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12/08/07 J D Power Customer Retention Trends, 2004-2007With new-vehicle sales falling, automakers need to retain existing customers to hold or grow market share. New customers are expensive to acquire, costing four times as many marketing dollars as keeping an existing customer New car buyer demographics are unfavorable, new-vehicle sales to 2014 are predicted to grow by only 8%. The US economy for 2008 is best described by (shhhh, don't say it) the "R" word. Bad boy, you just said recession. Meanwhile, the Chinese, Indians, Thais, and Australians are rushing product to market. Customer retention, using the brand stepping-stone model, built General Motors in the American century. But today, retaining a customer through downward social mobility is as important as the up-trader from Chevy to Pontiac to Buick was. At texas-cars-and-dealerships.com, customer retention is considered the single most important metric for evaluation of automobiles in the marketplace. Forget industry sponsored media reviews. Poor vehicle quality and service at the dealership will show up best where people are voting with funny little pieces of green paper with pictures of dead presidents. Don't ask me why millions of people think this rapidly depreciating fiat currency is worth anything. But car customers also vote with their feet, deserting any brand that lets them down. So I look to the annual J D Power Retention Study, conducted since 2003, for shifts and trends that guide my thinking about brand quality. J D Power's Customer Retention Study reports the percentage of new-vehicle buyers and lessees who return to buy another car of the same brand. Manufacturer Retention Scores Toyota Motor Sales USA, Inc. 68.9%General Motors Corp. 64.7%American Honda Motor Co. 63.3%BMW of North America 56.9%Ford Motor Co. 54.4%Subaru of America, Inc. 51.2%Hyundai Motor America 50.9%Daimler-Chrysler 50.2%Nissan North America 47.6%Maserati North America, Inc. 41.9%Porsche Cars North America 41.6%American Suzuki Motor Corp. 39.6%Volkswagen of America 38.8%Kia Motors America 32.8%Mitsubishi Motors North America Inc. 31.7%Isuzu Motors America, Inc. 1.6%Brand Loyalty Scores Taken alone, the 2007 rankings snapshot tells us much about brand quality. But by looking at all five years of data, trends are easier to spot. Year over year fluctuation often represent new product success or failure, but five year trends speak volumes. Listed below are the 2007 brand rankings, with 2007, 2006, 2005, 2004, and 2004 percentile scores, and comment. Toyota 64.6%, 63.9%, 62.6%, 60.6%, 59.3%Lately Toyota Motor (TM) has been getting bad press about quality gaffs and bogus green image. Dealer arrogance has become widespread. I wondered if big T's customer retention numbers would slip. But Toyota retained its brand leadership for 2007, up seven tenths of a percentage point from 2006. Lexus 63.0%, 63.2%, 63.0%, 59.5%, 55.5% Honda 62.8%, 60.3%, 59.9%, 55.2%, 57.1%, The little engine that could. BMW 58.0%, 56.5%, 50.0%, 51.4%, 50.1%, Steady gains. Chevrolet 56.8%, 55.3%, 57.3%, 58.9%, 60.8%, Was #1 in 2003. Mercedes-Benz 56.6%, 53.6%, 52.6%, 51.6%, 58.7% Ford 52.9%, 53.3%, 54.0%, 54.5%, 58.1%, Slip slidin' away. Cadillac 52.8%, 55.5%, 53.0%, 52.8%, 52.9%, Maybe CTS Car-of-the-Year will help. Subaru 51.2%, 51.1%, 51.4%, 50.8%, Slow and steady. Hyundai 50.9%, 51.6%, 56.3%, 57.6%, 54.3%I keep saying the Koreans have peaked, and should be reinforcing the base product instead of trying to upscale the brand with the V8 rear drive Genesis. Dropping from earlier ranks adds to the proof. And see Kia, Yikes! Industry Average 48.8%, 47.9%, 49.6%, 48.4%, 49.3% Nissan 47.3%, 48.8%, 48.5%, 42.3%, 40.6%, Shows improvement. GMC 45.7%, 41.4%, 46.1%, 44.1%, 42.3% Saturn 45.7%, 40.4%, 42.7%, 50.2%, 45.4% HUMMER 44.0%, 44.5%, 48.6%, --- Lincoln 43.0%, 37.3%, 35.7%, 35.7%, 44.0% Jeep 41.8%, 40.5%, 39.9%, 38.3%, 35.0%, Four door Wrangler helps uptrend. Porsche 41.6%, 46.5%, 44.4%, 41.8%, 40.4% Acura 41.1%, 37.6%, 45.7%, 39.8%, 36.6%, Lack of V8 hurts the luxury Honda. Audi 40.8%, 35.6%, 38.1%, 46.0%, 44.2% Dodge 40.1%, 40.1%, 44.7%, 45.0%, 46.3%, Slow erosion. Suzuki 39.6%, 43.9%, 28.6%, 31.4%, 20.7%, Best 5 year improvement. Buick 37.8%, 39.9%, 41.8%, 44.4%, 46.5%, Slow starvation of dealer net underway, no new product. Mercury 35.6%, 31.9%, 35.1%, 34.4%, 33.6%, zzzzz..... Infiniti 33.6%, 29.0%, 31.0%, 31.4%, 36.5%, Slick G-series supports company, but few customers advance to big sedans or SUVs. Saab 33.5%, 33.4%, 29.6%, 30.5%, 39.3% Volvo 33.0%, 35.5%, 37.1%, 39.3%, 31.9% Kia 32.8%, 42.8%, 46.1%, 50.9%, 49.9%, Ten percent one year drop, minus 20% over five years, Hyundai-Kia needs to regroup! Volkswagen 32.5%, 35.5%, 29.3%, 33.7%, 37.1%, Can VW cure boring? Chrysler 31.9%, 38.2%, 42.5%, 39.5%, 35.3% Mitsubishi 31.7%, 30.5%, 25.2%, 31.8%, 36.7% Land Rover 31.1%, 41.2%, 37.9%, 41.3%, 44.3%, For sale sign drains luxury cachet. Mazda 31.1%, 26.8%, 23.4%, 23.1%, 22.2%, Steady improvement. Scion 30.8%, 56.3%, ---, The kids move up to Toyotas. Pontiac 27.8%, 27.8%, 28.2%, 33.5%, 35.3%, See Buick. Jaguar 24.5%, 29.8%, 37.1%, 48.3%, 48.0%, 45.5%, Owch! Latest news is dealers protest planned sale to consortium from India car industry. MINI 21.1%, 32.4%, 40.4%, ---, Where can buyers go when the family gets too big for a Mini? Watch for restyled Mini to gain weight. Isuzu 1.6%, 4.7%, 4.2%, 7.0%, 3.5%, Goodbye, fare well, adios, hasta la vista.
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