Hyundai Up, Nissan Falls in Quality Study

DETROIT April 28, 2004; Michael Ellis writing for Reuters reported that Korea's Hyundai Motor Co. Ltd. has improved the quality of its cars to match the best Japanese models, while Nissan's new made-in-America trucks and SUVs suffer more glitches than average, the latest J.D. Power study said on Wednesday.

Hyundai was the most improved automaker in the annual benchmark study on initial quality during the first 90 days of ownership, while Japan's Nissan Motor Co. Ltd.Motor Co. Ltd. and Germany's Porsche AG dropped sharply in the poll due to problems with new vehicles.

The Big Three U.S. automakers made some gains in quality but remained in the middle of the pack, while Germany's Porsche tumbled from second place last year to last place this year, J.D. Power and Associates said.

"Hyundai has done its homework and really understands the U.S. consumer," said Brian Walters, senior director of vehicle research with J.D. Power, which conducted the vehicle quality study. "What Hyundai has gone through is really no different from what the Japanese carmakers went through," with quality problems in the 1970s.

Hyundai leaped from 10th place on last year's list into a tie for second this year. Its vehicles had an average of 102 problems per 100 vehicles, tying Honda Motor Co. Ltd. for second and trailing only Toyota Motor Corp., which again topped the list with only 101 problems.

Hyundai has cut its quality problems by 57 percent over the past six years, from 272 problems per 100 vehicles in 1998.

That same year, Hyundai began offering a 10-year warranty on its engines and transmissions to convince consumers that its quality was improving.

General Motors Corp., Ford Motor Co. and DaimlerChrysler AG ranked slightly below average in vehicle quality. All made gains and some had some brands and vehicles that ranked near the top.

Overall, the industry had 119 problems per 100 vehicles, down from 133 last year, indicating that the automotive industry is making strides at improving quality.

"Virtually every nameplate improved and nearly three-quarters of models," Walters said.

PRODUCT PUSH

Although Toyota has long been a quality leader, its new Scion brand of low-priced cars for young buyers ranked near the bottom with 158 problems per 100 vehicles. Scion cars were only sold in California during the study period, and Walters said consumers there may have different expectations than buyers in other parts of the United States.

J.D. Power polled more than 51,000 U.S. consumers about their initial impressions and problems 90 days after they had bought or leased 2004 model-year vehicles.

Walters said Hyundai's gains could be partly due to its relatively small number of cars and SUVs. He said the carmaker could be challenged if it expands its lineup, which has hurt Nissan and Porsche.

Nissan aggressively pushed into the full-size pickup truck and large sport utility vehicle segment over the past year with new models built at a Mississippi plant. Porsche expanded beyond its niche of sporty cars with the launch of the Cayenne SUV.

"It's not uncommon for a manufacturer entering a new segment to stumble a bit," Walters said.

Nissan's score dropped to 147 problems per 100 vehicles, ranking it 10th among major automakers, with 12 more problems than the 135 recorded last year.

Porsche had 159 problems per 100 vehicles this year, up sharply from 117 problems last year.

Porsche sales have surged with the launch of the Cayenne, and Nissan has also increased its U.S. market share with the roll-out of the new models.

But sales of the Nissan Titan pickup truck, Quest minivan and Infiniti Armada, all made in Mississippi, have been disappointing, industry analysts said.