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Chevy leads in retaining buyers

GM unit tops in ownership loyalty, with Toyota, Mercedes, Ford and Honda nipping at its heels

By Ed Garsten / The Detroit News



DEARBORN — Otis Williams can’t remember how many Chevys he’s bought, but the retired autoworker has owned several.

And Monday, he kept the tradition alive by turning in a 2001 Blazer sport utility vehicle for a 2004 TrailBlazer.

Williams’ loyalty to Chevrolet isn’t unusual. A study released Monday shows General Motors Corp.’s top-selling brand retains the highest concentration of car buyers, about 61 percent.

Isuzu owners, on the other hand, are the least loyal, opting to return to the Japanese brand just 3.5 percent of the time, according to the inaugural J.D. Power and Associates 2003 customer retention study.

“I get better service out of a Chevy,” said Williams, 79, as he took delivery of the white TrailBlazer at Les Stanford Chevrolet in Dearborn.

“If you need a part or a rim, anything you need, it’s easy to find.”

Ford customers also are quite loyal — thanks in large part to popular F-Series pickups — but those who buy a Jeep or Dodge brand car or truck have roving eyes, the study showed.

Keeping customers in the fold is crucial for automakers facing cutthroat competition in the increasingly crowded U.S. market.

And long-term projections show an erosion of customer loyalty for domestic brands, said J.D. Power’s Joe Ivers.

“If you take this year’s purchase patterns and forecast out five years, domestics would all lose significant market share,” Ivers said.

If so, automakers should take whatever steps necessary, he said, to retain what customers they already have.

“The cost of getting new customers is higher than keeping your own,” Ivers said.

Two up-and-coming Korean brands — Hyundai and Kia — that have not been noted for customer loyalty, are starting to retain customers at a higher rate than the industry average.

The study, conducted between November 2002 and April 2003, is based on responses from 106,418 owners of 2003 models regarding their previous vehicle.

Chevrolet’s retention rate was far above the 49.3 percent industry average, but was closely followed by Toyota at 59.3 percent, Mercedes-Benz at 58.7 percent, Ford at 58.1 percent and Honda at 57.1 percent.

“This is really terrific news,” said GM North America President Gary Cowger in an interview during media previews Monday at the Los Angeles Auto Show.

He said Chevrolet accounts for 66 percent of all GM sales and has an “extremely” high loyalty rate among Chevrolet truck owners.

Chevy’s success at holding onto its customers is mainly due to its wide product line and the fact that GM as a corporation has the highest retention rate in the industry, Ivers said.

“With its rather broad product range, people feel they have someplace to go for their next vehicle,” Ivers said.

Without its wide product line, Chevy might otherwise be caught up in the same maelstrom as other GM brands whipped up by the automaker’s aggressive incentive strategy.

“GM customers abandon one brand for another GM brand because of incentives,” Ivers said.

The lack of product breadth can be costly.

The retention rate for DaimlerChrysler AG’s Jeep brand was just 35 percent because customers said Jeep does not sell the type of vehicle they’re interested in for their next purchase, Ivers said.

A narrow product line also hurt Jeep’s corporate cousins Dodge and Chrysler, which had retention rates of 46.3 percent and 35.3 percent, respectively, Ivers said.

Poor quality was one of the major reasons mentioned by survey respondents for jumping to another brand, regardless of vehicle price or features.

In the case of Volkswagen and Volvo, respondents said they did not repeat their purchases because of too many things gone wrong, Ivers said.

On the other hand, improving quality is helping drive GM’s strong customer retention rate, according to the study.

Improving quality is also a big part of the strong showing for Hyundai and Kia, Ivers said.

One strong factor in retaining customers has nothing to do with the vehicle.

“Sales satisfaction winds up being one of the more influential factors,” Ivers said.

Satisfaction with the purchasing experience is especially important among luxury vehicle customers who don’t forget a bad experience very soon, he said.

For the most part, however, car and truck buyers aren’t a very fickle bunch. About half of all buyers tend to stick with the same brand a second time, Ivers said. Owners of Ford F-series trucks are especially loyal, he said.

J.D. Power results do not square completely with a loyalty study by R.L. Polk last June that showed the Ford brand with the highest loyalty rate at 57.6 percent and GM with the best corporate loyalty rate of 68.7 percent.

The Southfield company will release its full-year loyalty study next week.

You can reach Ed Garsten at (313) 223-3217 or egarsten@detnews.com.