Thursday, April 29, 2004

New York Times - Hyundai Near Top of Quality Ranking

This really is momentous, as it was indeed no more than a decade ago that Hyundai cars were derided as low-quality vehicles. Like Japan before it, Korea continues to climb the quality ladder, leaving behind raw price competition to the likes of the Chinese.

DETROIT, April 28 - For the first time, new-car buyers ranked Hyundai, the South Korean automaker, higher in initial quality than any domestic or European manufacturer, according to a survey released on Wednesday by J. D. Power & Associates

The result was a coup for Hyundai, which has been trying hard to upgrade its image from cheap to classy, or at least respectable, and close the gap between it and Toyota Motor and Honda Motor.

"A decade ago, as Korean manufacturers struggled with a universally poor reputation for vehicle quality," said Joe Ivers, executive director of quality and customer satisfaction at J. D. Power, a research firm, "no one would have predicted they could not only keep the pace, but actually pass domestics and other imports in terms of initial quality."

As a company, Toyota ranked first, followed closely by Honda and Hyundai, tied for second.

There are caveats, however. Hyundai's Kia brand continues to be a subpar performer in the initial-quality rankings. And in J. D. Power's most recent study of long-term reliability, which many in the industry consider to be a more important barometer, the Hyundai brand ranks near the bottom of the industry and Kia is dead last.

Chris Hosford, a spokesman for Hyundai, said improvements in initial quality inevitably contribute to longer-term improvements.

"One leads the other," he said. "We really want people to see us as a great value automobile. Part of value is price. Part of value is getting a lot of features and equipment for what you spend. And part of it is definitely having a great quality car."

So what, exactly, is initial quality? In February and March, J. D. Power asked 51,000 buyers of new cars and trucks in the United States whether they had experienced any of 135 problems during the first three months after purchase.

The most common complaint was wind noise audible inside the car. Poor fuel economy was a top 10 complaint, but less so than in last year's survey, even though gasoline prices are higher now than in 2003.

"It suggests consumers are adjusting to higher fuel prices," said Brian Walters, J. D. Power's senior director of vehicle research.

The annual survey data is closely watched by the auto industry, though the differences between the best and worst automakers have narrowed in recent years.

"Because it's so darn close, I don't think it has the same importance it had 10 or 20 years ago," said Louise Goeser, vice president for quality at Ford Motor.

The range is much wider in long-term reliability, which affects how automobiles retain value. Still, the initial-quality report is an important reflection of how well new cars and trucks live up to customer expectations.

As a group, Japanese brands scored best in the latest survey, averaging 111 problems for each 100 vehicles. Korean brands were next, with 117; European brands had 122; and domestic brands 123. In 1998, the Korean brands were worst, with 272 problems for each 100 vehicles, and European brands best, with 156.

Hyundai and the other Korean car-makers still have quite a lot of work ahead of them to change their brand perception in the eyes of customers in the West, but I have no doubt that they'll succeed on that front as well, sooner or later. Samsung has already shown in the field of electronics that "Korean-made" and "excellent" can be identified in the public eye with enough effort. As for American car-makers, would it be uncouth of me to suggest that they might be better off working on their quality-control problems rather than expending vast amounts of effort whining about and lobbying against foreign competition, as they have over the last two decades?