The Mediating Role of Customer Satisfaction in Customer Retention Model: A Case of Local Automobile Brands in Malaysia

The automobile industry in Malaysia is facing increasing competition from foreign makes.
Local automobile manufacturers, namely Perodua and Proton, are thus losing their market
share. With such rapid decline in sales, it is important to ascertain the needs of customers
in determining the predictors of repurchase intention of vehicles. This research seeks to
examine the mediating role of customer satisfaction and to investigate the relationship
of perceived service quality, product quality, price fairness, satisfaction, and repurchase
intention. Multistage cluster sampling method was employed first in the Klang Valley
before extending to a few selected authorized service centres. 200 samples were collected
and data was analysed using SMART PLS 2.0 to build and assess the structural equation
model of the relationships between the constructs. The results show that perceived service
quality has no significant relationship with repurchase intention. However, perceived
product quality, perceived price fairness and customer satisfaction are important factors
that influence customers’ repurchase intention. Customer satisfaction also mediates the
relationship between perceived product quality and perceived price fairness towards
repurchase intention.