Leasing drives loyalty.  

This was one of several benefits of the leasing boom mentioned by Experian Automotive’s Melinda Zabritski during an interview with Auto Remarketing at January’s NADA Convention & Expo, and new loyalty data released this week by IHS Automotive indicates this certainly came to fruition during the remainder of the first quarter.

The growth in leasing was among a handful of factors mentioned by IHS as “key drivers” of a 10-year high in auto brand loyalty, which reached 52.8 percent in Q1.

“Leasing is just such an interesting product. As long as it’s well understood and there is consumer education around it, I think it has a lot of positives,” Zabritski said in the January interview.

“You see those lower monthly payments (on the consumer side) and you’ve got — from the OEM and brand standpoint — the increased loyalty,” she added.

In this week’s report from IHS, Tom Libby starts with the loyalty boost from a wider selection from OEMs then goes into how ramped-up leasing leads to a more loyal customer.

“The increased number of different models within brands makes it easier for households that may need a different type of vehicle to maintain their loyalty,” said Libby, who is the manager of automotive loyalty and industry analysis for IHS Automotive.

“In addition, the increased popularity of leasing since the downturn has helped significantly as lessees are consistently more brand loyal compared to retail owners,” he added.

IHS points out that leasing is a decade-long high with a year-to-date penetration of 22.5 percent. That’s nearly 62 percent stronger than the trough of 13.9 percent back in 2005, according to IHS.

Lease penetration has climbed in 24 of 32 segments in the past decade, according to the firm’s analysis of new-vehicle registrations. And quite a few are seeing upswings of more than 20 percentage points, IHS said.

“This leasing trend is due, in part, to greater cooperation between OEM captive finance arms and their operating divisions,” the IHS analysis said.

Of course, leasing is just one of several factors pushing increased brand loyalty. Here are some of the others playing a role:

• As mentioned earlier, greater choice has had some influence. IHS indicates that there are 12 percent more models available in the U.S. this year than there were in 2005, with luxury brands playing a big part in that. The thought is, if a shopper buys from a brand, and then when he or she returns to the market, that brand has more choices, there’s a greater likelihood the customer will remain loyal, IHS said.
• New-vehicle quality, which can lead to customers being more pleased with their selection and thus more likely to buy from that brand again.
• Automakers have put more focus on loyalty and customer satisfaction, as marketers have realized retaining a customer is more cost-effective than going after one from another brand, according to IHS.
• Between 2010 and 2014, there was 49-percent drop in the number of households that returned to market while currently owning a vehicle from a discontinued brand, IHS said. The logic is that an owner of a discontinued brand technically has to be “disloyal by default.” Point is, there has been a significantly fewer number of consumers put in that situation.