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.
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.”
While the national average age for car owners is 51, the average age of a Lincoln owner is 60. Of course, parent Ford would like to bring that down. Buick owners are not that much younger, at 59 years old. Jaguar, formerly owned by Ford, and Chrysler owners are about 55 years old.
Some correlations are clear but hard to explain. Surprisingly, longer ownership appeared to be related to lower vehicle quality. The ratings of six of the nine vehicles on our list were well below the industry average in the JD Power 2012 Vehicle Dependability Survey.
The study measures problems experienced during the past 12 months by original owners of three-year-old vehicles (2009 model-year). In fact, Chrysler, Dodge, Infiniti and Jaguar were at the very bottom of the list.
Perhaps as a result of poor vehicle quality, drivers who own vehicles for a long period often switch makes when the cars are traded in. While 49% of people who turned in cars in the United States traded them in for the same brand, owners of seven cars on our list did so less often, JD Power customer retention data show. Less than 40% of Buick, Dodge, Chrysler, Volvo and Jaguar owners traded in their cars for the same make.
Taken together, the data create a puzzle. That may be because the car brands that people have owned for six or seven years are very different from those same brands today. Volvo is very nearly gone altogether, having withered since it was sold by Ford. Virtually every car in the Lincoln line is different from the ones it made seven years ago. Chrysler and its Dodge division have a new owner, as does Jaguar. Many of these brands and their new parents have launched cars to bring in younger buyers.
Based on data provided by Edmunds.com, 24/7 Wall St. identified the nine car makes whose owners held them six years or more before trading them in, measured as of October 2012. We also reviewed year-over-year sales and market share data as of October 2012, as well as the average number of days vehicles are in dealer inventory before they are sold during September 2012, all provided by Edmunds.com.
And we considered the average age of car buyers by make from Polk, as well as customer retention and vehicle dependability data from JD Power and Associates.
9. Dodge
Average age when turned in: 6.00 years (tied for 8th highest)
Change from previous year: 9.2% (10th most)
Market share: 3.7% (8th highest)
Average buyer age: 50 years old
Drivers are keeping their Dodges longer than they previously did. The average age of a Dodge that was turned in last month was six years old, up from 5.5 years old in October 2011.
Sales of Dodge are also climbing. Chrysler, Dodge’s parent company, sold 40,611 Dodges in October, up from 33,734 in October 2011. Chrysler has been extensively promoting its new Dodge Dart, which went on sale in June and was Dodge’s first compact car since the Neon.
Although sales of the Dart were initially hurt because Dodge first shipped out cars with manual transmissions, sales of the Dart picked up by August. Customer retention for Dodge is just 21%, the third-lowest rate of all makes measured and well below the industry average of 49%.
8. Chrysler
Average age when turned in: 6.00 years (tied for 8th highest)
Change from previous year: 3.4% (12th least)
Market share: 2.0% (16th highest)
Average buyer age: 55 years old
In the past 12 months, Chrysler has sold just over 300,000 cars, trailing other Chrysler Group brands, such as Dodge and Jeep. The average age of a traded-in Chrysler vehicle in October 2012 was six years, up from 5.8 years in October 2011.
Chrysler vehicles are, according to J.D. Power and Associates, the least dependable vehicles of any major manufacturer, having the most mechanical problems per vehicles sold.
Chrysler tends to skew towards older consumers. The average owner of a Chrysler is 55-years old, the third-oldest among nonluxury makes.
7. Ford
Average age when turned in: 6.02 years
Change from previous year: 2.2% (9th least)
Market share: 14.9% (the highest)
Average buyer age: 52 years old
Ford owners hold on to their cars for an average of over six years before trading it in.
The make is the nation’s most popular, with a nearly 15% share of the American car market and over 162,000 car sales in October alone. As of September it took dealers an average of just 50 days to sell a Ford, below the industry average of 61 days.
Once Ford owners do trade in their models at the dealer, they are more likely than not to get another Ford.
In January, J.D. Power and Associates reported Ford had a 60% customer retention rate, tied with Honda Motor Co. Ltd. for the second highest among all makes behind Hyundai.
See the rest of the story at Business Insider
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