Toyota Ranks Highest in Retaining New-Vehicle Buyers

December 7, 2007

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Automotive

Toyota leads the automotive industry in retaining the highest percentage of new-vehicle purchasers for a second consecutive year, according to the J.D. Power and Associates 2007 Customer Retention Study.

The study measures the percentage of new-vehicle buyers and lessees who replace a previously purchased new vehicle with another from the same nameplate.

Improving by nearly one percentage point from 2006, Toyota (64.6%) leads the customer retention rankings, followed by Lexus (63.0%) and Honda (62.8%). Each brand has achieved the same rank position in 2007 as it had in 2006.

“Toyota’s high customer retention rate is particularly notable, considering that new-vehicle sales have declined in the past year,” said Neal Oddes, director of product research and analysis at J.D. Power and Associates.

Customer retention rates have remained stable in the industry since 2003 at approximately 49%. However, individual nameplates have incurred substantial gains and losses within the past five years. Most notable are Suzuki, which improved by 19 percentage points, and Mazda, up 9 percentage points since 2003.

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Suzuki’s five-year gain in customer retention is the largest since the study’s inception in 2003. The study identifies increased cargo capacity and higher resale value as the main reasons for Suzuki’s improvement.

Mazda’s improvements to the styling and quality of its product line have helped to elevate its retention rates. In particular, the study finds that better safety features, fuel economy and seating arrangements have led to Mazda’s five-year gain.

Customer retention may become even more important to automakers in the coming years, as new-vehicle sales between 2007 and 2014 are expected to increase only 8%, or about 1.2 million units.

“Competition for a dwindling number of new-vehicle buyers will likely intensify in the next seven years, meaning that brands will need to retain more of their existing customers in order to increase, or even maintain, market share,” said Oddes.

“In addition, it is approximately four times more costly to attain a new customer than it is to retain an existing one, so in the face of a very competitive new-vehicle market, a strong focus on customer retention becomes particularly important.”

About the study: The 2007 Customer Retention Study is based on responses from 169,017 new-vehicle buyers and lessees, of whom 101,860 replaced a vehicle that was previously acquired new.

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