Number of Automotive Recalls Impacts Owner Loyalty;Mercedes-Benz and Toyota Motor Sales Have FewestRecalls.

Business & Automotive Editors

DETROIT--(BUSINESS WIRE)--Oct. 18, 2000

The Polk Company revealed today a study showing that it takes more than one recall to undermine the loyalty of customers for their favorite vehicle brands.

In fact, loyalty stands firm until a customer experiences three or more recalls, and then customer loyalty quickly erodes. Polk found that in light of the recent rash of recalls in the automotive industry, it is vitally important for a manufacturer to keep the number of recalls per customer at a low level to avoid future loss of its customer base. When a customer experiences three or more recalls, special consideration should be given to boost loyalty.

The Polk study compared loyalty of consumers affected by manufacturer recalls with the loyalty of those who were not. Data was gathered through a survey research study conducted with a sample of new vehicle buyers during the first six months of the 2000 model year. It showed that, for new-vehicle buyers on average, loyalty to the previous manufacturer decreased by 9 percent for owners affected by a third or fourth recall and by 16 percent for those with five recalls or more.

       Impact of Number of Recalls on Manufacturer Loyalty Rate

Number of Previous Vehicle Recalls       Loyalty %
                                        ----------
No recalls                                 57%
One recall                                 57%
Two recalls                                56%
3-4 recalls                                52%
5 or more recalls                          48%

      Source: Polk Manufacturer Loyalty Excelerator(TM), 2000 Model
Year, First Six Months

"We can surmise from this that consumers are willing to tolerate mistakes, as long as they are taken care of immediately, honestly, and with minimum disruption," said Karen Piurkowski, Polk's managing director of Loyalty. "Having one or two recalls does not necessarily drive owners to defection, but as the number of recalls increases, consumer confidence decreases."

Although Ford Motor Company has been the focus of press attention over the past several months, the Polk study showed that owners of cars from most major manufacturers are experiencing recalls. In fact, more than four out of every ten owners who purchased new vehicles during the first half of the 2000 model year claimed they had a recall on their previous vehicle.