Resale Value, Vehicle Quality Drive Owner Loyalty

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Automotive manufacturers are working hard to increase customer loyalty and attract buyers from other brands.  With the uncertainty of the economy, retaining existing owners is critical to a brand's market success.  A new study from J.D. Power and Associates finds that resale value and vehicle quality have become increasingly important reasons for new-vehicle buyers to remain loyal to an automotive brand.  The study measures the percentage of vehicle owners and lessees who replace a previously purchased new vehicle with another from the same brand.

The study finds that the importance of resale value as a reason for owner loyalty has increased by 12 percentage points in 2009, compared with 2008. Meanwhile, the importance of vehicle quality has increased by 6 percentage points. In comparison, in 2008, the reasons with the largest increases in importance for staying loyal to a brand were safety, fuel economy and deals/incentives.

Resale value and quality have also increased in importance as reasons why brands conquest new customers from their competitors, as has the importance of appearance and styling.

"Although there are some signs of economic recovery, the outlook remains uncertain, so for many new-vehicle buyers, high resale value and quality are particularly important considerations that are driving purchase behavior," said Raffi Festekjian, director of automotive product research at J.D. Power and Associates. "Whether manufacturers are striving to increase loyalty or conquesting buyers from other brands, offering attractively styled models and having strong customer perceptions of resale value and quality are critical."

Mercedes-Benz ranks highest among automotive brands in retaining vehicle owners when they buy a new-vehicle, and improves their retention rate by eight percentage points from 2008 to 67% in 2009. Following in the rankings are Honda (64%) and Toyota (61%).

Overall customer retention in 2009 remained stable from 2008 at 48%. In 2009, 13 of the 36 ranked brands improved in customer retention rates from 2008, while 20 declined and three remained stable. MINI and Porsche post the greatest improvements in customer retention rates from 2008, each improving by 14 percentage points in 2009. For MINI, this improvement is driven primarily by incentives and customer perceptions of resale value of the brand's models. For Porsche, the increase is due to resale value, fuel economy and quality.

"2009 Customer Retention Study," conducted by J.D. Power and Associates, December 10, 2009.  Website: www​.jdpower​.com.