Buying New, But Not As Often
We've talked for some time about Americans holding on to their new cars longer and the reasons have been well documented. Cars last longer and as their prices have gone up, people are less inclined to take on a monthly payment. Since the recession they have stretched out the length of time to pay off a new loan. In other words, people now expect to be in their car 6, 7, or 8 years after they buy it. (Read More: New Car Buyers Stretching Out Payments.)
That's a dramatic change from a well-established rule in the auto industry. For years, automakers counted on Americans to buy, on average, a new car or truck every 3 or 4 years. Some of that was due to our vehicles starting to show their age sooner.
"When we were younger, we had to replace vehicles out of necessity. That's not the case anymore," Pratt said. "The vehicles are much better quality, they're lasting much longer, so really, there is no need to replace vehicles."
Fewer Chances For Automakers to Retain/Steal Customers
Since Americans are now forecast to buy fewer new vehicles in their lifetime, it means automakers will have fewer chances to steal customers.
The "conquest buy", when one brand converts a customer to switch from one brand to another brand has long been a crucial part of building sales and market share. This is how the Japanese automakers, and more recently, the Korean automakers gained market share in the U.S. (Read More: Young Car Buyers Coming Back, Picking Korean Brands.)
That's tougher with people holding onto their new cars longer. In the past, you would start looking for a new car every 3 or 4 years, and when you did you might start looking at several brands, not just the one you were driving.
Conversely, since we are going longer between new car purchases, what we want or need in a new model may change more as the years pass. As a result, Pratt said, the brand we are driving may not have the type of vehicle, or styling we want for the next stage of our life.
"It's more difficult to retain a buyer, especially if they've changed stages in their lifetime," Pratt said. "Their needs for a vehicle may have changed, so they may abandon the brand they've driven for many years."
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