Abandoned brand owners seldom return to parent company products

Abandoned brand owners seldom return to parent company products

An analysis by online auto information site Edmunds.com indicates that Ford and GMs hopes for keeping owners of Pontiacs, Saturns and Mercury models in the fold, now that those franchises have been abandoned, arent going as well as they might have wished.

Edmunds.com looked at Pontiac, Saturn and Mercury owners returning to the market for a replacement vehicle and found that two thirds typically abandoned the manufacturer altogether, choosing instead to buy a model from a different automaker. Edmunds.com found that about 70% of customers who traded in a Pontiac this year replaced their car with a non-GM model, and that for Saturn owners that number rose to 71%. Ford, which gave up its Mercury division last year, isn’t doing any better. About 65% of the Mercury owners who have bought new cars this year have defected to automakers other than Ford. Edmunds.com says about a third of the abandoned brand owners opted for Japanese brands.

GM offered extra discounts of $1,000 to owners of its defunct-brands in January and February, which stemmed the defection tide some, but the effort was controversial as Wall Street questioned whether the incentives were a sign that GM had returned to the old strategy of pushing market share over profits.

GM North America President Mark Reuss defended the incentives, arguing that they threw off competitors and helped GM hang onto existing customers at a critical time. Edmunds.com noted that 57% of customers trading Pontiacs bought another GM product in the time period.