Toyota, Subaru and Honda lead industry for trade-in loyalty

Toyota, Subaru and American Honda customers are most loyal to the brand, according to a new study examining the rate at which customers trade in vehicles for one from the same segment, manufacturer, brand or model.

Edmunds analysts compiled the 2018 Edmunds Trade-In Loyalty Report from more than 13.9 million vehicle transactions between 2007 and 2017, examining the percentages of vehicles traded in to purchase a new vehicle. Lease returns were excluded from the study.

Automakers with longstanding reputations for reliability offer a wide array of SUVs and leverage "emotional design" to bring customers back, the report said. Last year, 75 percent of SUV owners returned their vehicle for another SUV -- compared with 57 percent of car owners trading in that car for a new one. Seventy-four percent of truck trade-ins went toward the purchase of another truck in 2017, according to Edmunds.

Toyota and Honda each hold a reputation for quality. Though the reputation was "built on the backs of passenger cars, it has successfully bled over and boosted loyalty for their SUV offerings as well," the report said. Sixty-three percent of Toyota customers returned to the brand, compared with 58 percent in 2007. Honda customers came back 60 percent of the time in 2017, five percentage points more than 10 years prior.

Subaru's success stems from strategic product launches -- switching to a vehicle lineup of utility vehicles launched customer loyalty to 61 percent last year, up from 45 percent in 2007.

Most of the bottom five brands -- Fiat, Mitsubishi, Dodge, Smart and Chrysler -- have seen decreases in customer loyalty since 2007. Chrysler and Dodge in particular lost more than half of customers' trade-in opportunities in 10 years.

In the luxury segment, Lexus, Audi and Land Rover led the pack in brand loyalty. Luxury loyalty has declined steadily during the last three years, hitting 37 percent in 2017, the lowest score since 2009.

Trade-in customers are a critical group for automakers to keep the next purchase within the brand family, said Jessica Caldwell, Edmunds executive director of industry analysis. To subsidize the technology of tomorrow, sales loyalty is the first hurdle.

"We think with all of the new products in the market, as automakers scramble to get all these new cars on the road for sale, loyalty is a challenge," Caldwell said. "We think that this is really step one of the automakers' challenges, is getting this right."

The report also investigates why shoppers are turning from cars in droves and highlights manufacturers with particular advantages in brand loyalty.

Events before and following the Great Recession irrevocably altered the retail landscape, the report contends. Fuel economy mandates and swinging fuel prices acted as the impetus for the marketplace switch to SUVs.

"The irony of the last decade is that had the recession not happened, and had automakers not been forced to develop more fuel-efficient SUV options, the segment may have stayed limited to just those buyers who preferred larger, truck-based SUVs," the report reads. "SUVS that drove and consumed fuel similar to passenger cars actually led to the abandonment of the passenger car segment we're seeing today."