Big three US carmakers gain on Japanese

May 6,2001; Jeremy Grant writing for FT reports that General Motors, Ford and DaimlerChrysler, the three largest US carmakers, received a boost on Tuesday when a respected US survey of vehicle quality showed that the carmakers were, by some measure, continuing to narrow the gap with their Japanese rivals.

The development comes as the Detroit "big three" battle to reverse years of steady declines in their North American market share as Toyota and Honda of Japan have increased theirs by building better quality vehicles.

GM's aggressive use of financing incentives - such as "zero per cent" loans - has been as much an attempt to attract consumers who had defected to Japanese brands in recent years back into GM showrooms as it has been to generate much-needed cash.

J D Power & Associates said in its annual survey of "initial quality" that Toyota of Japan came top for the fifth consecutive year, with its luxury car Lexus offering the best performance of all vehicle types. Initial quality measures the number of problems car owners said they have experienced in the first 90 days of ownership. Detroit's carmakers still lag their Japanese rivals on long-term quality.

Toyota scored 115 problems per 100 vehicles surveyed, compared to DaimlerChrysler, which scored 134. Toyota's Lexus was the best performing vehicle brand.

GM maintained its leadership among the "big three" by coming fifth overall but losing ground slightly compared to last year. The world's largest carmaker has spent recent years implementing elements of Toyota's so-called "lean manufacturing system" at its North American plants.

However, Ford performed best of the Detroit carmakers, overtaking DaimlerChrysler and improving its performance by 5 per cent in a market where overall there was no noticeable improvement on average.

"What this suggests is that, while the industry is flat, they are improving and closing the gap on the domestic leader [GM]," said Brian Walters, director of product research at J D Power.

Lost market share due to poor quality was one of the main reasons why Ford reported a $5.45bn loss for 2001. It has made significant progress with a $9bn restructuring plan, which includes a renewed focus on quality.

Mr Walters said that the US carmakers had shown a 26 per cent improvement in their initial quality scores since 1998, compared to a 23 increase by the Japanese and an industry average of 24 per cent.

South Korean carmakers, such as Kia and Hyundai, showed a significant jump in quality ratings, underscoring rapid progress the carmakers are making in the US, where they started selling vehicles in the 1990s.