SOUTHFIELD, Mich.--(BUSINESS WIRE)--For the release dated July 24, 2018, please replace the graphics with the accompanying corrected graphics.
The release reads:
SUV SHIFT NOT PROMINENT AMONG ALL GROUPS, IHS MARKIT SAYS
Consumer preferences for SUVs continue to rise, and at a faster pace than five years ago, based on new loyalty and defection analysis from business information provider IHS Markit (Nasdaq: INFO). More than 35 percent of US households with a sedan in the garage that returned to market for a new vehicle from April 2017 to March 2018 acquired an SUV, up from just 24 percent five years ago.
However, not all consumers are moving to the popular body style at the same pace. The IHS Markit analysis found variances among ethnic groups, household income and age levels that may be surprising.
Cultural preferences dominate the US loyalty landscape
The propensity to defect from a sedan to an SUV is much higher among Asians than African American or Hispanic consumers in the US, according to the analysis. Nearly 40 percent of Asian sedan owners returning to market for a new vehicle in the timeframe defected from a sedan to an SUV, at a significantly higher rate than Hispanics (31.9 percent) or African Americans (31 percent), according to the analysis.
Perhaps surprisingly, 55.7 percent of African American sedan owners opted to stay with a sedan for their next vehicle purchase, versus only 49.6 percent of Hispanic and 43.5 percent of Asians.
Older drivers less likely to defect
Various age groups have different patterns for defection from sedans as well. During the April 2017-March 2018 time frame, the propensity to defect from sedan to SUV decreased as age increased. Loyalty to sedans is extremely high among older consumers, and varies by nearly 20 percentage points from the youngest consumers to the oldest.
“Many marketers may not realize the importance of continuing to target their sedan marketing and advertising efforts toward older buyers,” said Tom Libby, loyalty principal at IHS Markit. “These consumers sometimes have more buying power, as well, which means an important group of prospective customers could be at risk of being missed in advertising and marketing efforts.”
Income influences defection decisions
Household income levels also contribute to consumer preferences and defection rates. The analysis found as incomes rise, consumers are more likely to defect from a sedan to an SUV. Conversely, the propensity of sedan owners to choose another sedan when returning to market declines as income levels increase. These data would suggest the healthy US economy itself is contributing to the flourishing SUV business.
The complete analysis by IHS Markit covered new vehicle transactions from April 2017-March 2018, including purchases and leases among owners who had acquired a new vehicle during the 12-month time frame. The SUV/CUV body style as defined by the research includes SUV and CUV models collectively. In addition, the second vehicle may be an addition to the household fleet, not necessarily a replacement. Age and income levels reported in the analysis are based on head of household, who may not be the primary driver.
About IHS Markit (www.ihsmarkit.com)
IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.
IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2018 IHS Markit Ltd. All rights reserved.