An examination of the effects of quality on customer loyalty: the automobile industry in Taiwan

Abstract

One prominent difference between the automobile industry and service industries lies in the former's products being durable goods with a relatively long useful life. According to the data published by Taiwan's Ministry of Transportation and Communications, automobiles in Taiwan sustain an average useful life of around 10 years. The study focuses on examining the effect of quality on customer loyalty (CL) in Taiwan's automobile industry and exploring how quality may influence other factors affecting CL. Based on structural equation modelling, the study strives to analyse the effects of both product quality (PQ) and service quality (SQ) on CL so as to identify the deciding factors shaping CL in Taiwan's automobile industry. Results indicate that neither PQ nor SQ exerts direct influences on CL. Enhanced customer satisfaction, however, does have an indirect influence on strengthening CL. Moreover, using demographic characteristics to analyse the concerned variables, the study finds that CL is  influenced by ‘family composition’ and ‘lifestyle’.

Keywords:

• structural equation modelling
• product quality
• service quality
• customer satisfaction
• customer loyalty