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Ford, Honda Tie In J.D. Power Customer Retention Study

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Ford, Honda Tie In J.D. Power Customer Retention Study

Domestic brands making significant gains as they improve the “fun-to-drive” factor.

by Paul A. Eisenstein on Dec.09, 2010

Ford's Fusion helps the Detroit maker tie Honda in terms of customer retention, reports J.D. Power.

While automakers are constantly looking to draw business away from their competitors, one of the toughest challenges is keeping buyers in the fold, and according to a new study by J.D. Power and Associates, Ford and Honda tie as the brands with the highest customer retention rates.

Domestic automakers are making inroads when it comes to getting existing owners back at trade-in time, but on the whole, the imports still do a better job, the market research firm reports.

But what keeps buyers happy and loyal is shifting, according to the annual Customer Retention Study. Buyers are placing more and more emphasis on fun-to-drive, rather than practical, factors in making their choice for a new car.

“Now that economic and market conditions have improved somewhat, vehicle owners are increasingly citing emotional, rather than practical, reasons for staying with their vehicle brand or switching to a different one,” said Raffi Festekjian, director of automotive product research at J.D. Power and Associates.

Honda ties for first buoyed by Accord.

Customer retention is a critical factor, up there with issues like quality and reliability. Various studies have, over the year, shown that it can cost anywhere from seven to 11 times more – in marketing dollars – to win over a new customer as opposed to holding onto an existing buyer. And high customer retention rates routinely translate into stronger residual – or resale – values.

Honda has traditional scored high in terms of customer retention, and this year grabs the lead, with a 62% retention rate. But Ford ties the Japanese maker for the top spot, also scoring a 62%, according to Power, a notable victory for a domestic brand.

Honda’s strong performance is driven by three models, the flagship Accord, and two crossovers: the Pilot and the CR-V. Ford, meanwhile, hits a home run with the Edge crossover, the Fusion sedan, and the F-Series pickup.

Another strong new contender is Hyundai, the Korean marque, which scores an unexpected tie with Toyota and its luxury division, Lexus, all three with 60% customer retention rates. While the emergence of Hyundai might sting, Toyota still has the satisfaction of remaining in the top tier despite the widely-covered safety problems it has faced over the last year.

On the whole, the industry’s customer retention rate has held, year-over-year, at 48%, with 16 of the 34 brands covered by the 2010 study improving, 14 declining and four maintaining the same scores as in 2009.

Domestic makers still tend to lag their foreign rivals, and particularly struggle when it comes to “conquesting,” or winning over buyers who leave a foreign maker. But they are showing improvements, according to the new study.

“While import brands still have notably higher customer conquest rates than domestic brands, the gap is beginning to narrow,” said Festekjian. “In recent years, domestic brands have achieved parity or even surpassed the performance of import brands in initial quality and new-vehicle appeal, and customer perceptions of these nameplates seem to be evolving accordingly. It will be interesting to see how the performance gains by domestic brands affect retention and conquest rates in the coming years.”

Power based the 2010 Customer Retention Study on responses from more than 120,000 new vehicle buyers and lessees.

link:

http://www.thedetroitbureau.com/2010/12/ford-honda-tie-in-j-d-power-customer-retention-study/

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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 ET

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 21percentage 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 123,600responses 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.”

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20101209/RETAIL/101209812/1277#ixzz17em4Ku8G

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Ford, Honda top customer loyalty survey

Scott Burgess / The Detroit News

Ford Motor Co. and Honda Motor Co. have the most loyal customers, according to a new study released today by J.D. Power and Associates.

Nearly two-thirds of Ford and Honda owners, 62 percent, return to their brand for their next vehicle. For Ford, the key vehicles are the Edge crossover, the F-Series pickups and the midsize Fusion sedan. Honda customers come back for the Accord sedan, CR-V crossover and the seven-passenger Pilot.

Hyundai, Lexus and Toyota customers return to their respective brands at the rate of 60 percent. Kia, which had a 58 percent retention rate, improved the most in the study, gaining 21 percentage points over 2009 numbers, the study said.

Additionally, the study noted that more drivers want vehicles that are fun to drive and that has played a role for carmakers to get a customer to switch from one brand to another, known in the industry as a conquest customer.

"Now that economic and market conditions have improved somewhat, vehicle owners are increasingly citing emotional, rather than practical, reasons for staying with their vehicle brand or switching to a different one," said Raffi Festekjian, director of automotive product research at J.D. Power and Associates, in a news release. "In light of this, developing new models with attractive styling and that are perceived as fun to drive is increasingly critical for automakers in order to retain and conquest customers as the market continues to recover."

The study also states that domestic carmakers have done a better job at attracting traditional import buyers. In 2010, 14 percent of buyers of domestic brands had previously owned an import, which was up from 10 percent in 2008.

However, the overall loyalty rates remains fairly consistent, the study noted. In 2009, 69 percent of owners who traded in a domestic brand vehicle bought another domestic brand vehicle compared with 68 percent in 2008. Import buyers, however, are much more loyal to import brands, with 90 percent of import buyers traded in an import brand for another import brand in 2010, which is the same number as 2008.

From The Detroit News: http://detnews.com/article/20101209/AUTO01/12090465/Ford--Honda-top-customer-loyalty-survey#ixzz17etiECPw

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Ford, Honda lead latest J.D. Power owner loyalty survey

by Jeff Glucker (RSS feed) on Dec 9th 2010 at 5:33PM

jd-power-loyalty-study.jpg

Customer loyalty is incredibly important to automakers and something earned by providing both good products and service. J.D. Power has just put out its 2010 Customer Retention Study to show how well each automaker is doing at keeping existing car buyers coming back for more. Leading the way are Ford and Honda who tie each other with a 62 percent rate of customer retention. Hyundai, Lexus and Toyota are right on their heels however with a rate of 60 percent each.

Overall, import manufacturers have the edge on the domestics but that gap has slimmed down due to customers realizing that American automakers are producing a greater number of good products. Of the top 10 automakers in the study, nine are imports.

One of those imports is Kia, which has climbed the most compared to the 2009 study. Rising 21 percentage points, the Korean automaker now sees a rate of retention of 58 percent. That's 10 points above the industry average.

Be sure to click past the jump to take a look at the full press release for more information on this study.

[source: J.D. Power]

Show full PR text

J.D. Power and Associates Reports:

Desire for a Fun Driving Experience Increases in Importance as a Reason for Brand Loyalty, While Expected Resale Value Becomes Less Important

Ford and Honda Each Rank Highest in Owner Retention, in a Tie

WESTLAKE VILLAGE, Calif.: 9 December 2010 - New-vehicle owners are increasingly citing fun-to-drive vehicles as a top reason to remain loyal to their brand, while shifting away from expected resale value as a loyalty reason, according to the J.D. Power and Associates 2010 Customer Retention StudySM released today.

Now in its eighth year, the study measures the rate at which automotive brands retain their existing customers and the reasons why owners remain loyal. Customer retention is critical to a brand's market success, particularly during the current period of slow recovery, in which each new-vehicle sale is vital.

The study finds that the importance of fun-to-drive vehicles as a reason for owner loyalty has increased by eight percentage points in 2010, compared with 2009. Meanwhile, the importance of resale value as a reason to stay loyal has decreased by 10 percentage points from 2009.

In addition to customer retention, the study also examines rates at which automotive brands capture customers from their competitors, known as conquesting. The importance of a fun-to-drive vehicle has also increased as a reason why brands conquest new customers from their competitors, as has vehicle styling.

"Now that economic and market conditions have improved somewhat, vehicle owners are increasingly citing emotional, rather than practical, reasons for staying with their vehicle brand or switching to a different one," said Raffi Festekjian, director of automotive product research at J.D. Power and Associates. "In light of this, developing new models with attractive styling and that are perceived as fun to drive is increasingly critical for automakers in order to retain and conquest customers as the market continues to recover."

Ford and Honda rank highest in a tie among automotive brands in retaining vehicle owners. Each brand retains 62 percent of owners. Ford's retention rate is primarily driven by the Edge, F-Series and Fusion models, while for Honda, retention is driven by the Accord, CR-V and Pilot. Comparing the two brands, Ford owners are more likely than are Honda owners to indicate they have remained with their brand due to the perception that their new vehicle is fun to drive or has good styling. Honda owners are more likely than Ford owners to cite resale value and safety as reasons for repurchasing the brand.

Following Ford and Honda in the rankings are Hyundai, Lexus and Toyota, in a three-way tie, each with a customer retention rate of 60 percent. Kia posts the greatest improvement in customer retention rate from 2009, improving by 21 percentage points to 58 percent in 2010.

Overall customer retention has remained stable from 2009 at 48 percent. In 2010, 16 of the 34 ranked brands have improved their customer retention rates from 2009, while 14 have declined and four have remained flat.

The study finds that customer retention among domestic brands, as a whole, has improved slightly from 2009. In 2010, 69 percent of owners who traded in a vehicle from a domestic brand purchased another domestic vehicle, compared with 68 percent in 2009. However, retention rates among domestic brands continue to lag behind those of import brands. In 2010, 90 percent of owners who traded in a vehicle from an import brand purchased another import vehicle-a level that has remained consistently high during recent years.

Compared with their retention rates, domestic brands have made more substantial progress during the past two years in conquesting customers from import brands. In 2010, 14 percent of buyers of domestic brand vehicles previously owned an import, up from 10 percent in 2008.

"While import brands still have notably higher customer conquest rates than domestic brands, the gap is beginning to narrow," said Festekjian. "In recent years, domestic brands have achieved parity or even surpassed the performance of import brands in initial quality and new-vehicle appeal, and customer perceptions of these nameplates seem to be evolving accordingly. It will be interesting to see how the performance gains by domestic brands affect retention and conquest rates in the coming years."

The 2010 Customer Retention Study is based on responses from 123,601 new-vehicle buyers and lessees, of which 81,350 replaced a vehicle that was previously acquired new. The study was fielded between February and May and August and October 2010.

link:

http://www.autoblog.com/2010/12/09/ford-honda-lead-latest-j-d-power-owner-loyalty-survey/

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