Polk study finds auto industry lagging in building loyalty with minority customers

(December 19, 2006) Less than 15 percent of African-American, Asian-American and Hispanic-American car buyers believe the auto industry is "best in class" at developing customer loyalty, according to a recent study by R. L. Polk & Co.
 
"Auto manufacturers need to do a better job of courting repeat business from minority customers, or they risk missing out on the biggest growth opportunity in the auto industry right now," said Lonnie Miller, director of Industry Analysis, R. L. Polk & Co.

"Minority buying power in the United States is projected to grow by 14 percent by 2010, so winning and keeping minority customers will be a key element to success in the next decade," said Miller.

Minority purchases have been a bright spot in recent years' auto sales, according to Polk. While personal registrations in the auto market were down approximately 1 percent from 2003 to 2005, new vehicle sales to minority customers were up approximately 18 percent.

Despite the overall rise in minority vehicle sales, loyalty to a specific manufacturer is low among these groups. For example, on average, Hispanic-American customers buy from the same manufacturer 48 percent of the time while Asian-American customers buy from the same manufacturer just 42 percent of the time. Overall manufacturer loyalty is 52 percent.

Factors influencing loyalty
The Polk study found that the most important factor for retaining customers was whether or not they felt a manufacturer was a reliable and trustworthy organization. This was strongly agreed upon by 39 percent of Hispanic-Americans, 35 percent of Asian-Americans and 31 percent of African- Americans. These traits were followed by the consumer's joy of driving the vehicle and the overall experience with dealership's service department.

"Aside from the joy of driving the vehicle, the majority of brand loyalty with ethnic groups is built on a dealership level," said Miller. "There seems to be continued opportunity for automakers to connect with customers at the dealership level to encourage them to return for any needed repairs or routine maintenance, while leveraging cultural cues unique to each audience seeking individual attention."

The results of the multicultural loyalty study were presented during a three-city seminar tour visiting Long Beach, Calif., Woodcliff Lake, N.J. and Troy, Mich. Entitled "Multicultural Marketing 2006: Listening to a Diverse Marketplace," the seminar featured research and case studies from Suzanne Irizarry, Yankelovich associate director, Multicultural Research; Bryan Mattox, Burrell Communications vice president and Urban Marketing director; Dr. Djuana Stoakley, Burrell Communications senior research and strategy manager; Terry Barclay, Inforum president and CEO; Jon Yokogawa, interTrend vice president and managing director of creative; Tanya Raukko, interTrend managing director of strategic planning, research, business development; and Sara Hasson, Univision Communications vice president Automotive Marketing.

The seminar focused on strategic opportunities to effectively understand, listen to and reach multicultural audiences active in the U.S. automotive market. Presenters brought unique experiences based on practical experience gained from implementing marketing programs and studying behaviors and attitudes among these diverse audiences.


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