Honda Tops in Customer Loyalty - mKia Coming on Strong

Ford, Honda tops in U.S. customer retention; Kia rising fast



Brand loyalty survey finds that 'fun' is becoming more important

Laurén Abdel-Razzaq

Automotive News
December 9, 2010 - 3:42 pm EST

Ford and Honda have vaulted past Mercedes-Benz to tie for the highest customer retention rate among automotive brands in the United States this year, according to a new study.

The two mass-market brands retained 62 percent of buyers this year, J.D. Power and Associates said in its annual Customer Retention Study released today.

Ford rose five spots from 56 percent in 2009 while Honda increased one spot from 64 percent last year. Mercedes fell five spots, from 66 percent in 2009 to 59 percent in 2010, J.D. Power said.

The firm said Ford's higher retention rate was driven mostly by the Edge, F-Series and Fusion models. Honda's retention was driven by the Accord, CR-V and Pilot, the firm said.

“Ford, specifically, (is) producing products that have vehicle appeal, that have good styling and are fun to drive,” said Raffi Festekjian, director of automotive product research at J.D. Power and Associates. “For Honda, it's still more about resale value.”

Kia Motors had the largest increase in brand loyalty from last year, jumping by 21 percentage points to a 58 percent retention rate.

Overall, the average customer retention rate for the industry remained at 48 percent, even though some brands shifted in the rankings. Of the 32 brands ranked by the study, 16 improved their retention rates from last year, 14 declined and four did not change.

Fun to drive

A growing number of new-vehicle buyers consider a fun driving experience when it comes to being loyal to a certain brand, J.D. Power said.

According to the study, the desire for a fun driving experience as a reason for brand loyalty has increased in importance by 8 percentage points -- to 55 percent of respondents. In contrast, sticking with one automaker because of resale value has become less important, decreasing 11 percentage points to 45 percent.

“Last year we saw that resale value was important, consumers were a little bit more tight with their money, so that led to people staying with their brand” Festekjiansaid.. “Now we're seeing a shift in people who are interested in going back to some of the fundamentals of styling.”

Power said the top reason for remaining loyal to a brand this year was “seating arrangements,” chosen by 70 percent of the respondents -- unchanged from last year. Other top reasons were look/style, 65 percent; safety, 64 percent; deal incentive, 59 percent; and quality, 59 percent. Those results changed little from last year.

J.D. Power and Associates looked at more than 123,600 responses from new-vehicle buyers and lessees, of which more than 81,000 were replacing a vehicle they had purchased new. Power conducted the study between February and May and again between August and October. This is the eighth year J.D. Power and Associates has conducted this study.

Conquest rates

Besides customer retention, the study also looked at the rate at which auto brands capture customers from their competitors -- what J.D. Power and Associates calls “conquesting.”

Domestic brands have made strides during the past two years in grabbing customers from import brands. This year, 14 percent of domestic brand buyers previously owned an import, compared with 10 percent in 2008.

Despite the fun-to-drive factor, look and styling remain the top reasons consumers will stick with one brand, Festekjian said.

Although it is difficult to predict future trends, Festekjian said, right now customers are looking at a combination of factors in determining whether to stick with one auto brand. Brands that have good quality, good appeal and can bring people into showrooms are still important, he said.

“Consumers are shifting now to where they want it all,” Festekjian said. “They want the vehicles to be fun to drive and maybe aren't thinking of it so much as a vehicle to get me from point A to point B.”