As someone who works in the auto industry, knowing how long Amercians hold onto their car or truck gives me a sense of what future sales demand may look like--"demand" in terms of selling replacement parts and service as well as understanding factors that impact new vehicle sales. We're all looking for "demand signals," right?
Polk's research shows that as of the second quarter of 2012, the average number of months that both new and used vehicle owners hold onto their vehicles is climbing. Among new owners, it's an average of 71.6 months. Among used owners, it's an average of 50.7 months. When you compare this ownership behavior to what Polk observed in late 2001, Americans are holding onto their vehicles for nearly two years longer! We saw this trend aggressively rise during the 2009 recession when vehicle sales took a dive and people decided it was far better to keep their set of wheels for a little longer. Plus it doesn't hurt that automakers are producing higher quality and longer-lasting vehicles today as evidenced by an average vehicle age of 11.2 years.
Why is this relevant? Increased periods of ownership may negatively impact customer loyalty. So automakers and dealers must prove their value to the owner throughout the entire ownership experience.
In the figure below, you'll see that after the third year of owning a new vehicle, make loyalty and manufacturer loyalty decline and stay at a reduced level. While Polk has been tracking automotive loyalty for over a decade and the industry averages for make and manufacturer loyalty have risen, the behaviors of these sub-groups of owners tell a different story.
Interest piqued? Take a look at our latest paper titled "Strategic Questions for Automotive Business Planners" and find out what else automotive leaders should be considering as they work on their business plans for the near-term.
Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (12.17.2012)