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Why Tesla’s loyalty rate is ‘ominous’ for the rest of the auto industry

Why Tesla’s loyalty rate is ‘ominous’ for the rest of the auto industry
Why Tesla’s loyalty rate is ‘ominous’ for the rest of the auto industry


However, Tesla was an exception to the rule. It was one of three luxury brands that didn’t experience a drop in loyalty at the time, joining Maserati and Genesis, which are much smaller brands compared to Tesla.

When Tesla is removed from the calculations, luxury fell by nearly an additional percentage point, down 5.5 points to an average of 45.4 percent.

“Tesla, frankly, is hiding a little bit of the luxury drop, which is really twice the usual,” Libby said during the presentation.

Libby ruled out that Tesla was stealing customers from other brands.

The company’s capture/defection ratio, which shows how many customers are defecting to Tesla divided by the number who are leaving the brand, was low compared to luxury and mainstream competitors.

“Tesla’s C/D ratio to the other luxury brands, with the exception of Land Rover, was down, which I found surprising. I thought maybe they were suffering because of Tesla,” Libby said. “And the overall overall flow is down as well, which I found a little surprising.”

Instead of poaching from other brands, Tesla is driving its success with internal loyalty, he said.

The Model 3, the company’s dominant flagship, is behind the trend. The vehicle loyalty rate increased by over 7.5 percentage points to an average of 62.2 percent.

That means about 62 percent of Model 3 customers from March 2021 to April 2022 already owned a Tesla vehicle.

Tesla’s year-over-year loyalty rate was even better. Its loyalty rate in March 2022 was 73.1 percent, compared to 49.1 percent in March 2021, equaling an increase of 24 percentage points.

Libby speculated on several different reasons for Tesla’s success in light of the inventory shortage. CEO Elon Musk’s unique personality and brand building is near the top of the list.

“I think he’s an extremely talented marketer. I say going beyond the cars, I think he’s created an image of himself and the brand that really connects with some people,” Libby said.

Tesla’s range of electric vehicle options could also play a factor, with owners having access to different segments within the brand, such as the Model Y crossover.

“The story here is that Tesla owners … they’re coming back to the market in increasing numbers,” Libby said. “But just as important, if not more important, they love the brand and they’re getting another one. So this is an ominous trend, frankly, ominous for the rest of the industry, something that needs to be faced and acknowledged.” .




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