Toyota no. 1 in customer loyalty, GM close behind

Auto manufacturer's customer retention rates are exclusively ranked.

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By Peter Valdes-Dapena, CNNMoney.com staff writer

2008_scion_xb.03.jpg
2008 Scion xB: Most Scion owners do not return to buy another Scion, but many buy Toyota products.
Automaker customer retention rates
Percentage of new vehicle customers whose previous new vehicle was from the same manufacturer.
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%
DaimlerChrysler 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%
Source:J.D. Power and Associates

NEW YORK (CNNMoney.com) -- Toyota Motor Company does a better job than any car company in America of keeping its customers coming back, according to data from J.D. Power and Assoc. General Motors ranks second in customer retention.

Among recent new car buyers whose previous car was a Toyota, Lexus or Scion 68.9 percent bought another Toyota Motor Co. (Charts) product. That's similar to Toyota's retention rate last year, according to J.D. Power.

Meanwhile, owners of Chevrolet, GMC, Pontiac, Saab or other GM vehicles bought a GM (Charts, Fortune 500) product again 64.7 percent of the time, according to J.D. Power.

That represent's about a three percentage point improvement over last year for GM.

The upward shift for GM likely represents a genuine trend, said Neal Oddes,, director of product research and analysis at J.D. Power and Associates, and not just a blip.

Oddes cited improved quality, in general, and the introduction of several well received products in the last couple of years as factors that are probably driving greater repeat business for GM.

Ford Motor Co. (Charts, Fortune 500) ranks fifth, coming in behind American Honda Motor Co. and BMW of North America. Ford, which makes Ford, Lincoln, Mercury, Jaguar and Land Rover and which owns a controlling interest in Mazda, brings back 54.4 percent of buyers, according to J.D. Power.

Honda of America (Charts) sells Honda and Acura vehicles while BMW sells BMW and Mini.

DaimlerChrysler, which included Mercedes-Benz, Chrylser, Dodge and Jeep, retained a little more than half its customers. DaimlerChrysler split into two separate companies earlier this year.

J.D. Power usually publishes customer retention by brand - for example Chevrolet owners who buy another Chevrolet or Lexus owners who buy another Lexus - in its annual Customer Retention Study which was released Thursday.

In that study, the Toyota and Lexus brands ranked first and second with Chevrolet, the top ranking Detroit-based brand, coming in fifth.

J.D. Power provided CNNMoney.com with additional data that is not usually shared with the public. This data shows how car manufacturers ranked overall, even if customers switched from one of the manufacturer's brands to another. That is the main reason, after all, that car companies have different brands. A customer can trade in a Chevrolet for a Buick, for instance, while remaining a GM customer.

Because of its broad base of vehicle brands, GM does much better - viewed as an overall manufacturer - than does any of its individual brands. Toyota, with its three brands, also does somewhat better overall than any of its brands does on its own.

Generally speaking, smaller car companies have a harder time retaining customers. This is mostly because they have less to offer returning customers whose needs may have changed.

Poor vehicle quality and poor service at the dealership are two other factors that hurt customer retention, said Neal Oddes, director of product research and analysis at J.D. Power and Associates.

Isuzu has the lowest customer retention rate, by far, of any car company in the J.D. Power study. Just 1.6 percent of Isuzu owners bought another Isuzu. The next lowest was Mitsubishi which managed to keep 31.7 percent of owners.

Suzuki improved its customer retention rate by a remarkable 19 percentage points over last year, according to J.D. Power. In 2007, Suzuki retained 39.6 percent of customers, a rate slightly better than that for Volkswagen.

Retaining customers is important for car companies because gaining a new customer costs four times as much, in terms of marketing, as keeping an existing customer, Oddes said.

"The [number of new car buyers] between now and 2014 is not getting any larger," Oddes said, "and there are more products coming in."

That scenario will make maintaining a customer base even more challenging, he said. To top of page

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