The automotive industry can be a scary place for investors, and many shy away from putting their money into these stocks. That's because when the competition to win over consumers gets heated, it can be tough to gain market share while keeping profitability high.
On Tuesday, IHS Automotive announced a critical industry award at the Automotive News World Congress, which is held in conjunction with the North American International Auto Show in Detroit, the largest and most prestigious auto show in the U.S.
Here's what Ford (NYSE:F) won, and why it's a big deal.
For IHS Automotive's Loyalty awards, "loyalty" is defined as when a household that owns a vehicle returns to purchase or lease another vehicle of the same make, model, or manufacturer.
Based on IHS Automotive's analysis of new vehicle registrations for the 2014 model year, winners were featured in eight categories. Ford came out a big winner, taking top honors for Overall Loyalty to Manufacturer (which covers all Ford brands) and Overall Loyalty to Make (covering just the Ford brand). Conversely, the Blue Oval's best-selling F-Series full-size truck was beat out by Chevrolet's Silverado for the segment's loyalty award.
Maserati also did well, taking top honors for Most Improved Loyalty to Make and Highest Conquest Percent of Registrations -- the latter meaning Maserati stole more consumers away from its peers than any other brand. That's good news for brand owner Fiat Chrysler Automobiles, which hopes to drastically increase Maserati's presence in the United States.
What's the big deal?
You might be saying to yourself, "Big deal, there are a zillion awards out there. Why does this one matter?"
The answer is simple: Market share is absolutely critical. The easiest way to maintain market share is to turn your consumers into loyal consumers, people who come back to your brand time and time again. It's been proven in business that it costs much less to keep a consumer than it does to win one from a competitor. That's even truer if and when growth in new car sales begins to flatten in the U.S. market.
Furthermore, 2014 was a building year as Ford rolled out 16 new or significantly refreshed vehicles in the U.S. alone, which was more than three times what it released in the previous year. When Ford's fresher lineup begins to improve sales, as fresher lineups typically do, the Dearborn, Michigan, automaker looks poised to keep more of its car buyers -- and that's great for business and Ford investors.
Job well done, Ford
If you're a Ford driver, fan, employee, or investor, you should be thrilled with the awards the company took home this week. In addition, on Monday, Ford's aluminum-bodied 2015 F-150 was named the North American Truck of the Year at the 2015 NAIAS. With a transitional year in the rearview mirror, Ford is off to a strong start in 2015, as these two awards prove.