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Market Insight: Hyundai on top for customer retention

Changed perception: JD Power reports that Hyundai's industry-high vehicle retention rate in largely driven by new models such as the Elantra.

Return buyers put Korean brand on top in America, ahead of Ford and Honda

Market Insight logo23 Jan 2012

HYUNDAI owners are more likely than those of any other car to buy the same brand again, according to a new study in the United States.

The ninth annual customer retention study, released by JD Power and Associates last week, found that Hyundai ranked highest among 33 automotive brands and improved its retention rate in the past two years to 64 per cent.

That placed the Korean brand clearly ahead of Ford and Honda (60 per cent), followed by BMW and Kia (59 per cent).

Former champion Toyota dropped another place to sixth with 58 per cent compared to its table-topping 64.6 per cent of four years ago.

Toyota’s luxury brand Lexus (54 per cent) dropped six percentage points in just a year to slide from equal third (with Hyundai) last year to ninth place, behind Chevrolet and Mercedes-Benz.

Some surprising names in the bottom half of the ladder included Audi (45 per cent), Porsche (42 per cent), Mazda (which dropped from 37 to 34 per cent), Volvo (30 per cent), Chrysler (26 per cent) and Suzuki, which finished second-last (beating only doomed Saab) with 20 per cent.

128 center imageFrom top: Hyundai Sonata (i45), Veloster, ix35 and Azera.

Jaguar finished well down the list, but almost doubled its retention rate from 16 to 31 per cent.

According to JD Power director Raffi Festekjian, one in three new-vehicle owners who switched brands say their previous brand did not make the type of vehicle they wanted, indicating that striking the right combination of model offerings and vehicle appeal is critical to retaining customers.

Other key reasons for switching brands relate to dissatisfaction with the previous vehicle, including maintenance costs dependability issues and resale value.

“Many automotive brands are expanding their array of models in an attempt to capture more buyers, but this isn’t enough in and of itself,” said Mr Festekjian.

“Manufacturers need to integrate specific attributes and features that delight vehicle owners to maximise their opportunity to both retain customers and conquest from other brands.

“Manufacturers also need to ensure owners are satisfied with the quality, residual values and ownership costs of their vehicles.”

JD Power reports that Hyundai’s industry-leading retention rate is primarily driven by its Elantra and Sonata models.

“Hyundai’s increased retention rate is shaped by its expanding model line-up, as well as the fact that perceptions of the brand’s quality and appeal have continued to improve during the past decade,” said Mr Festekjian.

Hyundai Motor America sales boss Dave Zuchowski said he was delighted with the level of brand loyalty by Hyundai owners.

“Once they experience the styling, comfort and value of Hyundai vehicles, it’s no surprise that they elect to stick with the Hyundai brand,” he said.

“We are thrilled that our vehicles and our dealers are earning the respect and loyalty of our customers.”

In the past year, 19 of the 33 ranked brands improved their customer retention rates, while 14 declined.

The study of 117,000 buyers also found that women and younger vehicle owners (those in the Generation Y and Generation X demographics, between ages 23 and 47) are less likely to choose the same vehicle brand for their next purchase, compared with men and older owners.

“Women and younger vehicle owners are more likely to experience changes in their life circumstances, including growth in household size or changes in income levels, that would lead them to purchase vehicles that better accommodate their new lifestyle,” said Mr Festekjian.

He said the brands that perform particularly well in retaining women customers include Honda, Hyundai, Kia and Mercedes-Benz, while Ford, Kia, Lexus and Mercedes-Benz do best with Gen Y and X.

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