Not All Owners of Japanese Cars Are Loyal

MICHAEL CLEAVER drives to work each day in his Honda - nothing unusual about that, except for the fact that he is an executive at General Motors Corporation. "I just don't see any domestic car that's right for me," says Mr. Cleaver (not his real name), admitting that his choice of cars causes him some political problems at the office.

Cleaver's devotion to imports is far from unique. Baby boom buyers have grown up with Japanese imports, and millions are so fiercely loyal that they won't even look at a domestic model, no matter how good or how cheap it is, says Thomas O'Grady, president and chief analyst with Integrated Automotive Resources (IAR) in Wayne, Pa.

"Imported-committed buyers have been frustrating to us," complains James Fitzpatrick, a marketing vice president with GM.

And they have been one of the main reasons why the import share of the new-car market has been growing steadily since the late 1970s. During the first five months of this year alone, the Japanese captured a 29.5 percent share of the United States passenger car market, up from 27.4 percent just a year earlier.

But now, there are some cracks showing up in Japan's grip on its buyers. Maybe it's a Gulf-war backlash, maybe a simple recognition of improved American quality. Whatever the reason, a new survey by IAR found that of those actively looking to trade in, a "shocking" 32 percent of Japanese-car owners were intending to replace those vehicles with domestic models.

The degree of disloyalty found by IAR varied according to manufacturer. Of those who owned Hondas, only about 20 percent planned to switch to a domestic brand. But of those trading in Mitsubishi products, the switch rate jumped to 47 percent.

According to Dr. O'Grady, the shift is the result of a number of factors. For one thing, he says, "The domestics have been competing on price," he adds, "and there's a recognition that quality has improved among the domestics." Meanwhile, as baby boomers age and expand their families, they are increasingly attracted to the mid- and full-size cars that the Big Three US carmakers specialize in.

There may have also been an issue of patriotism showing up in the first-quarter survey, taken at the time of and immediately following the Gulf war. That could have skewed the results, cautions Garrett Nash, vice president of marketing for Mitsubishi Motor Sales of America.

"With the war, saying you drove a Japanese car may have been a difficult thing to admit," Mr. Nash says. "But making the decision to [actually] buy a domestic car, that's another thing altogether."

If there is a shift in loyalties taking place in the market, it's not likely to show up immediately on the sales charts. Most import owners will still have to be convinced that the domestics offer products good enough to come back to.

Still, GM's Fitzpatrick says the apparent change in attitudes is welcome news. "Now, at least, we can get them to try our cars, and then it's up to the product to sell itself."

GM is targeting import owners with several of its new products. In particular it is hoping that as many as half of the buyers of its new Saturn subcompact will be current owners of Japanese small cars. Already, GM dealers report that Hondas make up the No. 1 trade-in on Saturn vehicles. GM is also hoping to "conquest" Asian and European buyers when it introduces its new Seville and Eldorado luxury cars in the 1992 model year.

Loyalty is a factor that all automakers crave. "In terms of marketing costs, those companies who have high degrees of loyalty can probably spend two-thirds less to bring their customers back than those with low loyalty," says Bobbie Koehler-Gaunt, marketing research director for the Ford Motor Company.

For the Japanese, high loyalty rates have translated into fewer dollars spent on advertising and other promotions. But today, loyalty is hard to come by, and even Honda and Toyota are forced to offer incentives of as much as $2,000 a car.

Meanwhile, the IAR report contained more good news for the Big Three. Only 7 percent of domestic-car owners were intending to trade in their vehicles on imports. If buyers follow through at the showroom, that could slow or halt the growth of Japanese market share.

You've read  of  free articles. Subscribe to continue.
QR Code to Not All Owners of Japanese Cars Are Loyal
Read this article in
QR Code to Subscription page
Start your subscription today