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Power: Initial Quality All-Time High


subscribeNew car quality has hit an all-time high, with all but a handful of manufacturers making significant gains in the 2004 J.D. Power Initial Quality Survey.

The oft-quoted annual report, released today, delivers some unexpected surprises, showing how difficult it’s become for any carmaker to dominate the quality charts anymore. Undoubtedly the biggest shocker comes from Korea. Long the industry laggard, Hyundai has soared past the traditional quality leader, Toyota. And even the Japanese automaker’s premium brand is now getting some stiff competition — from Buick.

For 2004, Power’s IQS reveals an 11-percent reduction in the number of problems the typical U.S. new car owner reported when compared to the 2003 survey. That is a positive development, especially as the quality numbers showed no gains in the previous two years.

“This is one of the more significant improvements we’ve seen,” noted Power senior analyst Brian Walters.

What went wrong, Japan?

The IQS is a measure of what can be called “things gone wrong.” That can include major problems, such as a blown engine, as well as more minor matters, including poorly placed cupholders. The survey counts up the number of problems participating owners experienced during the first 90 days of ownership, grouping them into nine separate categories. The final figure is calculated in terms of problems per 100 vehicles, or PP100s. Like golf, this contest goes to the lowest score.

And over the decades, the Japanese have consistently delivered industry-leading quality. This year, their products had a score of 111 PP100s, compared with 119 for the industry as a whole. Among individual manufacturers, Lexus was the brand to beat, with a score of 87, meaning less than one problem per vehicle.

Yet the Japanese do not dominate like they have in the past. Some key manufacturers tumbled. Nissan slipped 11 percent, driving it down to the lower tier of the 36 manufacturers Power ranked. Then there’s Toyota, the company that first taught the industry the concept of initial quality. In the 2003 survey, the flagship Toyota brand actually suffered a seven-percent decline. It recovers in 2004, its initial quality gaining 14 percent, to 104 problems per 100 vehicles.

Hyundai stuns, Europe falls

But Toyota’s gains weren’t enough to overcome the most stunning come-from-behind performance of the year. With what Walters called a “surprising” 29-percent improvement, Hyundai sees its problem count drop to 102.

Until recently, Korean makers have anchored the IQS and other quality surveys. In 1998, when Power redesigned the Initial Quality Survey, they had a score of 272, nearly double the problems of the Japanese, at 156. This year, they surge to second place, with a group score of 117 PP100s, comfortably ahead of both Europeans and American automakers.

That underscores just how rapidly things are changing. In 1998, the Europeans, as a group, edged out the Japanese, led by luxury industry stalwarts Mercedes-Benz and BMW. Mercedes has had a number of serious quality problems in recent years, though it does show signs of a turnaround in the 2004 IQS, its score improving 20 percent.

Luxury makers regularly outscore mainstream brands, as one might expect. With a score of 87 this year, Lexus has again proven the brand to beat on the IQS, but several of its competitors are edging closer. Cadillac delivers a count of 93 problems per 100. And with several specific products, another General Motors division nudges even closer to Lexus territory. The Buick Century, which Walters described as “one of the best models in the industry,” comes in with 63 PP100.

Individual products can make — or break — a manufacturer’s overall score, as Porsche painfully discovered. Its 911 is the top-quality nameplate in the Premium Sports Car category, but overall, Porsche experiences a 36-percent decline, to 159 PP100s, due to the troubled debut of its Cayenne SUV.

“In the past, it was always a risk to buy a new vehicle,” said Walters, yet despite the Cayenne’s problems, “Our data now show there’s less of risk in buying a vehicle its first year out on the market.”

F-150 gets better

Among the new or significantly updated products covered in the 2004 IQS, the decline in quality is a modest 3 problems per 100. And several new vehicles actually improve, underscoring the basic tenet of the IQS, said Walters, that quality needs to be designed into a vehicle, not fixed at the end of the assembly line.

Perhaps the most striking example of that is the all-new Ford F-Series pickup. The 2004 F-150 comes a close second to Toyota Tundra, tying Cadillac’s Escalade EXT for second in the Light-Duty Full-Size Pickup category. Ford’s new truck edged out the “classic” F-150, which remains in production, by 1 PP100.

While Detroit automakers may be stuck in last place on a regional basis, domestic automakers have plenty to crow about with products like the new F-Series, the Buick Century and Chevrolet’s Monte Carlo — second among premium mid-size sedans, and ahead of both the Toyota Camry and Honda Accord.

American makers, unfortunately, also have some of the worst products on the new IQS, however. HUMMER anchors the list, at 173 problems, though that is still up 23 percent from the 2003 survey.

There was a time when the typical American motorist could expect to endure a whole series of problems with a brand-new automobile. These days, even the worst models on the IQS list are relatively problem-free. Some defects, such as blown engines and transmissions, have virtually vanished from the survey forms owners fill out for Power.

In a way, that’s making the IQS almost irrelevant. “It’s so darned close, it doesn’t have the same impact it did ten or twenty years ago,” suggested Louise Goeser, the executive in charge of Ford Motor Co.’s quality campaign.

Power analyst Walters does not disagree. As cars get better and better “out of the box,” the focus is shifting towards long-term reliability — which Power measures in another survey. After three years in service, there are still some distinct differences between the best and the worst manufacturers, though even there, quality continues to show significant gains.

And that’s good news for American motorists.

2004 IQS Results:

Lexus 87

Cadillac 93

Jaguar 98

Honda 99

Buick 100

Mercury 100

Hyundai 102

Infiniti 104

Toyota 104

Mercedes-Benz 106

Audi 109

BMW 109

Oldsmobile 110

Volvo 113

Acura 117

Chevrolet 119

IND. AVERAGE 119

Chrysler 120

Dodge 121

Lincoln 121

Pontiac 122

Subaru 123

GMC 127

Ford 130

Mitsubishi 130

Saab 133

Jeep 136

MINI 142

Land Rover 148

Saturn 149

Suzuki 149

Kia 153

Nissan 154

Mazda 157

Scion 158

Porsche 159

Volkswagen 164

Hummer 173

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