2008 JD Power Loyalty/Conquest Survey: Toyota tops; Saturn struggles

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Loyalty/conquest: Power's best, worst

Index shows domestic brands are struggling
February 25, 2008


Toyota, Lexus, Hyundai, Honda and Hummer are the industry's strongest brands, according to a new set of ratings compiled by J.D. Power and Associates.

The index, which measures 2007 loyalty and sales conquest data, suggests that Ford, Pontiac and Buick are in decline.

Loyalty and conquest rates have long been benchmark measurements. Power's New Customer Ratio blends the two categories, comparing the number of customers leaving a brand with the number of new ones coming in.

"Loyalty is important," Steve Witten, Power's executive director of automotive research, said at the National Automobile Dealers Association convention here this month. "But without looking at the importance of conquest, it belies the true strength of the brand. When below-average loyalty makes up more than half your sales, that's a brand in trouble."

Power says a measurement below 100 in its index indicates that a brand is losing existing customers faster that it can conquest new ones. Only consumers who bought or leased their trade-in vehicle as new are counted in the index.

For instance, the Ford brand has a new-customer ratio of 44 percent. That means it is losing twice as many existing Ford owners as it has new conquests coming in.

Witten said about 53 percent of Ford owners buy another one, considered a healthy loyalty ratio. But that group represents 72 percent of the brand's retail sales.

"Ford is unable to conquest new customers," Witten said.

Toyota has a new-customer ratio of 267 percent, which means it is bringing in nearly three times as many new customers as it has old ones staying put.

Toyota's 65 percent loyalty rating is the industry's best, yet represents just 41 percent of total sales. Its conquest sales are huge. Honda shows similar strong numbers.

The Power data also track the brands defectors go to and the ones conquests come from. Sometimes that information is the most revealing.

Chrysler, Jeep and Dodge show weak loyalty numbers. And they mostly conquest sales from each other, while leaching sales to non-Chrysler brands. Something similar is happening at Mercury, Pontiac and Buick.

A good rating can sometimes be deceiving. For example, Saturn has a 96 percent new-customer ratio, with a 54 percent loyalty rate that represents 47 percent of sales — all healthy numbers.

But Power says Saturn owners defect primarily to Toyota, Honda and Nissan, while Saturn's top three conquest brands are Chevrolet, Pontiac and Ford. Only 13 percent of conquests come from foreign brands. For a brand pegged as an import-fighter, Saturn is not living up to its mission, Witten said.

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