Lexus led the motor industry in the US in retaining the highest proportion of new vehicle owners, according to the JD Power and Associates 2005 customer retention study.
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The study, now in its third year, measures the proportion of new-vehicle buyers and lessees who replace a vehicle that was previously purchased new with a new vehicle from the same nameplate.
With a 3.5% increase from 2004, Lexus ranked highest, retaining 63.0% of its customers. The industry average was 49.6%.
Lexus was followed by Toyota (62.6%), Honda (59.9%), Chevrolet (57.3%) and Hyundai (56.3%).
“By satisfying its customers on many different levels, Lexus consistently enjoys high retention rates,” said JD Power. “Customer retention is extremely valuable in the auto industry because it costs manufacturers less to keep existing customers than to attract new ones, and strong retention fosters favourable word of mouth.”
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By GlobalDataAlthough Suzuki retained just 28.6% of its customers, the brand recorded the greatest improvement, increasing its retention rate by 38% from 2003, which was the first year of the study. Acura also enjoyed strong increases in retention rates, improving 25% from 2003 to retain 45.7% of its customer base in 2005.
“Suzuki has made tremendous strides in better retaining its customers, due partly to the fact that it has expanded its lineup to include more segments of the market, which offers buyers a wider variety of models in different segments as their needs and wants change over time,” said JDP.
The study found that quality and customer service experiences played key roles in influencing customer retention. About 23% of respondents did not buy a vehicle from the same brand because they felt that too many things went wrong with their previous vehicle.
The nameplates with the fewest customers leaving for this reason also performed relatively well in JDP’s 2005 vehicle dependability study, which measured problems experienced during the first three years of ownership.
Experiences with the dealer service and sales departments also have an important impact on whether customers return to the brand when they are in the market to buy a replacement vehicle. Nameplates performing well in the firm’s 2005 customer service index study, which measures satisfaction with the service department, and the 2005 sales satisfaction index study, which measures satisfaction during the new-vehicle sales process, tended to have relatively few customers who cited poor service as a reason for defecting to another brand.
“Although acquiring new customers is an integral part of any OEM’s strategic plan, strong nameplate retention is essential to grow and expand its customer base over time,” said JDP. “Manufacturers cannot underestimate the power of excellent service and short- and long-term quality in convincing their customers to come back to the brand time and again.”
The 2005 customer retention study was based on responses from 177,941 new-vehicle buyers and lessees, of which 106,275 replaced a previous vehicle that was originally acquired new.
