WESTLAKE VILLAGE, Calif.: 8 December 2005 — Lexus leads the industry in retaining the highest percentage of new-vehicle owners, according to the J.D. Power and Associates 2005 Customer Retention StudySM released today.

The study, now in its third year, measures the percentage of new-vehicle buyers and lessees who replace a vehicle that was previously purchased new with a new vehicle from the same nameplate. With a 3.5 percentage-point increase from 2004, Lexus ranks highest, retaining 63.0 percent of its customers. The industry average is 49.6 percent.

Lexus is followed in the rankings by Toyota (62.6%), Honda (59.9%), Chevrolet (57.3%) and Hyundai (56.3%), respectively.

"By satisfying its customers on many different levels, Lexus consistently enjoys high retention rates," said Neal Oddes, director of product research at J.D. Power and Associates. "Customer retention is extremely valuable in the auto industry because it costs manufacturers less to keep existing customers than to attract new ones, and strong retention fosters favorable word of mouth."

Although Suzuki retains just 28.6 percent of its customers, the brand records the greatest improvement, increasing its retention rate by 38 percent from 2003, which was the inaugural year of the study. Acura is also enjoying strong increases in retention rates, improving 25 percent from 2003 to retain 45.7 percent of its customer base in 2005.

"Suzuki has made tremendous strides in better retaining its customers, due partly to the fact that it has expanded its lineup to include more segments of the market, which offers buyers a wider variety of models in different segments as their needs and wants change over time," said Oddes. "Suzuki has also been focusing heavily on quality, improving its performance in the J.D. Power and Associates Initial Quality StudySM by 35 percent over the past five years."

The study finds that quality and customer service experiences play key roles in influencing customer retention. About 23 percent of respondents did not buy a vehicle from the same brand because they felt that too many things went wrong with their previous vehicle. In fact, the nameplates with the fewest customers leaving for this reason also performed relatively well in the J.D. Power and Associates 2005 Vehicle Dependability Study,SM which measures problems experienced during the first three years of ownership.

Experiences with the dealer service and sales departments also have an important impact on whether customers return to the brand when they are in the market to buy a replacement vehicle. Nameplates performing well in the firm’s 2005 Customer Service Index (CSI) Study, which measures satisfaction with the service department, and the 2005 Sales Satisfaction Index (SSI) Study, which measures satisfaction during the new-vehicle sales process, tend to have relatively few customers who cite poor service as a reason for defecting to another brand.

"Although acquiring new customers is an integral part of any OEM’s strategic plan, strong nameplate retention is essential to grow and expand its customer base over time," said Oddes. "Manufacturers cannot underestimate the power of excellent service and short- and long-term quality in convincing their customers to come back to the brand time and again."

The 2005 Customer Retention Study is based on responses from 177,941 new-vehicle buyers and lessees, of which 106,275 replaced a previous vehicle that was originally acquired new.

They say that it's a lot cheaper to keep the customers you have, than it is to grab someone else's. No wonder, then, thatToyota, which makes more profit than any other automaker, tops J.D. Power's Customer Retention Study.

The Japanese automaker's flagship Toyota brand topped its Lexus luxury brand in the annual survey, which measures the percentage of new vehicle buyers and lessees who replace a vehicle with another from the same brand.



Power said overall industry customer retention fell slightly to 47.9 percent, from 49.6 percent in 2005. Among the reasons cited were aggressive incentive marketing by automakers, and more brand-changing based on price.



"Declining customer loyalty results from considerable improvements in quality, combined with a plethora of choices for consumers," said Neal Oddes, director of product research and analysis at J.D. Power.



Toyota scored an impressive 63.9 percent retention rate. Honda retained third place with 60.3 percent retention. GM's Cadillac ranks highest among American brands and sixth overall, with a 55.5 percent retention rate. The automaker's Chevrolet brand ranked seventh, with a 55.3 percent rate. A lot of that is due to high loyalty among Chevy pickup truck buyers.



In yet another bell-toll for the U.S. auto industry, of the twelve brands that ranked above the industry average of 47.9 percent, only three were American, including Ford.



The biggest one-year gain among brands goes to Suzuki, which achieved a 23-percent gain in customer retention. The Japanese automaker has upped its advertising spending and especially its direct marketing to its own customers, as well as expanded its product line.



The survey is based on responses from more than 138,000 new vehicle buyers and lessees, of which 82,274 replaced a vehicle that was previously acquired new.