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GM Passes Toyota to Lead J.D. Power Survey for First Time (1)

June 19, 2013

GM Passes Toyota to Win J.D. Power Quality Survey for First Time

Eight General Motors Co. vehicles led their respective segments, including five Chevrolets and one model each from its GMC, Cadillac and Buick brands. Photographer: Matthew Staver/Bloomberg

General Motors Co. (GM:US) led one of the auto industry’s most closely watched quality measures for the first time since the survey began almost three decades ago, pacing U.S. carmakers producing their best cars in a generation.

All four of GM’s U.S. brands were ranked above average in J.D. Power & Associates’ Initial Quality Study, led by its GMC truck brand, which trailed only Volkswagen AG (VOW)’s Porsche sports-car line. Chevrolet, Detroit-based GM’s biggest-selling brand, ranked fifth in the market, leapfrogging Toyota Motor Corp. (7203)’s namesake brand, which had the seventh-best score.

“If you were to ask me the question, what corporation has the best quality in the entire industry, the answer would be General Motors” for the first time, David Sargent, J.D. Power vice president of global vehicle research, said in a telephone interview. The gap in quality of domestic cars to imports is now “almost immaterial.”

The results are a shift in the 27-year history of a study long dominated by Toyota and other import brands. Consumers credited GM’s Chevrolet Silverado pickup, Ford Motor Co. (F:US)’s Mustang sports car and Chrysler Group LLC’s Town & Country minivan for leading quality, more evidence that U.S. automakers’ lineups are the most competitive in decades.

The survey, conducted annually by Westlake Village, California-based J.D. Power, tracks the number of consumer complaints per 100 vehicles in the first 90 days of new car ownership. The market research firm revamped the study this year by beginning to measure the quality of new technology such as systems that warn drivers when they’re driving out of their lane or have something in their blind spot.

GM’s Winners

Eight GM vehicles led their respective segments, including five Chevrolets and one model each from its GMC, Cadillac and Buick brands. Honda Motor Co.’s Honda, Kia Motors Corp. (000270), Mazda Motor Corp. (7261) and Porsche fielded two models that won segment awards.

Toyota’s Lexus luxury line slipped to No. 3 after leading all brands the two previous years. The LS large premium car is Lexus’s only segment winner in 2013. The brand grabbed the most awards each of the last four years and topped every segment that it competed in just seven years ago.

The Toyota line was the only brand owned by Toyota or Honda to improve in this year’s study, moving up two spots to No. 6. It still trailed Chevrolet at No. 5. GM’s challenge is to maintain its standings as the automaker rolls out new models this year, and to change consumers’ perceptions that haven’t caught up with reality, J.D. Power’s Sargent said.

Former Laggards

“If you went out on the street and asked 100 people who has better quality, Chevrolet or Toyota, 90 people would say Toyota,” he said. “The reality is, they’re essentially identical and sort of have been for a few years now. People just don’t give the domestics credit because for 30 years they were laggards. You don’t overcome that reputation easily.”

While GM has matched Japanese quality, the company has so many new models coming to market that it will be difficult to repeat this year’s success, Sargent said today at an Automotive Press Association briefing in Detroit. New and redesigned vehicles tend to have more problems than carry-over models that have had more time to resolve defects. GM has 18 new vehicles being introduced this year to boost U.S. sales.

“I think if GM’s No. 1 as a corporation next year, I’ll be surprised and they will be surprised.”

‘Disappointing’ Toyota

Honda’s Acura premium line tied for sixth for the second consecutive year, and the Tokyo-based company’s namesake brand slipped three spots to No. 8. Scion, Toyota City, Japan-based Toyota’s youth-oriented brand, fell seven spots to rank last.

“They will consider this disappointing,” J.D. Power’s Sargent said of Toyota and Honda. “Toyota would expect Lexus to be No. 1 and Toyota to be No. 2. That’s their mission. Honda would expect to be in the top five. And they’re not.”

Of 11 brands owned by U.S. automakers, eight improved in the rankings versus a year earlier, with Ford’s Lincoln luxury line climbing one spot to match the industry average. The namesake Ford line was unchanged at No. 27, as the Dearborn, Michigan-based automaker’s Sync voice system and MyFord Touch controls weighed on results.

While Ford has improved its touch-screen and voice-control systems, that’s not translating to bigger gains in initial quality scores because the availability of the technology is spreading to more of its vehicles, Sargent said. Vehicles with the Sync or MyFord Touch systems climbed to 79 percent of Ford’s 2013 car and truck sales, from 68 percent for year-earlier models, the company said earlier this week.

“Ford is probably at its low point,” Sargent said. “As we go forward, the improvements they’re making to their technology will offset the fact that it’s in more vehicles. We’ll probably see Ford start to rise, particularly as we see some of the others introduce their versions of the technology.”

Chrysler Progress

Chrysler’s namesake brand surged 10 spots to No. 15, above the industry average and its best showing since tying for 10th in 2006. While the Dodge line rose three spots in the rankings and Jeep and Fiat each climbed by one, they joined the Ram truck brand in placing below the industry average.

“There is progress being made, but they still have a ways to go,” Sargent said of Chrysler. “Most of their newer vehicles are much better than some of the older ones, so as they go through the process, things will get better. There’s a limit to how much they can do in a short space of time.”

Chrysler is majority owned by Turin, Italy-based Fiat SpA. (F) Auburn Hills, Michigan-based Chrysler markets the Fiat brand in the U.S.

Industry Progress

The Infiniti brand of Yokohama, Japan-based Nissan Motor Co. (7201)’s Infiniti brand improved by two spots to No. 4, while its namesake line plunged by 18 to No. 30.

Hyundai Motor Co. (005380) and Kia, affiliates both based in Seoul, tied with Daimler AG (DAI)’s Mercedes-Benz with the No. 10 score. Bayerische Motoren Werke AG (BMW)’s BMW fell eight places to tie for No. 18, below the industry average.

This year’s industry average was 113 problems per 100 cars, compared with 102 in 2012. J.D. Power attributed the majority of consumer complaints to technical design flaws rather than manufacturing problems and said the industry’s average number of issues rose in part because of the survey’s redesign.

“The manufacturers have gotten really, really good at building high-quality products,” Sargent said. “Quality now is not just ‘Does it work?’ It’s a matter of how it works and is it simple and enjoyable to operate.”

J.D. Power’s study this year was based on responses from more than 83,000 purchasers and lessees of 2013 model-year cars, trucks and SUVs. The unit of McGraw-Hill Financial Inc. (MHFI:US) conducted its survey between February and May.

To contact the reporters on this story: Megan Durisin in Detroit at mdurisin@bloomberg.net; Craig Trudell in Detroit at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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