Market Overview

SUV Shift Not Prominent among All Groups, IHS Markit Says

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Consumer preferences for SUVs continue to rise, and at a faster pace
than five years ago, based on new loyalty and defection analysis from
business information provider IHS
Markit
(NASDAQ:INFO). More than 35 percent of US households with a
sedan in the garage that returned to market for a new vehicle from April
2017 to March 2018 acquired an SUV, up from just 24 percent five years
ago.

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Source: IHS Markit

Source: IHS Markit

However, not all consumers are moving to the popular body style at the
same pace. The IHS Markit analysis found variances among ethnic groups,
household income and age levels that may be surprising.

Cultural preferences dominate the US loyalty landscape

The propensity to defect from a sedan to an SUV is much higher among
Asians than African American or Hispanic consumers in the US, according
to the analysis. Nearly 40 percent of Asian sedan owners returning to
market for a new vehicle in the timeframe defected from a sedan to an
SUV, at a significantly higher rate than Hispanics (31.9 percent) or
African Americans (31 percent), according to the analysis.

Perhaps surprisingly, 55.7 percent of African American sedan owners
opted to stay with a sedan for their next vehicle purchase, versus only
49.6 percent of Hispanic and 43.5 percent of Asians.

Older drivers less likely to defect

Various age groups have different patterns for defection from sedans as
well. During the April 2017-March 2018 time frame, the propensity to
defect from sedan to SUV decreased as age increased. Loyalty to sedans
is extremely high among older consumers, and varies by nearly 20
percentage points from the youngest consumers to the oldest.

"Many marketers may not realize the importance of continuing to target
their sedan marketing and advertising efforts toward older buyers," said Tom
Libby
, loyalty principal at IHS Markit. "These consumers sometimes
have more buying power, as well, which means an important group of
prospective customers could be at risk of being missed in advertising
and marketing efforts."

Income influences defection decisions

Household income levels also contribute to consumer preferences and
defection rates. The analysis found as incomes rise, consumers are more
likely to defect from a sedan to an SUV. Conversely, the propensity of
sedan owners to choose another sedan when returning to market declines
as income levels increase. These data would suggest the healthy US
economy itself is contributing to the flourishing SUV business.

The complete analysis by IHS Markit covered new vehicle transactions
from April 2017-March 2018, including purchases and leases among owners
who had acquired a new vehicle during the 12-month time frame. The
SUV/CUV body style as defined by the research includes SUV and CUV
models collectively. In addition, the second vehicle may be an addition
to the household fleet, not necessarily a replacement. Age and income
levels reported in the analysis are based on head of household, who may
not be the primary driver.

About IHS Markit (www.ihsmarkit.com)

IHS Markit (NASDAQ:INFO) is a world leader in critical information,
analytics and solutions for the major industries and markets that drive
economies worldwide. The company delivers next-generation information,
analytics and solutions to customers in business, finance and
government, improving their operational efficiency and providing deep
insights that lead to well-informed, confident decisions. IHS Markit has
more than 50,000 business and government customers, including 80 percent
of the Fortune Global 500 and the world's leading financial
institutions. Headquartered in London, IHS Markit is committed to
sustainable, profitable growth.

IHS Markit is a registered trademark of IHS Markit Ltd. and/or its
affiliates. All other company and product names may be trademarks of
their respective owners © 2018 IHS Markit Ltd. All rights reserved.

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