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J.D. Power Study Examines Keys to Brand Loyalty

January 12, 2012

WESTLAKE VILLAGE, Calif. — A study by J.D. Power and Associates revealed that one-in-three new-vehicle owners who switched brands said their previous brand didn't make the type of vehicle they wanted, indicating that striking the right combination of model offerings and vehicle appeal is critical to retaining customers.

The 2012 Customer Retention Study, now in its ninth year, measures the rate at which automotive brands retain their existing customers and examines the reasons why customers remain loyal. In addition to customer retention, the study also measures he rate at which each automotive brand captures customers from its competitors, also known as conquesting.

Among new-vehicle owners who switched vehicle brands for their latest purchase, 33 percent indicated that their previous brand didn't offer the type of vehicle they wanted, according to the study. Other key reasons relate to dissatisfaction with the previous vehicle. Cost, mechanical problems their previous vehicle’s inability to retain sufficient resale value were other reasons listed.

"Many automotive brands are expanding their array of models in an attempt to capture more buyers, but this isn't enough in and of itself," said Raffi Festekjian, director of automotive product research at J.D. Power and Associates. "Manufacturers need to integrate specific attributes and features that delight vehicle owners to maximize their opportunity to both retain customers and conquest from other brands. Manufacturers also need to ensure owners are satisfied with the quality, residual values and ownership costs of their vehicles."

Hyundai ranked highest among automotive brands in retaining customers when they buy a new vehicle, and improved its retention rate by four percentage points from 2010 to 64 percent in 2012. Hyundai's retention rate is primarily driven by the Elantra and Sonata models, according to J.D. Power. "Hyundai's increased retention rate is shaped by its expanding model lineup, as well as the fact that perceptions of the brand's quality and appeal have continued to improve during the past decade," Festekjian said.

Following Hyundai in the rankings are Ford and Honda. Their retention rates were the same at 60 percent. Jeep posted the greatest improvement in its retention rate from 2010, improving by 17 percentage points to 51 percent in 2012.

Overall customer retention has improved by one percentage point in 2012 to 49 percent, compared with 48 percent in 2010, according to J.D. Power. In 2012, 19 of the 33 ranked brands improved their customer retention rates from 2010, while 14 have declined.

The study also revealed that women and younger vehicle owners are less likely to choose the same vehicle brand for their next purchase, compared with men and older owners, according to J.D. Power. "Women and younger vehicle owners are more likely to experience changes in their life circumstances, including growth in household size or changes in income levels, that would lead them to purchase vehicles that better accommodate their new lifestyle," Festekjian said.

Brands that performed particularly well in retaining female customers included Honda, Hyundai, Kia and Mercedes-Benz, according to the study. Among vehicle owners in the Gen Y and Gen X demographics, Ford, Kia, Lexus and Mercedes-Benz performed particularly well in customer retention.

The 2012 Customer Retention Study was based on responses from 117,001 new-vehicle buyers and lessees, of which 73,733 replaced a vehicle that was previously acquired new. The study was fielded between February and May 2011 and August and September 2011.

For more information, visit www.jdpower.com.

2012 Brand Retention Rates

 

Hyundai            

64%

Ford           

60%

Honda           

60%

BMW             

59%

Kia              

59%

Toyota         

58%

Chevrolet      

57%

Mercedes-Benz             

57%

Lexus       

54%

Cadillac      

52%

Jeep        

51%

Nissan      

50%

MINI        

49%

Ram             

49%

Industry Average           

49%

Subaru         

48%

Land Rover      

47%

Volkswagen         

47%

GMC        

46%

Infiniti        

46%

Acura         

45%

Audi         

45%

Porsche       

42%

Lincoln        

40%

Buick      

38%

Mazda     

34%

Mitsubishi      

33%

Jaguar       

31%

Volvo      

30%

Chrysler       

26%

Scion      

24%

Dodge     

21%

Suzuki      

20%

SAAB     

7%

 

Base: Vehicle owners who previously purchased a new vehicle of a particular brand.

 

NOTE: smart is included in the study, but not ranked due to small sample size.

 

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