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Would you buy another one? Automotive Customer Retention survey reveals the truth

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January 18, 2012

The above-average auto makers in customer retention

The above-average auto makers in customer retention

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It's a lot easier to keep a customer than to get a new one, at least that's how the sales force maxim goes. So what then does the newly released J.D. Power and Associates 2012 Customer Retention Study say about the automotive brands and their ability to sell the same customer another car.

For starters, something incredibly positive is happening at Hyundai - just two years ago, Hyundai was below the industry average in customer retention - now the Korean brand has flown past Mercedes, BMW, Porsche, Lexus, Infiniti and Acura to become the stickiest brand in the business, with a healthy margin of 4% to Ford and Honda.

The reasons a car owner switches brands make fascinating reading and it seemingly is very hard to retain customers, with even the prestige brands that sell a "way of life" unable to convince much better than one in two to stay with the marque.

Though the primary reason given for switching brands was that the previous brand didn't offer the type of vehicle they wanted (one in three "switchers") the underlying reason for most switches is undoubtedly dissatisfaction with the previous vehicle. Maybe it was too many problems with the car, or that it was too costly to run and maintain, or that the car had poor resale value.

The big winners - car makers which have gained the most in customer retention since 2009

The J.D. Power and Associates 2012 Customer Retention Study is now in its ninth year, and measures the rate at which automotive brands retain their existing customers, the reasons why customers remain loyal, and the rate at which automotive brands capture customers from competitors.

The 2012 study is based on responses from 117,000 new-vehicle buyers and lessees, of which 73,733 replaced a vehicle that was previously acquired new. The industry's average brand customer retention rate improved marginally this year (by one percentage point) to 49 percent.

In 2012, 19 of the 33 ranked brands have improved their customer retention rates from 2010, while 14 have declined. Just to get a clearer picture, we put all the numbers together for 2009 too, to see which brands are winning and which ones are leaking customers over the last three years.

What was most surprising was the performance of both of the big Korean brands. Hyundai improved from 47% in 2009 to an industry-topping 64% this year, but its improvement was beaten by Kia, which scored just 37% in 2009 and this year slotted into equal fourth with 59%, way ahead of all the well known brands which claim to sell a way of life to their customers.

Several other brands improved dramatically over the three year period from the 2009 survey - Land Rover from 25% to 47% (an increase of 22% in raw numbers but effectively almost a doubling of retention), Nissan's prestige brand Infiniti from 25% to 46% and Jeep which improved from 34% in 2009 to 51% this survey.

The big losers - car makers which have dropped the most in customer retention since 2009

Looking at the figures over a slightly longer time frame also enables trends to be clearly seen, and the biggest take-out from the survey has got to be the abyssmal perfromance of Dodge which had a similar customer retention rate to Hyundai just three years ago (43% v 47%), and has slipped to just 21% today, doubling the company's customer bleed rate in just a few years.

Equally as intriguing was the poor performance of normal stellar perfromers in Mercedes-Benz, Subaru and Porsche which all lost 9% during the three year period. The study also noted some interesting points. Women and younger vehicle owners (aged 23 to 47) are less likely to choose the same vehicle brand for their next purchase.

"Women and younger vehicle owners are more likely to experience changes in their life circumstances, including growth in household size or changes in income levels, that would lead them to purchase vehicles that better accommodate their new lifestyle," said Raffi Festekjian, director of automotive product research at J.D. Power and Associates.

Brands that perform particularly well in retaining women customers include Honda, Hyundai, Kia and Mercedes-Benz. Among vehicle owners in the Generation Y and Generation X demographics, Ford, Kia, Lexus and Mercedes-Benz perform particularly well in customer retention.

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10 Comments

Come on Gizmag - this really isn't the sort of article I want to read in the webzine. Where's the innovation? Gizmo? Invention? Excitement? I could go on but I've dropped off to sleep

Chris Knowles
18th January, 2012 @ 05:06 am PST

I've driven Toyota's exclusively since 1975.

Patricia Clements
18th January, 2012 @ 06:06 am PST

I've been an advocate of Hyundai since 2000...after putting 300,000 miles on one with only oil and tires and brakes for all of that 399k....not even a tune up.

I am an ASE certified master tech and remember the early days of that company and the terrible product they put on the road...but then one day everything changed.

Hyundai now outdoes Honda and Toyota for reliability and price...price being the penance for the companies early failure to satisfy owners.

To this very day Hyundai makes some of the finest mechanically engineered vehicles on the road from it's lowest price compacts all the way up to it's multiple award winning Genesis line that has destroyed every luxury car maker in reviews, owner satisfaction, and high end automotive journals in depth reviewing where every detail is considered even down to the thickness of the paint and primer and the interior acoustics...just an amazing vehicle.

John Hemingway Parkes
18th January, 2012 @ 10:40 am PST

hmm considering the fact that the only new car I purchased was a 1976 vw dasher wagon, and now don't buy into the stupid of needing a new car, I have three cars, an '83 Audi Turbo quattro Coupe garage queen, the first quattro, a modified '86 Audi 4000 CSQ snow car with a 2.2 litre 350CHP engine, my daily driver, an '89 Audi Avant, look tits in red, 17" TSW wheels, everything works including the heated seats, why would I want a car payment?, hear a lot of good about Hyundai, just had a BuMmerW customer change to a Genesis

Bill Bennett
18th January, 2012 @ 08:52 pm PST

I must take exception to Mr. Knowles' comment; thank you, Gizmag for the variety of subjects covered. It's amazing to me that I simply don't have time, most days, to read all of the articles! All of them have some interest to me - Even the ones that aren't exactly cutting-edge technology; keep up the good work and if I ever read an article I don't like, I'll take it with a grain of salt while going on to the next item.

Wanzewurld
19th January, 2012 @ 08:35 am PST

As a Detroit native, I too, thank you for this interesting article. The automotive industry is a HUGE part of the US economy - exploring different aspects of our interaction with the products they sell not only empowers consumers to make better buying decisions, it gives us an idea of some cultural and sociological trends. The 'fancy' brands retained less customers - could this be any result of the 'Occupy Wallstreet' movement? Or are the 'wealthy' feeling the economic pinch as well? The serious decline in the Dodge brand - what is the company doing that causing customers to jump ship? Poor quality? Lack of innovation? Poor customer service? And what will the future hold as manufacturers try to retain women and younger buyers, transforming them into long standing customers? Will they build retention through innovative vehicle technology, or interesting potentially viral marketing? Will they inject their brand as much as possible into tv shows and movies like Twilight? As I said, fascinating article.

Kristen Miller
19th January, 2012 @ 10:04 am PST

where is citroen in this chart.or doesnt anyone who has bought a citroen ever buY another one,because of ALL THE MYRIAD FAULTS THEY POSSESS.the modern motor car is designed to be so complex that people are forced into the clutches of the rip off main dealer ships.citroen are the worst for this,closely followed by renault.nightmares of unfixeable recurring electrical computer ,bsi problems.needlessly complex,notoriously unreliable.

keanechris
19th January, 2012 @ 12:35 pm PST

This article did not mention customer service. We would have stayed with Toyota, however the way they treated us; we purchased a new car from another company amongst the top 3 and the dealer can not do enough to keep us happy. Honesty and good service make for a return customer.

widgets
19th January, 2012 @ 01:17 pm PST

The stats are a bit confusing...article titled "would you buy another one" but charts, if titled, are "customer retention" as in "DID you buy another one".

Also the data is mixed between buying and leasing...very different considerations...when leasing (usually for business) the primary cost factor is monthly payments, but when buying its long term cost of ownership and resale. So if Hyundai comes in with a super monthly lease deal and focuses on fleet sales, it could gain short term advantage without, perhaps, being truly a preferred brand.

Notice 2009 all the above average makes are "name brands" then it all switches to Hyundai and Kia...I think a major factor is pricing as the recession kicked in.

Mike Hodgkinson
24th January, 2012 @ 08:49 pm PST

Where are VW, Opel and Renault? Dacia maybe?

Srečko Lavrič
27th January, 2012 @ 02:15 am PST
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