People are buying fewer cars and manufacturers are in trouble.
The recent decline in new vehicle sales can be attributed to a confluence of factors, including the rise of online ridesharing platforms and reduced car ownership among millennials. As sales continue to plummet, automotive brands are scrambling to retain their share of a rapidly shrinking pie. With limited resources at their disposal, loyalty marketers are having to zero-in on the biggest issues facing their industry. Data suggests they can trace most of their challenges to one particular problem:
The world has fallen out of love with the passenger car.
After consistently accounting for roughly half of all new vehicles sold every year, what was once a symbol of prosperity and independence has fallen out of vogue. American automotive intelligence firm Edmunds noted that in 2017, passenger cars represented only 36% of all new vehicles sold, the lowest in history. As utility and reliability become top priorities for more vehicle shoppers, young families and longtime drivers are switching to trucks and SUVs in droves, leading some manufacturers to abandon their pursuit of the shrinking passenger car market altogether. It’s putting a massive dent in the auto industry at large, leading industry pundits to call for a second straight year of overall sales decline in 2018.
But even as many of the world’s automotive brands pivot to new models and strategies, one country’s carmakers are doubling down on an emerging design practice in hopes of keeping the passenger car alive and profitable. “Emotional design,” first made popular by industry luminaries like Don Norman, has arguably been the single most important design trend of the last hundred years. It’s allowed modern tech brands like Apple, where Norman worked as a user experience architect, to overcome technical shortcomings and establish incontrovertibly dominant market positions. Japan’s automotive brands are hoping it will do the same for them.
For the last 10 years, designers and engineers from Japan’s largest automotive brands including Toyota and Subaru have been injecting emotional design principles into their product lineups. Auto journalist and historian Ronan Glon explains how “Toyota’s all-new 2018 Camry debuted at the Detroit Auto Show with a more emotional design. The Japanese company promises to have infused its hot-selling sedan with more character, performance, and style than ever before. The new bones allowed designers to give the Camry a lower center of gravity, which translates to improved handling and stability as well as a more planted, low-slung look.” These affordances, in keeping with the principles of emotional design, do as much as is possible within the boundaries of safety and commercial viability, to prioritize emotional response in the driver. Put simply, Japanese passenger cars are more fun to drive. The result? Even amidst declining overall sales in the mid-size sedan market, the Camry’s numbers are up. It’s a novel approach that has caught the eye of fellow automakers hoping to achieve the same.
While Subaru may not command the same market share as Toyota, it’s smart enough to employ the same principles in both its product and marketing strategies, and it’s paying off. From its active presence in the motorsports community to its emotionally resonant ad campaigns, emotional design is at the heart of everything Subaru does. It’s what has allowed it to connect with its self-described target demographic of “experience seekers” and grow its admittedly modest market share from 1.4% to 3.5% in 8 years, no mean feat considering it’s up against some of the most heavily entrenched brands of any industry. Better still, Subaru’s relentless pursuit of emotional design has allowed it to secure the highest vehicle loyalty rating of any automotive brand in the world according to a study by Experian Automotive. A whopping 67.7% percent of consumers who own a Subaru will buy another one.
As the rest of the Japanese automotive industry rallies behind the now validated standard of emotional design, the numbers suggest there may yet be hope for the passenger car. A 2017 study of vehicle trade in transactions found that Japanese manufacturers are driving unprecedented levels of customer loyalty, stating, “In 2017, 83 percent of people who traded in Japanese cars to purchase a new car bought a Japanese brand, compared to 53 percent for American brands.” In fact, over the last ten years, emotional design principles have made both Toyota and Subaru the world’s top brands when it comes to loyalty among trade in customers. Today, 63% of customers trading in a Toyota opt to exchange it for another Toyota, up from 58% in 2007. Sixty-one percent of Subaru customers do the same, up from 45%.
Loyalty marketers of all industries could stand to learn something from Japanese automakers. Even in the face of shrinking market segments and declining customer interest, a commitment to emotional resonance can help marketers foster long-term relationships with their customers. It’s these relationships, built atop emotions rather than marketing rhetoric, that will sustain a brand through even the most challenging market conditions.