• by Karl Greenberg , December 11, 2009

Buyers of new cars and trucks are much more conscious these days of the value and quality of the vehicles they buy, since their dollars are not going as far as they used to. Value and quality are driving brand loyalty as they never have, according to J.D. Power, whose latest Customer Retention study puts Mercedes-Benz on the top of the list when it comes to owners who stay with the brand.

The study, in its seventh year, measures the percentage of vehicle owners and lessees who replace a previously purchased new vehicle with another from the same brand. One of the findings is that this year, the importance of resale value as a reason for owner loyalty has increased by 12 percentage points, and the importance of vehicle quality has increased by 6 percentage points. Last year, the biggest increases among the reasons consumers stay loyal to a brand were in the areas of safety, fuel economy, and deals and incentives.

The firm says resale value, quality and appearance, and styling have also increased in importance as reasons why brands conquest new customers from their competitors.

In the study, based on responses from 128,939 new-vehicle buyers and lessees this year, Mercedes-Benz saw its retention rate increase by eight percentage points to 67%. The brand was followed by Honda at 64% retention and Toyota at 61%.

"Mercedes-Benz has steadily improved its customer retention rates during the past five years, and in 2009, has achieved the highest rate ever attained by a manufacturer since the inception of the study," said Raffi Festekjian, director of automotive product research at J.D. Power and Associates. "In particular, customers cite the resale value and appearance and styling of Mercedes-Benz models as primary reasons to remain loyal to the brand."

According to J.D. Power, total customer retention in 2009 across all brands has remained the same as last year at 48%: thirteen of the 36 ranked brands have improved in customer retention rates from 2008, while 20 have declined and three have remained stable.

The firm says BMW's Mini unit and Porsche -- which both saw loyalty rates improved by 14% this year -- posted the biggest improvements in retention. J.D. Power says Mini's improvements were driven by incentives and customer perceptions of resale value of the brand's models. For Porsche, per the firm, the increase is due to resale value, fuel economy and quality.