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A fun car steers brand loyalty, study shows

Thu, 09 Dec 2010

Car buyers stick with their current brands if the automaker builds fun-to-drive vehicles, a customer-retention study revealed.

The J. D. Power and Associates report found that buyers are putting less stock in resale value as a reason for brand loyalty.

The number of survey respondents citing fun-to-drive vehicles as a reason to stay with their current brands rose 8 percentage points in 2010 from the 2009 survey. At the same time, the importance of resale value among car owners fell 10 percentage points.

"Vehicle owners are increasingly citing emotional, rather than practical, reasons for staying with their vehicle brand or switching to a different one," said Raffi Festekjian, research director at J. D. Power and Associates.

Not only do fun rides help brands keep customers, the study found, but they also enable them to steal buyers from their competitors. Vehicle styling has also become more important to car buyers, according to the study.

Ford and Honda tied for the lead in retaining the most customers this year--each keeping 62 percent of buyers. The study showed that Ford can primarily thank the Edge, the F-Series and the Fusion for customer appeal and that Honda's high retention rate was fueled by the Accord, the CR-V and the Pilot.

Hyundai, Lexus and Toyota tied for third place in the rankings, with 60 percent customer retention. Kia showed the greatest improvement in loyalty rates, rising 21 percentage points from 2009 to reach 58 percent.

Retention among domestic brands has slowly improved in the past few years, although import brands continue to keep the most customers.

In 2010, 90 percent of owners who traded in a vehicle from an import brand bought another, whereas 69 percent of owners who traded in a domestic vehicle stayed with a domestic. This pattern remains steady from recent years.

By Michelle Koueiter