Auto Makers Offering Deals Based on Brand Loyalty

Faced with increasing competition in a shrinking market, auto makers are now offering so-called loyalty and conquest discounts. These deals are designed to reward car owners for either sticking with a particular brand or defecting from a competitor's (hence the word "conquest").

"With the tightening of the credit market, people just don't have the discretionary income to buy a new car," says Jonathan Linkov, managing editor for Consumer Reports' automotive division. "Incentives are auto makers' best shot at staying at a plateau."

As a result, loyalty and conquest deals are more plentiful — and more rewarding — than in years past. In late 2007, for example, General Motors offered $1,000 in loyalty cash to current Saab owners (Saab is a GM brand) who purchased a 2008 model. Now the amount being offered to faithful Saab owners is twice that. Sweetening the pot even further, these incentives can usually be combined with other rewards such as dealer incentives, says Laurie Harbour-Felax, a managing director for Stout Risius Ross, an auto market researcher.

To best take advantage of these deals, keep an eye on announcements and launches for new models, advises Tom Libby, senior director of industry analysis for J.D. Power and Associates' Power Information Network, the division that analyzes automotive sales data. That's when conquest and loyalty incentives are prone to spring up. Let's say, hypothetically, that Ford is preparing to launch a new four-door truck. GM might make a play for customers it perceives as likely to buy, sending a direct mailing for conquest cash on its own truck models instead. Ford would then retaliate with a loyalty incentive.