December 10, 2004

Toyota owners most likely to buy another Toyota

Westlake Village, California – In the United States, Toyota has the highest number of owners who purchase another model in the Toyota brand when they purchase a new vehicle, according to the J.D. Power and Associates 2004 Customer Retention Study released Thursday.

The study, now in its second year, finds that while nearly one-half of vehicle owners overall purchase another vehicle from the same brand, Toyota retains 60.6 percent of its owners. The replaced models that drive Toyota’s high retention rates include the Camry Sedan (64.8%), Corolla (64.5%), Sienna (68.6%), Highlander (68.4%) and Tundra (64.8%).

Toyota is followed in the ranking by Lexus, which retains 59.5 percent of its owners, and Chevrolet, with a customer retention rate of 58.9 percent.

“Not only does Toyota offer its owners a wide range of vehicles to move up to as their financial means and stage in life change, but also the brand is highly successful in attracting new customers to the lineup, due in large part to its strong reputation for vehicle quality and high vehicle resale values,” said Neal Oddes, director of product research at J.D. Power and Associates. “The redesigned Sienna minivan has been particularly successful in capturing former owners of Plymouth Voyager, Honda Odyssey, Dodge Caravan, Mazda MPV and Oldsmobile Silhouette models.”

In addition to measuring retention rates, the study also analyzes the reasons consumers defect from the brand they own and are captured by other brands when they purchase a new vehicle. An important factor in defection is based on owners’ experiences with their previous vehicles. Owners often defect from their brand because they had problems with long-term durability, high maintenance costs or poor experiences with dealer service. Conversely, brands are often able to capture new customers with attractive rebates and incentive offers, better vehicle styling, more cargo capacity, high resale value and better fuel economy.

The study finds that brands such as Toyota and Honda not only maintain high retention rates, but also capture more customers from other brands than they lose. For every one customer Toyota loses, it captures six from other brands. Honda gains four customers for every one it loses.

“Subaru is an example of a brand that maintains relatively high levels of customer retention, yet currently captures fewer new customers than it loses to other brands,” said Oddes. “While Subaru has been successful in attracting new customers with the Forester, it will need to rely heavily on the new models it is introducing over the next few years to offset the defection rate to other brands and to establish a healthy longevity for the brand.”

The 2004 Customer Retention Study is based on responses from more than 171,000 new-vehicle buyers and lessees, of which 103,088 replaced a vehicle that was originally purchased new.

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