There’s a reason that four of the top 10 TV ad buyers are car companies. Spending on advertising is an investment in future sales, and keeping a customer is much cheaper than winning over a new one. A new report out Wednesday from research firm J.D. Power underscores the link between an automobile brand and its best customers.
For carmakers and dealers, customer retention has received the most attention since the COVID-19 pandemic led to stay-at-home directives beginning in early March. For automobiles, customer retention and brand loyalty are built on factors ranging from the purchase experience to how much they like to drive the vehicle, according to J.D. Power Vice President Tyson Jominy.
The U.S. auto industry faced a double-whammy during the lockdowns. Factories were shut down to slow the spread of the infection among workers. That led to a shortfall in dealer inventory of popular models. Customers who needed or wanted to purchase a new vehicle also needed help with financing. Overcoming those two issues was an opportunity to “build consumer confidence in their chosen brand and [to] repurchase it in the future,” Jominy said.
In its second U.S. Automotive Brand Loyalty Study, J.D. Power uses data from its Power Information Network to calculate whether a new car buyer purchased the same brand after trading in a vehicle of that brand. The firm based its customer loyalty score on that calculation for new vehicle purchases between June 2019 and May 2020.
The overall brand leader in customer loyalty is Subaru with a loyalty rate of 60.5%. This is the second year that Subaru has finished on top in both the mass market and overall industry categories. The top scorer in the Luxury segment was Lexus, also for a second straight year. The luxury brand from Toyota Motor Corp. (NYSE: TM) posted a rate of 48.0%.
The highest-ranking U.S.-made luxury brand is the Ford Motor Co.’s (NYSE: F) Lincoln, with a loyalty rate of 37.0% for a ninth-place finish. General Motors Co.’s (NYSE: GM) Cadillac brand finished tenth with a score of 33.8%.
Among mass-market brands, Toyota finished in second place, close behind Subaru with a loyalty rate of 60.3%. Honda, from Honda Motor Co. Ltd. (NYSE: HMC), finished third with a score of 58.7%, while Ram brand trucks from Fiat Chrysler Automobiles N.V. (NYSE: FCAU) finished fourth with a loyalty rate of 57.3% and Ford ranked fifth with a rate of 54.3%.
For car buyers concerned that a new vehicle in the driveway may be a magnet for car thieves, here’s a look at the most commonly stolen cars in each state.