Is the Vehicle Inventory Shortage Disrupting Brand Loyalty?

Brand loyalty is strong in America. Don’t believe me; just ask a group of people what their favorite pickup truck is and watch the fur start flying. Whether it’s Ford, Chevy, GMC, or Ram, almost everyone has an opinion and is more than happy to share it. While admirable, it might be important to learn the source of this automotive brand loyalty.

What’s the source of automotive brand loyalty?

Porsche 911 Carrera GTS
Porsche 911 Carrera GTS | Antoine Antoniol/Bloomberg

In many families, their loyalty to a specific car brand dates back several decades and possibly two or three generations. How many readers can raise their hand and say one of their parents or grandparents worked for one of the many auto companies in the country? I certainly can, and many of you can as well.

For many of us, our relatives working for the Detroit Big Three or one of the foreign brands that built new plants in the United States decades ago create brand loyalty. This automotive brand loyalty is often founded in the deep discounts offered when buying vehicles from that brand.

Are car dealers disallowing the employee discount?

Typically, employee discount pricing refers to the percentage or agreed-upon rate at which an employee or their family member can purchase a vehicle at a branded dealership. Unfortunately, dealers aren’t bound by any agreement to honor these discounts. This means some car dealers might allow employee pricing while others won’t, which makes finding the right vehicle at the desired price a little more difficult.

What is the GM employee discount?

Closeup of the dealership license plate holder surround on a GMC SUV.
Dealership | Brandon Bell/Getty Images

The GM employee discount is one of the most well-known discount programs offered. Cars.com covers this program in detail. Suffice it to say that this program is a great way for employees and their family members to find the best price for a vehicle. This program goes so far as to cover some used models, making it one of the most popular programs offered.

Why would car dealers deny an employee discount?

Before we get back to the automotive brand loyalty topic, let’s understand why a car dealer might deny an employee discount. Some dealers focus on selling their vehicles for the highest price possible. This means denying a discounted price. Employee discounts often reduce vehicle prices to the invoice price, which is what the dealer paid. This means the dealership isn’t making any profits on the vehicle.

How does the inventory shortage play into this conversation?

Currently, most car dealers still show less inventory on their lots than before the pandemic. Several factors created a logjam in the supply chain, which has caused these shortages. With fewer cars to sell, dealers must focus on profits, which means disallowing discounts, including employee discount programs.

Automotive brand loyalty takes a hit

A car dealer showing used Toyota cars to a customer.
A used Toyota dealership | Jack Smith/Bloomberg via Getty Images

I can only speak from personal experience, but my automotive brand loyalty was gone when the car dealer disallowed my employee discount. Yes, that might make me a little shallow, but my automotive brand loyalty is only as deep as a vehicle’s price.

Think about it this way, If the expected discount is disallowed, will you consider other vehicle options? That’s exactly what I did. Instead of only considering models with qualifying employee discounts, I opened up the vehicle search to a wide variety of options.

Could this be the same story for other consumers who expect the car dealer to honor their employee discount but, instead are told this program is disallowed at that dealership location?

Next, check out whether or not employee pricing is really a good deal, or learn more about automotive brand loyalty in this video below: