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J.D. Power and Associates Reports: Toyota Ranks Highest in Retaining New-Vehicle Buyers

December 6, 2006

Westlake Village, Calif.— Toyota leads the automotive industry in retaining the highest percentage of new-vehicle purchasers, according to the J.D. Power and Associates 2006 Customer Retention Study.

Now in its fourth year, the study measures the percentage of new-vehicle buyers and lessees who replace a previously purchased new vehicle with another from the same nameplate. As a whole, the industry registers a slight decline in customer retention, falling to 47.9 percent, from 49.6 percent in 2005.

The study finds that of more than one-half of the brands included in the rankings have shown some decline in retention rates since the study’s inception in 2003.

“Declining customer loyalty results from considerable improvements in quality combined with a plethora of choices for consumers,” said Neal Oddes, director of product research and analysis at J.D. Power and Associates. “In some instances, new models, such as those in the rapidly growing crossover segment, can have a significant impact on customer retention for a brand.”

With a 1.3 percentage-point improvement from 2005, Toyota (63.9%) replaces Lexus (63.2%) in the customer retention rankings. Toyota benefits from its reputation for exceeding customer expectations in terms of both short-term and long-term quality, which has helped to maintain the high resale value of its vehicles, as well as to expand its customer base. Honda retains its third-place ranking at 60.3 percent.

BMW, improving nearly 7 percentage points from last year, jumps six places to rank fourth at 56.5 percent. This gain, according to the study, can be mostly attributed to improved customer service stemming from BMW’s introduction of a free vehicle maintenance policy for new purchasers.

Bolstered by a 15 percentage-point increase from 2005, Suzuki achieves the largest gain in customer retention among all brands with a 23 percentage-point overall gain since the study’s inception in 2003. Several factors contribute to Suzuki’s improving loyalty rates, including improved short- and long-term quality, as well as the introduction of new models with better customer appeal. Suzuki customers are also often offered attractive purchase incentives.

Also registering robust three-year gains are Nissan, advancing 8.2 percentage points from 2003, and Lexus, which gains 7.7 percentage points.

“During the past four years, Nissan has had a remarkable turnaround in image and financial performance, due in part to stepped-up quality initiatives and improved resale values,” Oddes said. “The benefit of this is that the brand is retaining more of its customers than it did in 2003, which is helping turn around its financial performance.”

The 2006 Customer Retention Study is based on responses from 138,630 new-vehicle buyers and lessees, of which 82,274 replaced a vehicle that was previously acquired new.

2006 Make Retention Rates

Toyota 63.9%

Lexus 63.2%

Honda 60.3%

BMW 56.5%

Scion 56.3%

Cadillac 55.5%

Chevrolet 55.3%

Mercedes-Benz 53.6%

Ford 53.3%

Hyundai 51.6%

Subaru 51.1%

Nissan 48.8%

Industry Average 47.9%

Porsche 46.5%

HUMMER 44.5%

Suzuki 43.9%

Kia 42.8%

GMC 41.4%

Land Rover 41.2%

Jeep 40.5%

Saturn 40.4%

Dodge 40.1%

Buick 39.9%

Chrysler 38.2%

Acura 37.6%

Lincoln 37.3%

Audi 35.6%

Volkswagen 35.5%

Volvo 35.5%

Saab 33.4%

MINI 32.4%

Mercury 31.9%

Mitsubishi 30.5%

Jaguar 29.8%

Infiniti 29.0%

Pontiac 27.8%

Mazda 26.8%

Isuzu 4.7%

Base: The percentage of customers who replaced a vehicle previously purchased new and acquired a vehicle of the same make.

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