J.D. Power reports Toyota ranks highest in customer retention
J.D. Power and Associates released its 2006 Customer Retention Study today, and to no one's surprise Toyota tops the list. The Japanese automaker averages a 63.9 percent customer retention rate, which means that of people who purchase a Toyota vehicle, about 64 percent purchase another one as their next vehicle. Toyota actually beat out its own brethren this year, narrowly replacing Lexus (63.2%) at the top of the list. This news isn't surprising, merely because Toyota's image of quality and customer service has been gaining momentum along with its sales. It is just an image, though, as the reality of Toyota's quality and customer service at the moment is arguably much different than its rosy reputation suggests. Nevertheless, Toyota has somehow managed to sear a positive image of itself on the collective consciousness of consumers, which we believe artificially boosts its performance a bit in the marketplace, as well as in studies like this one. Overall J.D. Power and Associates reports that customer retention is declining across the auto industry, having fallen from 49.6 percent in 2003 to 47.9 percent this year. This makes perfect sense when you consider that the market for great vehicles has never been more competitive and new model classes, like the CUV, are pulling customers away from their trusted brands to try out new offerings.
You can follow the jump for a look at J.D. Power's press release and see a graph that shows see how each brand ranked.
[Source: J.D. Power]
PRESS RELEASE:
J.D. Power and Associates Reports:
Toyota Ranks Highest in Retaining New-Vehicle Buyers
Resale Value and Dealership Service Cited as Key Contributors to Retention
WESTLAKE VILLAGE, Calif.: 6 December 2006 - Toyota leads the automotive industry in retaining the highest percentage of new-vehicle purchasers, according to the J.D. Power and Associates 2006 Customer Retention StudySM released today.
Now in its fourth year, the study measures the percentage of new-vehicle buyers and lessees who replace a previously purchased new vehicle with another from the same nameplate. As a whole, the industry registers a slight decline in customer retention, falling to 47.9 percent, from 49.6 percent in 2005.
The study finds that of more than one-half of the brands included in the rankings have shown some decline in retention rates since the study's inception in 2003.
"Declining customer loyalty results from considerable improvements in quality combined with a plethora of choices for consumers," said Neal Oddes, director of product research and analysis at J.D. Power and Associates. "In some instances, new models, such as those in the rapidly growing crossover segment, can have a significant impact on customer retention for a brand."
With a 1.3 percentage-point improvement from 2005, Toyota (63.9%) replaces Lexus (63.2%) in the customer retention rankings. Toyota benefits from its reputation for exceeding customer expectations in terms of both short-term and long-term quality, which has helped to maintain the high resale value of its vehicles, as well as to expand its customer base. Honda retains its third-place ranking at 60.3 percent.
BMW, improving nearly 7 percentage points from last year, jumps six places to rank fourth at 56.5 percent. This gain, according to the study, can be mostly attributed to improved customer service stemming from BMW's introduction of a free vehicle maintenance policy for new purchasers.
Bolstered by a 15 percentage-point increase from 2005, Suzuki achieves the largest gain in customer retention among all brands with a 23 percentage-point overall gain since the study's inception in 2003. Several factors contribute to Suzuki's improving loyalty rates, including improved short- and long-term quality, as well as the introduction of new models with better customer appeal. Suzuki customers are also often offered attractive purchase incentives.
Also registering robust three-year gains are Nissan, advancing 8.2 percentage points from 2003, and Lexus, which gains 7.7 percentage points.
"During the past four years, Nissan has had a remarkable turnaround in image and financial performance, due in part to stepped-up quality initiatives and improved resale values," Oddes said. "The benefit of this is that the brand is retaining more of its customers than it did in 2003, which is helping turn around its financial performance."
Also worth noting is Cadillac, which, through quality improvements and a breadth of products, has achieved an increase in customer retention rates each year since 2003.
The 2006 Customer Retention Study is based on responses from 138,630 new-vehicle buyers and lessees, of which 82,274 replaced a vehicle that was previously acquired new.
Reader Comments (Page 1 of 3)
Bumbaclut 9:48PM (12/06/2006)
Once you go Toyota, you never go back.
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AutoFan 7:17PM (12/06/2006)
"It is just an image, though, as the reality of Toyota's quality and customer service at the moment is arguably much different than its rosy reputation suggests."
What exactly are you basing that on? They still top pretty much any survey you'd care to mention.
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$0.02 7:25PM (12/06/2006)
Hyundai breaks the top ten. Big news.
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Brent 8:09PM (12/06/2006)
coughScioncoughcough
Essentially another tool to help this cause.
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whofan 7:30PM (12/06/2006)
Its trendy and cool to drive a Toyota! Isn`t that what its really all about?
My Chevy and Plymouth serves me well.
I`m not cool anyhow!
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JJ 7:31PM (12/06/2006)
Surprise! You know companies (parent McGraw Hill) like this with there fingers in financial dealings, publishing etc., can you really trust what they say or is it to there own financial benefit to make a big deal out of some things, seems they always side with foreign companies, maybe we should make them foreign to us.
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mark 7:34PM (12/06/2006)
to autofan, post #1
If a survey told you that doctor's recommend jumping off a bridge, would you listen to that too? Wake up and think for yourself!
A survey can be made to say anything someone wants it to say and cut out the "bad stuff". A glance over any Toyota forum on the web will reveal the reality of Toyota's dealings with customers. As well as how dealerships are treating the customers too. It's not a rosy picture. Do a litle research and you'll see all that PR and happy story telling isn't as "happy" as they want you to believe.
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Jeff Hadley 9:06AM (12/07/2006)
There is no question Toyota makes a good vehicle , But the media is so bias its impossible to see the forest for the trees. (Toyota had so many recalls last year I gave up counting them) Also anyone who would buy a Camry or Corolla is gonna be a slowpoke knuckle dragger who wouldnt have quality issues because they would never get their RPMs over 3000. Toyota is gonna crash hard in the next few years as soon as Lutz slays the last of the bean counters at GM.
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Misaniovent 7:58PM (12/08/2006)
The most interesting thing here is that Buick is below the industry average.
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Petey 7:47PM (12/06/2006)
wtf is up with Mazda? 1 in 4 buy another Mazda?
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jack 8:32PM (12/06/2006)
"It is just an image, though, as the reality of Toyota's quality and customer service at the moment is arguably much different than its rosy reputation suggests."
Responding to both Mark and John Neff, if Toyota's quality is just an image why are 64% of their customers buying thier vehicles again? Why don't they buy another brand if they where treated so badly by Toyota?
And if you examine closely the posters who complain about poor Toyota Quality on such websites like Edmund's about the poor quality of the 2007 Camry, you will see it is the same 6 or 7 posters doing 80% or more of the complaining. These forums make you wonder how legitimate the posters problems with Toyota are.
I bought my first Toyota back in 1986 and I remember how much anti-Toyota sentiment there was back then and still today. I think Toyota is doing a pretty good job if they can sell all those vehicles and make so much profit at the same time (good business model) despite all the negative feelings towards them.
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Sam 8:38PM (12/06/2006)
I never expected Hummer to have such a high retention rate. Who buys two Hummers?
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RJ 9:36PM (12/06/2006)
This is hilarious, when a JD Powers survey shows that consumers are more sattisfied with their "purchase experience" at domestic dealerships all the closed minded import haters celebrate like it means something great. Yet when Toyota tops a list that actually means something it's "These surveys don't mean *bleep*"
You guys make no sense
I am impartial to either side, domestics or imports. I buy the better product, which in the case of my current two cars happens to be one Toyota and one Honda. Should I buy an inferior product just to show support for American companies?
NO
I would only be doing a disservice to the big 2.5 because it would give them the false sense that American's will still purchase their product regardless of the fact that it's inferior. In case you haven't noticed, hard times are falling upon the Big 2.5 and Toyota's momentum is only increasing. At least there are signs of life within GM and Ford and they're recognizing the situation they're in.
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cFoo 8:13PM (12/06/2006)
If Toyota goes down...who's going to make it to the top? GM or Ford? don't make me laugh. I don't care who's at the top, it's clear that the domestic market is dead replaced by foreign manufacturers.
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whofan 8:13PM (12/06/2006)
Mazda is the most underrated Japanese company. Toyota most overrated.
Toyota`s SUVs are nice. The RAV4 is very nice as is the Highlander also the new FJ cruiser but their cars are down right ugly.
It must be nice to be Toyota! Build the Camry as ugly as the new 07 is and sell it to legions of fans.
I saw a new Camry parked in front of a new Impala. The Impala is beautiful in comparison.
Does a new Toyota also come with an lobotomy?
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Jinna 8:21PM (12/06/2006)
I have owned 1988 Celica GT-S, 1990 4Runner, 1998 4Runner, 2004 Prado (your Lexus GX470), 2005 RAV4, and a 2007 RAV4. And I can tell you this, Toyota quality is not what is used to be, but you cannot associate bad quality to them still. I suppose it is because of the considerable increase in production, and they cannot keep up with it. The thing is that the price the dealers charge for the cars should give you an excelent, trouble free vehicle, which is not the case. I think they are a little overpriced. But the other brands (with the possible exception of Honda) are not much better than Toyota in quality, so they are happy with how the things are going, and we as consumers do not have too many choices still...
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sp 8:28PM (12/06/2006)
wait, so you are suggest that owners of cars, purchase new cars not because they are satisfied with their cars, but because they like media reports? Thats ridicilous.
Obviously, if you own an vehicle, and you have many problems with it and your dealer isnt helping, you most definetly wont purchase another vehicle from same brand.
the fact that OWNERS, not media, not reporters, not internet posters, come back to buy TOYOTA, more than any other brand, means they are THE most satisfied owners on the planet.
In the same sense, #10, it seems that it is Mazda owners that under-rate Mazda :-).
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sp 10:07PM (12/06/2006)
#6 - it is pretty clear cut survey, what is biased about asking what car did you previously own?
In fact, this is the best domestic survey to date - check how well Chevy is doing - there is no other survey on the planet that is as good to chevy as this one...
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Howard Kerr 8:35PM (12/06/2006)
Three things:
A.) If I was in charge of VW of America, I'd be awake nights worrying about the numbers for VW and Audi. 1 in 3 return...a number LOWER than Ford.
B.) If I ran the Infiniti arm of Nissan U.S.A. I'd REALLY BE WORRIED.
C.) My experience with repeat buyers of Toyota vehicles: the majority were/are women. They were only interested in a reliable car with decent looks and resale. (How else do you explain the Echo and it's successor, the Yaris?) To these women, it was merely a case of replacing a worn out appliance, like a washer or refrigerator, with a similar new one from the same manufacturer. Customer service is overlooked somewhat because the car is seen to be worth the one time hassle.
By the way, my sister recently bought a new Prius (2 or 3 months ago) and her latest letter mentioned the tire pressure warning system she didn't know her car had....not a word about gas mileage compared to her old car a '99 Mustang.
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rrr 10:27PM (12/06/2006)
So does this mean that out of 10 current Mazda owners only 2 will buy it again. What does that say about that car? I read about Mazdaz here all the time, and 90% if not more is very positive. And yet people who own it will not spend their money on it again.
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