Toyota is currently leading the automotive industry in retaining the highest percentage of new vehicle purchasers, according to a report from J.D. Power and Associates.
The 2006 Customer Retention Study report found that the industry as a whole registered a slight decline in customer retention, falling from 49.6% in 2005 to 47.9%, with more than half the included brands showing some decline in retention rates since 2003.
But with a 1.3 percentage-point improvement from 2005, Toyota (63.9%) replaced 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 retained its third-place ranking at 60.3%.
BMW, improving nearly 7 percentage points from last year, jumped six places to rank fourth at 56.5%. 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.
Suzuki, bolstered by a 15 percentage-point increase from 2005, achieved 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.
More choice, less loyalty
According to Neal Oddes, director of product research and analysis at J.D. Power and Associates, "Declining customer loyalty results from considerable improvements in quality combined with a plethora of choices for consumers. 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."