Daily Research News Online no. 3106 - Koreans Lead Global Vehicle Quality Improvements

Koreans Lead Global Vehicle Quality Improvements

May 5 2004

For the first time, Korean-branded vehicles outpace both European and US in initial quality, according to the recent J.D. Power and Associates 2004 Initial Quality StudySM (IQS). However, manufacturers from most countries and regions performed well with more than 80% of nameplates improving on their 2003 scores, and problems down 11 percent overall.

The 2004 Study is based on responses from more than 51,000 purchasers and lessees of new 2004 model-year cars and trucks, who were surveyed after 90 days of ownership. The IQS is now in its 18th year.

The industry average stands at 119 problems per hundred vehicles ('119 PP100') - the fewest problems since the study was redesigned in 1998. Among the 169 models included in both the 2003 and 2004 IQS, 129 (76%) have registered an improvement, while 35 (21%) have declined and five (3%) remain unchanged.

In 1998, initial quality among the Korean-branded vehicles trailed the industry-leading European-branded nameplates by a distant 116 PP100. Since then, led by Hyundai, manufacturers have cut initial quality problems by 57 per cent, from 272 PP100 to just 117 PP100 in 2004. The Koreans now lead the Europeans by 5 PP100 and the (US) Domestics by 6 PP100, and trail the Japanese by just 6 PP100.

Joe Ivers, partner and executive director of quality/customer satisfaction at J.D. Power and Associates, says that Korean manufacturers' success over the last decade in ditching their 'universally poor reputation for vehicle quality' is good news for consumers, demonstrating that the market has become vastly more competitive.

'When we started tracking initial quality more than a dozen years ago, the industry said this level of quality wasn't possible and that it would cost too much', continues Ivers. 'Yet, automakers could not ignore the warranty savings due to quality, as well as the impact quality has on consumer buying decisions. Even at this historically low level of initial quality problems, the ongoing quality improvements of new vehicles will continue to have a significant impact on the industry - affecting as many as one-third of new-vehicle purchases'.

In terms of individual manufacturers, Toyota Motor Sales, USA, Inc. maintained its no.1 ranking, followed by American Honda Motor Co. and Hyundai Motor America in a tie, and by BMW of North America, respectively. General Motors, DaimlerChrysler and Ford continue to improve but remain below the industry average in the rankings.

Lexus set a new IQS record with its Lexus SC 430, which is the best-performing model in the IQS history, scoring just 44 PP100. Lexus remains the top-ranked nameplate, despite a 14 percent decline in initial quality, with four models receiving awards. Lexus is followed in the nameplate rankings by Cadillac, Jaguar, Honda, and Buick and Mercury in tie, respectively.

Thirty out of 37 nameplates have improved IQS scores from 2003. Hyundai, which jumps an impressive 16 rank positions from 2003, makes the most significant advancement, improving 29 percent year-over-year to rank seventh. Between 1998 and 2004, Hyundai has improved by 62 percent - more than any other nameplate and nearly twice the industry average of 32 percent. Other nameplates reporting significant initial quality improvement in 2004 include: Honda (23%), HUMMER (23%), Land Rover (22%), Jaguar (20%) and Mercedes-Benz (20%).

The J.D. Power and Associates 2004 Vehicle Dependability Study, which measures quality after three years of ownership, will be released in late June.

IQS also gives Assembly Plant Awards, won for the third consecutive year by Toyota's Tahara, Japan, car plant, which produces the Lexus GS 300/GS 430 and the Lexus LS 430 and scored 53 PP100.

Defects and malfunctions, and safety-related areas, are responsible for much of the overall improvement, the other areas measured by the IQS being quality of workmanship, drivability and human factors in engineering (i.e. ease of use).