We turn to BusinessWeek (BW) for the skinny on J.D. Power and Associates' just-released 2007 Customer Retention Study (you can get the straight dope from J.D.'s press release here). Once again, Toyota tops the chart, followed closely by Lexus (63.0 percent) and Honda (62.8 percent). Three Detroit brands land in the top ten. Chevrolet takes the fifth slot (56.8 percent), Ford comes in seventh (52.9 percent) and Cadillac takes eighth (52.8 percent). Discounting MINI (not on the radar long enough to rank) and Isuzu (who?), Scion, Pontiac and Jaguar have the hardest time keeping customers; re-upping 30.8, 27.8 and 24.5 percent respectively. Although (or perhaps because) Mercedes scooped sixth at 52.6 percent, BW's boffins reckon it's not all about the product. "Marketing analysts say a solid record of quality and reliability combined with clarity and consistency of advertising keeps customers coming back. 'There are still many companies that do not understand that consistency of image over time is as important as making sure the quality is up to snuff and the dealers are doing their jobs properly,' says independent marketing consultant Dennis Keene, who advises companies on long-term brand strategy.
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I’d say it was the #1 factor in deciding which make to go with when buying a car.
I’m a bit surprised that Mercedes is as low as it is, I guess their quality isn’t quite what it was.
It’s also really worrying for Jaguar, as it seems to mean that people don’t like them enough to get a new one. On the other hand, many luxury car buyers are quite ficklish, and the ones who are not buy lexii.
Scion as a brand has no alternative to move up to when you’re done with the “tc” so that explains their dismal ratings. What’s Jaguars defence???
Jaguar is not as proficient as the others to “churn” its customers from one lease or finance deal to the next. In Jaguar’s case it would be mostly lease.
Non-PDF link to the press release here
Most of the brands rated above average (whatever that means) have a relatively full line-up of cars, SUV’, +/- trucks, vehicles that a buyer can move up to as their needs change. There are a whole bunch of other factors, such as brand loyalty and price, that probably explain why Subaru and Hyundai are up there.
Acura in the low 40’s? Methinks it’s because sedan buyers dismiss the RL as not uppity enough c/w the TL and move onwards. My parents did exactly that.
Then, there’s Pontiac, which hasn’t budged for a couple of years…
Ford, Chevy, and Caddy are working off of a pretty decent retention base.
If they continue to come to market with higher quality (Ford has consistently been doing this) and compelling product (eg.Malibu, CTS, Edge) they should start retaining even more of their current customers and share should stabilize.
GM or Ford won’t increase share until they consistently deliver against the high quality / compelling product mandate for an extended period (3-5 years).
I’m making the following predictions:
1: People will say how Toyota’s customer retention is because of them building a superior product. But when it comes to Chevrolet and Ford’s customer retention figures, the only reason they are high is because of “all the fleet sales they make”!
2: People will slate Jaguar for their low cusomer retention, despite Jaguar building a better product than BMW, Mercedes-Benz and Audi. Which just goes to show you, that a better product doesn’t always yield better sales!
3: I’ll get told to shut because I’m taking all the fun out of this thread! Damn my cynicism! ;O)
“musah” makes a good point in relation to moving on and trading up.
A Scion owner trading up in terms of purchase price and/or vehicle size/spec will probably not find a suitable larger car in the Scion range to fill their needs. If a Scion buyer declines to replace their Scion with another Scion but moves on to buy a Toyota or Lexus model – then the Toyota company wins. Likewise for Chevy owners who are not repeat buyers but move on to Buicks or Caddies.
If a Jaguar owner decides against buying another Jaguar then it is almost certain that they are taking their business to another entirely different company ( unless they traded up to an Aston martin I suppose – though even that family tie is gone now? ).
It is a shame that BW’s study does not break out separate percentages for buyers who did not buy the same nameplate again but did buy a car from the same company – that would be interesting.
I would think trucks are a significant factor for the Ford and Chevy numbers. I’ve several relatives in west KY farm country. They don’t ‘trade up’ their farm trucks. They beat them to death, then buy another one.
Driving a Toyota is like eating boiled chicken and steamed vegetables. Eat them long enough, and you no longer desire flavor.
Driving a Toyota is like eating boiled chicken and steamed vegetables. Eat them long enough, and you no longer desire flavor.
Note: there’s an potentially addictive substance in 65% of the portions that keeps people coming back for more. I’m under that spell too, as I’m glad to have the Sienna for hauling the kids despite it being the antithesis of a driver’s car.
Scion is on the low end because people buy something else once they reach puberty.
Jag has a similar problem at the other end of the age spectrum.
Pontiac? Their main sellers are on very old platforms.
Notice how in the press release JD Power sucks up to Toyota, couldn’t be because they want more of their business. How about a survey of JD Power that rates the quality of their data, methodology or practices. JD Power always seems to me to be a parasitic business that survives by the benovelence of their hosts.
Katie,
Starlight has put the lie to your claims about Jaguar. If people aren’t buying them, how can you claim they are better? Is it some sort of conspiracy of the rebellious colonials in league with the former axis powers keeping Jaguar down?
JD Powers often asks the wrong question, but this number seems pretty clear. It also passes the smell test.
This article missed the larger point that GM came in #2 just after Toyota in group retention. Have a look at the same data as analyzed on CNN:
http://money.cnn.com/2007/12/06/autos/jd_power_retention_study/index.htm?source=yahoo_quote
Toyota Motor Sales USA, Inc. 68.9%
General Motors Corp. 64.7%
American Honda Motor Co. 63.3%
BMW of North America 56.9%
Ford Motor Co. 54.4%
Subaru of America, Inc. 51.2%
Hyundai Motor America 50.9%
DaimlerChrysler 50.2%
Nissan North America 47.6%
Maserati North America, Inc. 41.9%
Porsche Cars North America 41.6%
American Suzuki Motor Corp. 39.6%
Volkswagen of America 38.8%
Kia Motors America 32.8%
Mitsubishi Motors 31.7%
Isuzu Motors America, Inc. 1.6%
It matters not to Toyota if Scion buyers pick a Toyota next time and it is all the same to GM if a GMC owner picks a Chevrolet next time. The corporate totals matter a lot, the individual brand totals aren’t so important.
Isuzu is in a planned getting out of retail mode, so it’s number is no surprise. Kia makes cheap entry level stuff, so no big surprise there. Mitsubishi is an afterthought in the US now. VW stands out as a brand in big trouble. VW loyalists claim that buying a VW gives one entre into a special club. It seems that 2/3 of new club members don’t want to stay in.
jthorner, looking at your stats reminds me of when I was reading the book about the fall of the Packard Motor Car Company, and the 1950’s, when the huge push by the big 2 nearly put Chrysler and all the independents out of business.
In fact, the companies with the lowest levels of retention did not survive. I’d say that anything less than 60% isn’t “healthy” and anything less than 50% is possibly “deadly” in the cyclical, inevitable economic downturns, except for niche players such as Porsche, etc., of course.
Below 40% is probably a mark of rigor mortis. Again looking above at the stats and recalling that only just the other day the Volkswagen CEO opined that he wanted massive increases in sales worldwide and in the US – I find the sub 40% level of VW to simply show how arrogant and out of touch the VW leadership obviously has to be.
Personally, I think TTAC should start a Volkswagen Death Watch, in fact.
As for Kia, they have “daddy” (Hyundai) to float them once they can’t bail for themselves. But if I were a Hyundai executive, I’d be studying these figures VERY hard. And would be calling the Kia exectutive in onto the carpet – stat.
With Mitsubishi and Suzuki, the only way I see either of them surviving? Is to merge and take the strengths of both, make a viable company, and go forward. Don’t do a DaimlerChrysler and use Chrysler unreliability and Mercedes “styling”…
jthorner, you are correct about group retention being a good thing, and certainly GM is doing a pretty good job.
But this “study” (I use the term loosely with anything JD Power does) is looking at vehicle brands specifically. As such it is a measure of a particular brand’s retention rather than the company. (This may be why GM is trying to increase awareness of GM as a brand.)
The fact that a Pontiac buyer jumps ship to a Chevy is not necessarily a net negative for GM, but is it not worth knowing why? It is still a data point that should be tracked and understood if GM feels that Pontiac is a worthwhile brand to have in the portfolio.
I think Kia and Hyundai should be combined in those CNN numbers, like GM’s brands are.
It’s also clear that companies that offer a broad range of vehicles get higher marks. That is, if you are a loyal Volkswagen owner, but now need a pickup or minivan, VW has nothing to offer you and you have no choice but switch.
Looking at it like that, VW’s numbers are still quite bad, but not quite as fatal as they appear.
Nissan and Chrysler have to worry, though. They have full line ups, yet are only getting half their customers to come back trade-in time.
dean –
I’m not saying that the nameplate specific data isn’t important, particularly to decision makers inside the companies. I’m saying that as an indicator of the overall health of the corporation it can be misleading.
I’m no GM fanboy as even a casual reading of my posts on TTAC and other venues shows, but GM should be given credit for being just barely behind Toyota in overall customer retention.
“That is, if you are a loyal Volkswagen owner, but now need a pickup or minivan, VW has nothing to offer you and you have no choice but switch.”
True as far as it goes. But they were edged out by Suzuki!!!! One must also ask why the **** VW stayed out of the minivan game they in fact invented, and where the modern successor to the very useful Rabbit pickup truck is. There is definitely a market need for a small light duty pickup truck which handles like a good compact car and sips fuel like one as well. VW South America still offers it:
http://www.autoblog.com/media/2006/04/VW-Pickup-blue.jpg
It’s just the thing for a daily one-person-commuter car which can also be used to stop at the Home Borg on the weekend for gardening supplies and the like. Put a cap on the back and you have a great vehicle for small business delivery duties or a plumbers run-about. Equip it with one of VW’s diesel engines and enjoy two to four times the real world fuel economy of an F150.
VW was in the US minivan market – remember the Eurovan, initially brought in with an inline 5? Not exactly a hit, but they’ll be back next year with a platform-engineered Chrysler van.
VW… They really should have made the Microbus after their successful concept. Then, they wouldn’t have as many fleeing customers as they do now. Heck, that and an AWD pickup off the Passat platform could work, no?
I mean, if Pontiac’s gonna do it…
starlightmica:
See what I mean?
hmmm … i bought a toyota & am quite disappointed by the thing (samir syed put it beautifully, btw). won’t buy another any time soon.
” … remember the Eurovan …. ”
I do indeed. It was on the US market, then off, then back on, then off again. Way overpriced compared to the competition and always underpowered. Nice fit and finish though.
Samir:
To keep things in perspective, we’re not only loyal to the big T but also repeat Mazda buyers, my daily drivers for the past 11 years. Whew!
VW… They really should have made the Microbus after their successful concept. Then, they wouldn’t have as many fleeing customers as they do now. Heck, that and an AWD pickup off the Passat platform could work, no?
I mean, if Pontiac’s gonna do it…
I would have had a very hard time refraining from buying one if they had made it. I would have bought it, put a bed and an espresso maker in it, and driven it around the country for six months.
Katie Puckrik,
you really ARE trying to stir up trouble these days. You say you think cars should drive themselves. DRIVE THEMSELVES! And then you talk elsewhere about how you enjoy doing the repairs on an old Neon. And now… Well, to tell you the truth, you’re not really taking the fun out of this thread, even if you do think premium group Fords are da bomb. But I’m having a lot of trouble getting my mind around the notion of someone whose posts are almost universally interesting and provocative, and who likes to repair cars, but thinks cars should drive themselves. Usually it’s the other way around, or people like both. Did you eat some hagis (pls forgive any spelling error) that disagreed with you? Or have the traffic and/or the speed cameras become intolerable in UK? Or are you just messing with us? Forgive me, but my curiosity has definitely gotten the better of me.