Customers Stay Loyal To Brands with Fun-to-Drive Vehicles

Attention car makers: new-vehicle owners want fun-to-drive vehicles, according to the 2010 customer retention study by J.D. Power and Associates. Buyers are staying loyal to brands like Ford for that reason.

Resale value is less important to new-car buyers. It measures the rate at which automotive brands retain their existing customers and the reasons why owners remain loyal. Manufacturers value retention because it’s easier to sell a new vehicle to an existing customer. Plus, existing customers can be a brand’s best word of mouth.

For the 8th year in a row, J.D. Power has conducted the customer retention study. The study finds that the importance of fun-to-drive vehicles as a reason for owner loyalty has increased by eight percentage points in 2010, compared with 2009. Meanwhile, the importance of resale value as a reason to stay loyal has decreased by 10 percentage points from 2009.

According to an announcement about the study, Ford and Honda rank highest in a tie among automotive brands in retaining vehicle owners. Each brand retains 62 percent of owners. Ford’s retention rate is primarily driven by the Edge, F-Series and Fusion models, while for Honda, retention is driven by the Accord, CR-V and Pilot. Comparing the two brands, Ford owners are more likely than are Honda owners to indicate they have remained with their brand due to the perception that their new vehicle is fun to drive or has good styling. Honda owners are more likely than Ford owners to cite resale value and safety as reasons for repurchasing the brand.

Following Ford and Honda in the rankings are Hyundai, Lexus and Toyota, in a three-way tie, each with a customer retention rate of 60 percent. Kia posts the greatest improvement in customer retention rate from 2009, improving by 21 percentage points to 58 percent in 2010.

Overall customer retention has remained stable from 2009 at 48 percent. In 2010, 16 of the 34 ranked brands have improved their customer retention rates from 2009, while 14 have declined and four have remained flat. J.D. Power did not identify the biggest losers.

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