When a consumer brings a Chevrolet Cruze or Ford Focus compact car back to the dealer lot as a trade-in, chances are he or she will not be returning to the brand — or even the segment — when it’s time to make the next new-vehicle purchase.
That’s according to a recent study from Edmunds that examined how owners of these now discontinued models have behaved once they start looking for a new vehicle.
And there are still millions of these respective cars from General Motors and Ford — both of which have stopped making compact cars — in the vehicle population: close to 2.7 million Focuses and more than 1.6 million Cruzes, Edmunds said.
But the automakers may be at risk of losing these customers when they come back to buy.
"Ford and GM made a strategic decision to prioritize profit at the expense of market share," said Jessica Caldwell, Edmunds executive director of insights, in a news release.
"While this may set them up better in the long run so they have the cash they need to fund electrification and autonomy, there's no question that decision is giving their competitors an edge now,” she said.
Through September, just 33% of consumers with a Focus trade-in have bought another Ford vehicle this year, Edmunds said. That’s down from 40% three years ago.
“With the forthcoming termination of other Ford cars such as the Fiesta and eventually the Fusion, which have become popular landing spots for Focus trade-ins, trade-ins staying with the brand will likely decline further,” Edmunds said in the report.
The segment average loyalty rate is in the neighborhood of 50%, similar to where it was in 2016. But like the Focus, the Cruze is below that market average this year.
Just 45% of buyers with a Cruze trade-in have opted for another Chevy, down from 57% three years ago, Edmunds said.
“In 2019, 9% of Cruze trade-ins have gone toward another Cruze, a prospect that won’t be an option as the year wears on. The impact was immediate, but Ford and Chevrolet can expect further loyalty declines moving forward,” analysts said in the report.
As far as the segments these shoppers are turning to when they trade-in, the compact car still carries some weight, as do cars in general.
Edmunds found that 21% of Focus trade-in customers have opted for a compact, with 22% of Cruze owners doing the same. Overall, about 42% of each are choosing to remain in car segments.
“The declining availability of in-brand car models has necessitated that many shoppers intent on buying a car turn to alternative brands,” Edmunds said.
“Segment leaders in the compact car segment have benefited from the termination of these models, with the share of trade-ins going toward the purchase of Honda Civics and Toyota Corollas rising sharply — Cruze trade-ins for Civics and Corollas nearly doubled from 2016 to 2019,” it added.
Interestingly enough though, SUVs are still a more popular choice.
According to the data, 48.8% of Focus owners and 49.1% of Cruze owners went with an SUV through nine months of 2019. (Rates for trucks/vans were much lower: 9.3% for Focus, 8.6% for Cruze).
As for the individual models these owners are buying next, the Ford Escape leaps the pack for those trading in Focuses, with 9.5% opting for this SUV.
The next highest is the Ford Eco-Sport (6.2%). Meanwhile, the percentage of Focus owners opting for another Focus has gone from a leader-in-the-clubhouse 13.8% in 2016 to 2.8% this year.
For the Cruze, it still maintains the top spot, with 10.3% of Cruze trade-ins going towards another Cruze.
But that’s down from 19.2% in 2016. And second highest is the Chevy Equinox (9.4%), followed by the Chevy Trax at 8.9%.
“In this regard, the strategy in Detroit has worked since the models (of SUVs they’re buying) are more expensive, which inevitably yield greater profits per vehicle for both GM and Ford. Last year the Focus transacted at $20,900, the EcoSport at $24,900 and the Escape at $28,300. The Chevrolet lineup shows a similar price distribution,” Edmunds said.
“However, even though Ford and Chevrolet have fielded models in the compact and subcompact SUV segments that have kept shoppers in the fold, the owners of the majority of Focuses and Cruzes that are traded in for SUVs still defect to other brands,” the company said in its report. “The market’s swing to SUVs was a trade-in issue for these models well before their discontinuation and has been a boon for automakers with SUV-heavy lineups such as Jeep and Subaru.
“Hyundai and Kia have gained some recent trade-in traction with small SUVs of their own, and over index with trade-ins of Focus and Cruzes from older model years. Honda and Toyota, the perennial compact-car segment leaders, have seen the largest increases and are bolstered by Focus and Cruze owners moving into their subcompact and compact SUVs.”