Tesla has many customers loyal to its luxury brand. According to a report by Tom Libby, associate director and loyalty principal at S&P Global Mobility, this devotion is not slowing down and is ominous to the rest of the automotive industry.
This comes after Tesla won three Best Luxury Brand awards in Kelly Blue Book 2022 earlier this year. Outside its industry, Tesla also came second to Disney in consumer bond with brands.
Libby made known his finding during a recent webinar that evaluated brand loyalty and reported by Automotive News. The data he presented applied to between January 2020 and April 2022.
The analyst arrived at the loyalty index for each brand by determining the percentage of customers that will buy their next car from the same brand.
Data showed a general reduction in brand loyalty in the industry, which coincided with the beginning of inventory shortages in March 2021. Popular brands including Ford, Hyundai, and Chevrolet had their customer loyalty drop from 54.8 percent to 52.1 percent on average from the 14 months before the beginning of the inventory shortage to the 14 months after, a span of 28 months.
The luxury category was the most affected, including Lincoln, Jaguar, Porsche, etc., with a brand loyalty drop of 4.7 percent to 46.3 percent on average.
Tesla, however, escaped unscathed, joined by smaller brands like Genesis and Maserati.
Libby revealed that taking Tesla out of the equation resulted in a decrease of 5.5 percentage points to 45.4 percent on average. This means Tesla was hiding much of the decline in brand loyalty in the luxury category.
Libby also concluded that Tesla’s success is due to its ability to sustain internal loyalty among its customers instead of stealing customers from competing brands. The major driver of this phenomenon was the Model 3, which recorded an increase of over 7.5 percent in customer loyalty to 62.2 percent.
One of the reasons Tesla has been able to maintain a tight hold on its customers is the personality of its CEO, Elon Musk, who has built a brand around his image.