More Buyers Defecting From Luxury Car Brands, According to Auto Market Report

By Justin Stoltzfus
Thursday, Oct 13 2011 14:58

A new market survey suggests that luxury car owners may not be as loyal to their brands as they were prior to recent financial crises. A firm called TNS that provides market predictions for global clients has come out with results from recent market research that’s indicating European debt and the fallout from the U.S. financial crisis could be dragging down the volumes for purchases of high-end vehicles in many markets. The most basic explanation for all this is that, in a down economy, buyers typically want to make less of investment for lower debt to keep more of their household budget liquid for other purchases. But according to TNS, there’s a little more to it than that.

One of the findings of this study casts some aspersions on the responses that the firm got from vehicle owners. In so many words, TNS suggests that many respondents may not have been completely straightforward about why they won’t buy a luxury brand again. TNS staffers say 19% of those polled mentioned low fuel economy as their reason for selecting non-luxury cars. However, the researchers point out that many luxury brands have the same competitive fuel economy as non-luxury midsized vehicles, which means that some of those who are downgrading to a more basic form of transportation are trying to rationalize this to themselves. In a flurry of market-speak, the TNS announcement theorizes that while past purchases may have been based on brand appeal and “emotional needs and lifestyle desires,” performance factors like fuel economy are going to be the main drivers for future purchases.

It’s not entirely clear how luxury car makers are dealing with this exodus: many of them have been pretty quiet about sales numbers and the kinds of negative outcomes expected as more car buyers gravitate toward value buys. What’s clear is that car makers now need to offer buyers more incentives and good financing deals in order to entice customers to make the step of signing up for auto loan debt. The final result is something of a buyer’s market. If you are willing to invest in a new or late model vehicle, take the time to understand all of the financing options available to you, so that you can take advantage of competitive current deals and drive away with less overall debt for the future.


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