations with digital technologies.”

Remember those value-based features customers may be willing to pay more for? If an autonomous vehicle can remember that a user needs a car seat for a child, or that he or she prefers the temperature inside to be at 72 degrees, that brand may just see greater consumer loyalty than a brand without learning abilities.

As dealers, there isn’t much we can do to affect corporate strategy or tech features at the Tier 1 level, but perhaps there are ways we can start positioning ourselves within our own markets to prepare for the future.

How do you establish loyalty with your customers outside of branded features, price point, or discounts? Is there an opportunity to educate buyers about a shifting market today, or is it still too early to tell how industry changes will affect your dealership?

No matter what happens to the automotive industry in the future, one thing is for sure – change is coming.

How are you preparing?

Alex Snyder

President Skroob
May 1, 2006
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TLDR, admittedly.

Is brand name a thing of the past? No.

Shoe brands, for example, are stuck with based on comfort and style. I can't get a pair of Cole Haans to fit ever. However, Johnston Murphy and Allen Edmonds are usually good enough for my feet that I can buy them online without trying them on. When it comes to loafers, wingtips, etc, style is out the window.

And that seems to be the case for a lot of cars too. Let's face it, the differences in pickup truck styling mostly revolve around how big the logo in the grill is. Ever since Audi employed Italian designers all cars are starting to look just as good. I caught myself getting excited about a Kia the other day :crazy:

As someone who cut his sales teeth at a Hyundai, Isuzu, VW store I can assure you that people will always pay more and rule-out some features to buy a brand name they trust... Toyota and Honda were the toughest competition back then.
 
Reactions: Karen Ann

joe.pistell

Uncle Joe
Apr 7, 2009
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Brand loyalty has been down trending for decades. There use to be 'Ford families' and 'Dodge families'. Now, the loyalty that sticks out to me is domestic vs imports.
 
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Tallcool1

Sr. Refresher
Mar 17, 2014
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I agree with @joe.pistell , I thought brand loyalty was already dead.

The one exception that I see frequently in my market...Toyota. Shoot, I am in farming country, and even the farmers are open to different brands. Never thought I would see it.
 

Brittany

Getting Refreshed
Jun 25, 2019
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Watched an interesting webinar today that talked about consumers being loyal to conveniency instead of brands...

Just a thought :D
 
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Jeff Kershner

Founder
May 1, 2005
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Watched an interesting webinar today that talked about consumers being loyal to conveniency instead of brands...

Just a thought :D
That's exactly what the study was touching on. It's hard to argue the point BUT I'm sure there will always be a good percentage of consumers that will be brand loyal to some degree. Especially in the high-end market.
 

Billy B

Noob
Jan 25, 2018
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Super interesting discussion!

It could be argued that tech + ease + convenience + perks will simply become the embodiments of a brand, and thus build loyalty from there.

If brands embrace tech and unfair advantages (per Lexus' preferred parking you mentioned - love this btw), their buyers will embrace the brand.

Just a take from a marketing guy. haha

Love this share though @Jeff Kershner thank you!

And 15% of vehicles being purchased...staggering to think that's less than 15 years away.

My agency is affiliated with the autonomous vehicle network and the automotive centre of excellence ("top secret" tech testing lab) here in Canada and I can say...they are up to some biiiiig things.

The future is both exciting, unknown and scary all at the same time. And we're here for it!