Automotive brand loyalty shifts closer to pre-pandemic levels

A surge in vehicle inventory and purchasing options is prompting more consumers to stick with their previous brand when buying a new car, according to a report from S&P Global Mobility.

In August 2024, brand loyalty was 50.3%, an increase of 0.3 percentage points year-over-year. Marking the sixteenth consecutive month of improvement.

Driving factors: The shift is largely driven by the growth in inventory — 1 million units in January 2022 to almost 3 million units in August 2024 — as well as the popularity of vehicle leasing. More choices within a brand mean customers find what they want, making them less likely to switch. And lessees, having closer dealer ties and quicker turnarounds, tend to stay even more loyal.

• Vehicle leasing now accounts for a quarter of all new vehicle transactions, up more than 8 percentage points from 16.6% in September 2022 to 24.9% in August 2024, according to the S&P Global Mobility study.

• Repeat leases rose to 69% in 2024 (compared to 28% in 2022) and were even higher than the 47% we saw in 2019 prior to the pandemic, according to a TransUnion report.

• According to S&P Global Mobility, vehicle leasing tends to be very beneficial to the luxury segment, by enabling a buyer to drive a vehicle that might otherwise not be able to afford.

Zooming in: Incentives have likely had an impact on brand loyalty as well, with discounts and rebates at 7.2% of ATP ($3,383) in August, up from 7% in July and higher than one year ago when incentives were 4.8% of ATP, according to Cox Automotive.

Deeper dive: Amid the surge in brand loyalty over the past two years, there are some notable trends regarding the varying degree of brand loyalty for electric vehicles, hybrids, and ICE models, according to another S&P Global Mobility report.

• 82% of households that previously owned a gas-powered car tend to opt for an ICE model when purchasing another vehicle.

• Only 15% of households that previously owned a hybrid prefer a BEV. The remaining were split, with 41% opting for another hybrid and 41% choosing a gas model.

• Aside from Tesla – which has high brand loyalty – only 47% of BEV households purchased another BEV. 38% shifted to a gas vehicle, with 14% opting for a hybrid.

Why it matters: As vehicle inventories continue to grow, providing buyers with more options, and more companies begin adding more ICE and hybrid models to their lineup (amid the uncertainty of EVs), the pre-pandemic levels of brand loyalty are well within reach.

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