SOUTHFIELD, Mich. — Consumer preferences for SUVs continue to rise, and at a faster pace than five years ago, according to a new loyalty and defection based on new loyalty and defection analysis from IHS Markit.
According to the firm, more than 35% of U.S. households with a sedan in the garage that returned to market for a new vehicle between April 2017 and March 2018 acquired an SUV, up from just 24% five years ago. However, not all consumers are moving to the popular body style at the same pace.
The IHS Markit analysis found variances among ethnic groups, household income, and age levels. For instance, the propensity to defect from a sedan to an SUV was much higher among Asians than African American or Hispanic consumers, according to the analysis.
According to the firm, nearly 40% of Asian sedan owners who returned to market for a new vehicle during the study period defected from a sedan to an SUV. That’s significantly higher than Hispanics (31.9%) or African Americans (31%).
“Perhaps surprisingly, 55.7% of African American sedan owners opted to stay with a sedan for their next vehicle purchase, versus only 49.6% of Hispanic and 43.5 percent of Asians,” the firm noted.
Various age groups also showed different patterns for defection from sedans as well. During the April 2017 to March 2018 timeframe, the propensity to defect from sedan to SUV decreased as age increased. Loyalty to sedans is extremely high among older consumers and varies by nearly 20 percentage points from the youngest consumers to the oldest.
“Many marketers may not realize the importance of continuing to target their sedan marketing and advertising efforts toward older buyers,” said Tom Libby, loyalty principal at IHS Markit. “These consumers sometimes have more buying power as well, which means an important group of prospective customers could be at risk of being missed in advertising and marketing efforts.”
Household income levels also contribute to consumer preferences and defection rates. The analysis found as incomes rise, consumers are more likely to defect from a sedan to an SUV. Conversely, the propensity of sedan owners to choose another sedan when returning to market declines as income levels increase. The data suggests the healthy U.S. economy itself is contributing to the flourishing SUV business.
The complete analysis by IHS Markit covered new vehicle transactions from April 2017 to March 2018, including purchases and leases among owners who had acquired a new vehicle during the 12-month timeframe. The SUV/CUV body style as defined by the research includes SUV and CUV models collectively. In addition, the second vehicle may be an addition to the household fleet, not necessarily a replacement. Age and income levels reported in the analysis are based on the head of household, who may not be the primary driver.
Originally posted on F&I and Showroom