Buyers Usually Don’t Consider Loyalty When Choosing Dealerships

After the termination of about 2,300 Chrysler and General Motors dealerships over the past year, the market research firm Morpace found that consumer loyalty to brand name dealers is an insignificant factor in choosing a dealership.

The recent survey of 1,000 online respondents -- representative of the general U.S. population over 18 years old -- examined factors that consumers consider most influential when choosing a dealership. It marked the first time that Morpace posed these specific questions.

In the data collected over four days in September, respondents were asked to rank the importance of dealership attributes such as personal service, location, environment, inventory, deals, referrals and prior experiences with a dealership.

Of the 1,000 people surveyed, 74 percent of respondents considered "best deal offerings" when choosing to buy from a dealer. In fact, four in 10 respondents -- the largest group -- ranked best deal offerings as the top consideration.

Other top considerations were "prior positive experience" and "referral from family or friends."

Among the lowest-ranking considerations for buyers were "location," the top consideration for 4.4 percent of respondents, and "desire to patronize a particular salesperson," the No. 1 consideration for 1.6 percent.

The survey also asked respondents to rank the importance of the brand name of a dealer, such as Smith Chevrolet or Johnson Toyota. The majority of respondents -- 54 percent -- said "not at all" important, further showing that customers cared more about what they were buying rather than from whom they were planning to buy.

Although the survey shows that customers do consider friend-and-family referrals, their own prior experiences and even dealer marketing strategies, these factors are only starting points for buyers, said Morpace Vice President Karen Gaule.

"The bottom line is that people go where they can get the best deals," Gaule told Automotive News. "They may start with a recommendation from a friend or go to the closest dealership. But when it comes to actually making a purchase, they are willing to travel for a good deal on the product they really want."

This may be bad news for dealerships in the post-bailout chaos. GM has shuttered about 1,550 dealerships and Chrysler about 760 since their bankruptcies in 2009.

Based on these findings, consumers may not mourn the loss of particular dealers so long as they still can find what they want at a low price.

"The fact is, the American consumer buys products that are convenient, predictable and affordable. It's the same for cars. The most important factors for a car buyer are overall price and monthly payment," Ed Tonkin, chairman of the National Automobile Dealers Association and a multifranchise dealer from Portland, Ore., said in a recent speech to the Automotive Press Association in Detroit.

(Source: Automotive News, 10/26/10)