Consumer preferences toward SUVs continue to rise, and at a faster rate than they did five years ago, according to a loyalty and defection analysis from IHS Markit, a business information provider in Southfield.
However, not all consumers are moving to SUVs – the analysis found variances among ethnic groups, household income levels, and age levels.
More than 35 percent of U.S. households with a sedan in the garage that returned to market for a new vehicle from April 2017-March 2018 acquired an SUV, up from 24 percent five years ago.
The analysis found that the propensity to defect from a sedan to an SUV is much higher among Asians than African Americans or Hispanic consumers. Nearly 40 percent of Asian sedan owners returning to market for a new vehicle in the timeframe chose an SUV over a sedan. The rate for Hispanics was 31.9 percent and 31 percent for African Americans.
About 55.7 percent of African American sedan owners decided to stay with a sedan for their next vehicle purchase, while 49.6 percent of Hispanics and 43.5 percent of Asians stayed with a sedan.
Loyalty to sedans is 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,” says 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.”
As incomes rise, consumers are more likely to defect from a sedan to an SUV, the analysis found. The propensity of sedan owners to choose another sedan when returning to market declines as income levels increase. The data suggests the healthy U.S. economy is contributing to the SUV business.
The complete analysis covered new vehicle transactions from April 2017-March 2018, including purchases and leases among owners who had acquired a new vehicle during the time frame. The body style defined by the research includes SUV and CUV models collectively. 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.