Brand loyalty will be vital to protect legacy carmakers’ market share

Brand loyalty will be crucial for legacy car brands to shield market share against the mounting threat of new entrants such as Tesla and cheaper imported Chinese BEVs, according to Bloomberg Intelligence’s latest European car buying intentions survey.

The study also revealed that European consumers continue to favour internal combustion engine (ICE) models - especially plug-in hybrids - over the battery electric vehicles (BEVs).

Hybrids have gained in popularity, split evenly between plug-in hybrids (PHEVs) and hybrid electric vehicles (HEVs), though neither is yet reflected in sales, with shares of 8% and 10%, respectively, in 2023.

Only 18% of respondents planning to buy a car in the next year said they would opt for a BEV, with 46% saying they prefer hybrids.

The survey findings also pose a potential stumbling block to pure-plays like Tesla and Chinese new entrants, with 74% of consumers reluctant to buy an imported vehicle which is good news for domestic European brands - but only if they enjoy strong brand loyalty.

 “Overall, brand loyalty in Europe looks strong,” said Michael Dean, senior industry analyst at BI. “With 62% of survey respondents confirming they're likely to buy the same marque and only 14% intent on changing versus 17% in August.

“Brand retention is highest in Germany, with just 10% of those surveyed unlikely to purchase the same car again. This bodes well for German automakers' domestic market share of close to 60%.

“Stellantis’ Peugeot had the lowest loyalty rating, though it may draw comfort from responses to follow-up questions that suggested the main reason for changing brands were the ability to afford a more expensive car or the unavailability of a preferred model.”

He added that consumer apathy over switching to electric may well be being driven by a watering down of pledges to ban ICE sales from 2035, especially as 68% of those surveyed believe the 2035 deadline should be delayed.

Dean commented: “European carmakers are dialling back EV sales goals in 2024 due to rising consumer apathy. Our latest research shows less than one in five private buyers favour EVs, with nearly half preferring hybrids. This is a trend which plays to BMW, Mercedes and Toyota's strengths, but disadvantages pureplay Tesla and China brands.

“Tesla's sales outlook continues to deteriorate, as it fell to fourth from pole position in August in our buyers' ranking of most-wanted brands as competition in the BEV space intensified. Audi now tops the list, closely followed by Mercedes and BMW. Porsche is not far behind as the most-sought-after luxury brand, ahead of Ferrari.

“Tesla's continued price cuts, as it seeks to move about 1 million units of ramped-up capacity in its Austin, Texas, and Berlin plants may put off potential buyers concerned over resale values. Meanwhile, European consumers need reassurance over the quality, technology and second-hand values of imported Chinese brands.”

A lack of charging points, range anxiety and high prices remain top consumer concerns across Europe, according to the survey

While European charging infrastructure is growing rapidly - with only 780,000 public connectors as of 2023 - it's failing to keep pace with EV sales and well below the 1.4 million points needed by 2025 to meet base transition scenario.

Charging and range anxiety are likely to continue to top the list of consumers' concerns, notes BI, as 77% of BEVs registered in Europe in 2023 had sub-312-mile (500 km) ranges.

In addition, the prices of new cars are too high in Europe, according to 83% of survey respondents, though most (27%) indicated they will go ahead with their purchases and make savings elsewhere. Still, 26% (down from 28%) are likely to delay a purchase in anticipation of price cuts, while 25% intend to buy a lower-specification model.