Study reveals what drives car owner loyalty

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By: Wise Marketer Staff |

Posted on December 25, 2009

Resale value and vehicle quality have become increasingly important reasons for new vehicle buyers to remain loyal to an automotive brand, according to the '2009 Customer Retention Study' by J.D. Power and Associates.

The study measured the percentage of vehicle owners and lessees who replace a previously purchased new vehicle with another from the same brand, and found that the importance of resale value as a reason for owner loyalty has increased by 12 percentage points in 2009, compared with 2008.

Meanwhile, the importance of vehicle quality has increased by 6 percentage points. In comparison, in 2008, the reasons with the largest increases in importance for staying loyal to a brand were safety, fuel economy and deals/incentives.

Resale value and quality have also increased in importance as reasons why brands conquest new customers from their competitors, as has the importance of appearance and styling.

"Although there are some signs of economic recovery, the outlook remains uncertain, so for many new vehicle buyers, high resale value and quality are particularly important considerations that are driving purchase behavior," said Raffi Festekjian, director of automotive product research for J.D. Power and Associates. "Whether manufacturers are striving to increase loyalty or conquesting buyers from other brands, offering attractively styled models and having strong customer perceptions of resale value and quality are critical."

Mercedes-Benz ranked highest among automotive brands in retaining vehicle owners when they buy a new vehicle, having improved its retention rate by 8 percentage points from 2008 to 67% in 2009. Following in the rankings were Honda (64%) and Toyota (61%). According to Festekjian, "Customers cited the resale value and appearance and styling of Mercedes-Benz models as primary reasons to remain loyal to the brand."

Overall customer retention in 2009 remained stable (at 48%) compared to 2008. In 2009, 13 of the 36 ranked brands improved their customer retention rates while 20 declined and three remained stable.

MINI and Porsche posted the greatest improvements in customer retention rates since 2008, with both improving by 14 percentage points in 2009. For MINI, this improvement was driven primarily by incentives and customer perceptions of resale value of the brand's models. For Porsche, the increase was due mainly to resale value, fuel economy and quality.

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