Trade-in Time? Chances Are Better Than Ever You Won't Pick Up a 'Car'

If German automakers keep calling SUVs and five-door liftbacks “coupes,” maybe we’ll see a reversal of this trend. For now, however, American car buyers have never been quite so unimpressed with “cars” come trade-in time.

According to Edmunds’ annual Trade-In Loyalty Report, passenger cars just don’t have what it takes to lure buyers back into the three-box lifestyle. Sport utility vehicles, on the other hand, have all the appeal of a WWII pinup model parachuting into an overseas USAF base.

The 2018 report, tabulated from new vehicle transactions in the U.S. (and broken down by segment), shows SUVs pulling ahead of pickup trucks for the first time. This loyalty is quite the opposite of the industry’s now long-gone status quo.

A full three-quarters (75 percent) of SUV owners picked up another SUV at trade-in time, compared to the 74 percent of pickup owners who just couldn’t part with a cab-and-bed chariot. In the grim years of the recession, this SUV loyalty rate stood just above the 50-percent mark. Blame skyrocketing gas prices and the federal government’s Cash For Clunkers program, in some measure, for that downturn in SUV fortunes.

Loyalty in the car segment fell below that of the truck segment in 2013 and never looked back. The following year, cars nosedived below the SUV segment. Going by the latest data, only 57 percent of car owners pick up another sedan, coupe, wagon, or convertible at trade-in time.

“There’s been a dramatic shift in the last 10 years in the tastes of car buyers, and with auto sales on the decline, maintaining customer loyalty has arguably never been more important,” said Jessica Caldwell, executive director of industry analysis at Edmunds. “Trade-in customers are a critical group for automakers to keep in the brand family, as in theory they should be among the easiest to retain.”

For SUV owners who drive to the dealer in search of a new ride, fewer than one in five pick up a car. A car purchase is even less likely if you’re moving on from a pickup.

So, is there a single glimmer of light in this gloomy, car-hating tunnel? There is, but sorry, American manufacturers, it’s not for you. Japanese automakers enjoy a loyalty their U.S. counterparts can’t match in the car segment. Last year, 83 percent of Japanese car owners who traded their ride in for a new car stuck with a Japanese brand. Compare that country-of-origin loyalty to the 53 percent of American car owners who stuck with the stars and stripes.

The chances that a Japanese or Korean car owner would trade their vehicle in for an American car model stand at 7 and 9 percent, respectively. For owners of American cars, there’s a 29-percent chance they’ll go Japanese and a 14-percent chance they’ll head to Seoul for some Korean fare.

Leaving segments behind, what does mainstream brand loyalty tell us about a customer’s next vehicle? If it’s a Japanese brand they’re trading in, chances are they’ll leave the dealer in a Japanese vehicle. Toyota, Subaru, and Honda top the list, with brand loyalty rates of 63, 61, and 60 percent, respectively. Ram and Chevrolet rounded up the top five with 54 percent.

Not surprisingly, America’s favorite two-model brand — Chrysler — showed the least loyalty among mainstream brands, with just 16 percent of returning Chrysler owners choosing another Chrysler. That’s down from 29 percent in 2007. It’s a similar story at Dodge, which saw only 19 percent of trade-in buyers choose another Dodge (down from 37 percent a decade earlier).

Edmunds blames the rock-bottom loyalty rates at Dodge and Chrysler on the automaker’s decision to phase out small and medium-sized cars, thus giving returning buyers less variety to choose from. Still, Fiat Chrysler axed the Dodge Dart and Chrysler 200 in response to declining sales, so it’s unlikely these statistics will sway the automaker back into the passenger car game. As these numbers show, new SUVs is the potion buyers want to drink.

The segment where brand loyalty is weakest is among luxury vehicles, Edmunds found. On average, only 37 percent of luxury trade-ins resulted in the buyer sticking with the same brand. Lexus, Audi, and Land Rover saw the highest loyalty rates in this field, with customers returning to the brands 51, 47, and 40 percent of the time, respectively. Close runners-up were Mercedes-Benz and Porsche.

Infiniti posted the lowest loyalty rate, with just 22 percent of customers returning to the fold.

Just like in the mainstream category, SUVs are king. Of the luxury vehicle owners who traded in a vehicle last year, 59 percent of them chose a luxury SUV. The growing subcompact luxury segment shares some of the credit for luring more and more car owners out of their sedans and coupes.

[Image: Fiat Chrysler Automobiles]