By Douglas A. McIntyre, Michael B. Sauter, Alexander E.M. Hess and Samuel Weigley
Published November 07, 2012
24/7 Wall St.
Owning a car for many years can be considered a sign of brand loyalty. The car is well made, or perhaps it retains its value better than other vehicles. Each of those factors should help the reputation of the car maker. On the other hand, the longer a customer owns a car, the longer before he or she trades it in for a new one — which is what makes the manufacturer money.
This story was originally published by 24/7 Wall St.
Does the length of a car ownership really cut both ways? Not really, according to an analysis by 24/7 Wall St. The relationship between the length of car ownership and loyalty is weak at best.
Based on data provided by Edmunds.com, 24/7 Wall St. examined the 30 largest brands sold in the United States measured by unit volume to find the average length of car ownership for each make. The brands people hold for long periods have several characteristics in common. Most sell very few units and therefore have a small market share. Jaguar owners hold their cars for seven years, but in a good month the brand sells just 1,000 units. Similarly, Volvo and Mitsubishi — also high on our list for years of ownership — sell around 4,000 units per month.
In an interview with 24/7 Wall St., Edmunds.com analyst Jeremy Acevedo explained that shrinking market share also plays a major role in the age of traded-in vehicles. In several cases, the fact that far fewer of these vehicles are being sold today means the average age of those vehicles is necessarily going to be older. Sales of seven of the nine makes on our list declined by more than 20% between 2007 and 2011. Sales of Mitsubishi dropped by 38.6% during that period, while sales of Chrysler sank by nearly 60%.
Another common factor among these brands is the relatively older age of the car owners. Acevedo explained, “frequently, it’s just a prudent fiscal decision to hang on to your car for longer.” It is likely that this decision is especially important for seniors because “driving is less of an imperative, if they’re retired they may not be driving around as much as younger drivers.”
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