Toyota no. 1 in customer loyalty, GM close behind
NEW YORK (CNNMoney.com) -- Toyota Motor Company does a better job than
any car company in America of keeping its customers coming back,
according to data from J.D. Power and Assoc. General Motors ranks second
in customer retention.
Among recent new car buyers whose previous car was a Toyota, Lexus or
Scion 68.9 percent bought another Toyota Motor Co. (Charts) product.
That's similar to Toyota's retention rate last year, according to J.D.
Meanwhile, owners of Chevrolet, GMC, Pontiac, Saab or other GM vehicles
bought a GM (Charts, Fortune 500) product again 64.7 percent of the
time, according to J.D. Power.
That represent's about a three percentage point improvement over last
year for GM.
The upward shift for GM likely represents a genuine trend, said Neal
Oddes,, director of product research and analysis at J.D. Power and
Associates, and not just a blip.
Oddes cited improved quality, in general, and the introduction of
several well received products in the last couple of years as factors
that are probably driving greater repeat business for GM.
Ford Motor Co. (Charts, Fortune 500) ranks fifth, coming in behind
American Honda Motor Co. and BMW of North America. Ford, which makes
Ford, Lincoln, Mercury, Jaguar and Land Rover and which owns a
controlling interest in Mazda, brings back 54.4 percent of buyers,
according to J.D. Power.
Honda of America (Charts) sells Honda and Acura vehicles while BMW sells
BMW and Mini.
DaimlerChrysler, which included Mercedes-Benz, Chrylser, Dodge and Jeep,
retained a little more than half its customers. DaimlerChrysler split
into two separate companies earlier this year.
J.D. Power usually publishes customer retention by brand - for example
Chevrolet owners who buy another Chevrolet or Lexus owners who buy
another Lexus - in its annual Customer Retention Study which was
In that study, the Toyota and Lexus brands ranked first and second with
Chevrolet, the top ranking Detroit-based brand, coming in fifth.
J.D. Power provided CNNMoney.com with additional data that is not
usually shared with the public. This data shows how car manufacturers
ranked overall, even if customers switched from one of the
manufacturer's brands to another. That is the main reason, after all,
that car companies have different brands. A customer can trade in a
Chevrolet for a Buick, for instance, while remaining a GM customer.
Because of its broad base of vehicle brands, GM does much better -
viewed as an overall manufacturer - than does any of its individual
brands. Toyota, with its three brands, also does somewhat better overall
than any of its brands does on its own.
Generally speaking, smaller car companies have a harder time retaining
customers. This is mostly because they have less to offer returning
customers whose needs may have changed.
Poor vehicle quality and poor service at the dealership are two other
factors that hurt customer retention, said Neal Oddes, director of
product research and analysis at J.D. Power and Associates.
Isuzu has the lowest customer retention rate, by far, of any car company
in the J.D. Power study. Just 1.6 percent of Isuzu owners bought another
Isuzu. The next lowest was Mitsubishi which managed to keep 31.7 percent
Suzuki improved its customer retention rate by a remarkable 19
percentage points over last year, according to J.D. Power. In 2007,
Suzuki retained 39.6 percent of customers, a rate slightly better than
that for Volkswagen.
Retaining customers is important for car companies because gaining a new
customer costs four times as much, in terms of marketing, as keeping an
existing customer, Oddes said.
"The [number of new car buyers] between now and 2014 is not getting any
larger," Oddes said, "and there are more products coming in."
That scenario will make maintaining a customer base even more
challenging, he said.