J.D. Power 2006 Customer Retention Study

[Variance]

J.D. Power 2006 Customer Retention Study

WESTLAKE VILLAGE, Calif.: 6 December 2006 — 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 StudySM released today.

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.”

Also worth noting is Cadillac, which, through quality improvements and a breadth of products, has achieved an increase in customer retention rates each year since 2003.

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.

[source: J.D. Power]

[loki]

wow.... just chevy and caddy are higher than the average...

look at Isuzu...wow that's sad ...

kinda interesting the average is about 50% though... makes sense

[FAPTurbo]

Weird... Chevy rates way higher than GMC...

Wonder why?

[Flybrian]

Weird... Chevy rates way higher than GMC...

Wonder why?

225052[/snapback]

If you buy a Chevy, chances are more likely than not your next automotive purchase will be a Chevy (truck, van, SUV, car).

If you buy a GMC, chances are more likely than not your next automotive purchase will not be yet another truck or SUV.

The problem with this survey is that its does not take into account corporate households, i.e. one who buys a Chevrolet, Pontiac, or Saturn and moves up to a GMC, Buick, or Cadillac.

I really question Scion's placement because it doesn't make any sense that a brand that only offers three models - all compacts - would have a high retention rate since those that buy entry-level cars are more likely than not to skip around to different brands. All the other high-scoring marques are either mass market or offer full lineups of luxury vehicles.

[DetroitNut90]

Isuzu's number is hilarious...not even 5% of customers return to their Isuzu dealers.

Mazda's number's low too...I wonder why?

[siegen]

I really question Scion's placement because it doesn't make any sense that a brand that only offers three models - all compacts - would have a high retention rate since those that buy entry-level cars are more likely than not to skip around to different brands. All the other high-scoring marques are either mass market or offer full lineups of luxury vehicles.

225054[/snapback]

Scion is very baffling. I suppose all those xA buyers moved up to xC's once their A's fell apart?

You would think the majority of new Scion buyers would move up to Toyota eventually, or wasn't that Toyota's plan? Since Scion doesn't really have anything bigger/more expensive to offer their buyers. Or maybe Toyota convinced J.D. Power to count buyers who went from Scion to Toyota as a positive retention rate?

[Paolino]

I can understand the Toyota/Lexus numbers... I have never met anyone who owned a Lexus who either didn't get another Lexus or said their next would be a Lexus.

I'm surprised Buick wasn't higher... I have heard Buick owners say, they'd always get another Buick. The problem I felt was getting them into the Buick in the first place.

Does it take into an account for those who move upscale? I mean, someone who decides to not get a Buick cause money is better, so they can now afford a Caddy?

[VenSeattle]

I'm surprised Buick wasn't higher... I have heard Buick owners say, they'd always get another Buick.  The problem I felt was getting them into the Buick in the first place.

225070[/snapback]

Actually, Buick dropping in this survey is a positive sign. We've read several times over the year where Buick "retail sales" have increased. This survey hints that Buick is gaining first-time buyers. I'm sure it will continue as Enclave and the next-gen LaCrosse become available. For now, I'd definitely give credit to Lucerne. It appears to be attracting both loyal Buick owners and those who aren't familiar with the brand.

[regfootball]

VW....LOL! 1 trip with an unreliable VW and that's all it takes.....

[AxelTheRed]

Seeing Isuzu's score made me laugh. Its really disappointing seeing Pontiac so far down on the list, though.

[ZL-1]

I'm not at all surprised with MINI's score: (a) If you get married or start a family, you need a more practical car, (b) the car's reliability is dreadful - interior light switches falling off without being touched, driver's side window constantly getting stuck in the Summer months...

The car is really, really fun to drive and if it had decent build quality I'd be first in line to get a new one!

[aaaantoine]

Seeing Isuzu's score made me laugh.

227534[/snapback]

One guy out of the 20 Isuzu owners out there decided to look for an Ascender.

[the_yellow_dart]

I'd really like to see a manufacturer retention study. Toyota is structured much better for this study, because they don't really have divisions...

Imagine what it would do for GM's numbers if all the inter-GM trades were counted here.

[aaaantoine]

I'd really like to see a manufacturer retention study. Toyota is structured much better for this study, because they don't really have divisions...

Imagine what it would do for GM's numbers if all the inter-GM trades were counted here.

227709[/snapback]

I agree, and I'm absolutely certain that JD Power already has the data to craft such a study.

[Hudson]

Isuzu's number is hilarious...not even 5% of customers return to their Isuzu dealers.

The problem with surveys like this is in the people surveyed. Only 138,000 car and truck owners were surveyed...while that's an impressively high number, you still get a statistical error. When you only survey 138,000 people...and only 20,000 or so people purchased Isuzus last year (out of about 16 million vehicles sold), you're going to have a slim chance of finding Isuzu buyers, let alone "average" Isuzu buyers.

If you look at JD Power surveys of years past, Porsche was either ranked really high in quality or was not ranked at all due to low numbers of Porsche owners polled. I'm sure that Isuzu just barely covered the necessary minimum number of owners to even make this poll.

With Scion being such a narrowly focused brand, I'm quite surprised at how high they've ranked. Are buyers of xAs and xBs going back for a second one? Are they adding a tC to their (mother's) garage?

Edited December 14, 2006 by Hudson

[VenSeattle]

The problem with surveys like this is in the people surveyed. Only 138,000 car and truck owners were surveyed...while that's an impressively high number, you still get a statistical error. When you only survey 138,000 people...and only 20,000 or so people purchased Isuzus last year (out of about 16 million vehicles sold), you're going to have a slim chance of finding Isuzu buyers, let alone "average" Isuzu buyers.

If you look at JD Power surveys of years past, Porsche was either ranked really high in quality or was not ranked at all due to low numbers of Porsche owners polled. I'm sure that Isuzu just barely covered the necessary minimum number of owners to even make this poll.

With Scion being such a narrowly focused brand, I'm quite surprised at how high they've ranked. Are buyers of xAs and xBs going back for a second one? Are they adding a tC to their (mother's) garage?

227723[/snapback]

Considering how young the division is, you have to wonder how many have been traded in to justify the percentage? All models are still on their 1st generation.

[CARBIZ]

I've always been suspicious about all of these types of surveys. For any survey to be valid it needs to be totally random and compulsary. I believe demographics (attitude/culture/age,etc) play very heavily into whether a person would BOTHER to respond to a survey.

Frankly, I am getting sick of statistics and surveys. They all lie. People's lives are being destroyed based on some government/business poll/survey, yet all of them can be twisted or distorted to say whatever the agenda wants.

Color me skeptical, but Big Business is drowning in these surveys and it isn't helpful.

[ocnblu]

I'd be interested in an even more narrowly focused loyalty study... down to the specific model. I have a feeling domestic truck buyers have a very high loyalty rate to their specific model... especially Silverado, Sierra, and F-150 lovers. I am willing to bet these buyers blow Toyota out of the water.

I am keen on seeing loyalty rates on specific hybrid vehicles. Perhaps I am prejudiced on this, but I cannot believe they'd be very high.

[Brougham-Holiday]

Pontiac is looking kind of sad way down near the bottom of the cart.

[CARBIZ]

...and that is the point. Why would Pontiac be at the bottom of the chart when they are exactly the same vehicles as Chevrolet? In Canada, many of the Pontiac badges outsell their Chevy equivalent, so why would the loyalty rate be so substantially lower?

[SoCalCTS]

I'd really like to see a manufacturer retention study. Toyota is structured much better for this study, because they don't really have divisions...

Imagine what it would do for GM's numbers if all the inter-GM trades were counted here.

I agree. I have switched brands within GM a few times but GM has retained me as a customer.

[Hudson]

This thread got me thinking. What makes you stick with a manufacturer? Did that make you rule out all other manufacturers? What would your manufacturer of choice (assuming the dealer does everything right) have to do to lose you? What would another manufacturer have to do to get you to shop there?

In my driving career, I've never purchased a vehicle based on my past experiences. I have no allegience to any brand or manufacturer so I'd like to know what makes you like your company over all others. Please try to provide something more than "my family has always been a GM family."

[Hudson]

This thread got me thinking. What makes you stick with a manufacturer? Did that make you rule out all other manufacturers? What would your manufacturer of choice (assuming the dealer does everything right) have to do to lose you? What would another manufacturer have to do to get you to shop there?

In my driving career, I've never purchased a vehicle based on my past experiences. I have no allegience to any brand or manufacturer so I'd like to know what makes you like your company over all others. Please try to provide something more than "my family has always been a GM family."

[The O.C.]

I'm surprised Buick wasn't higher... I have heard Buick owners say, they'd always get another Buick. The problem I felt was getting them into the Buick in the first place.

Buick drivers are so old, they lose their license or die before they get a chance to purchase another car........

Didn't you ever hear of Buick's special "Last-Time Driver Program" incentive? (a little joke....referring to GM's "first-time" driver incentive.)

[The O.C.]

VW....LOL! 1 trip with an unreliable VW and that's all it takes.....

Ahh.....don't necessarily read TOO much into VW's score.......many times younger consumers use VW as a stepping stone to Audi or BMW. My friend Julie went from a Honda Civic....to a VW Jetta VR6....to a prev-gen 325i.....to her current-gen 325i.....

That's the problem with these kinds of surveys.....they don't (can't) take reality into consideration with regards to people's buying habits......a low score doesn't necessarily mean that consumers were unhappy with a brand....

[The O.C.]

I've always been suspicious about all of these types of surveys. For any survey to be valid it needs to be totally random and compulsary. I believe demographics (attitude/culture/age,etc) play very heavily into whether a person would BOTHER to respond to a survey.

Frankly, I am getting sick of statistics and surveys. They all lie. People's lives are being destroyed based on some government/business poll/survey, yet all of them can be twisted or distorted to say whatever the agenda wants.

Color me skeptical, but Big Business is drowning in these surveys and it isn't helpful.

Exactly.....

For example, most people will fill out a vehicle quality survey......IF they have a bitch......

If ur happy with your purchase, most likely you won't take the time to fill out a survey. I myself fall victim to this phenomenon.

How many times you YOU filled out a comment card at a restaurant, let's say? Probably never....unless you had a negative dining experience......