Automotive News - April 28, 2004

Man bites dog. The earth is flat. Hyundai builds better quality cars than Toyota.

A study released Wednesday by J.D. Power and Associates rated Hyundai Motor America vehicles as having lower defect rates than those of Toyota Division, according to the consultancy's 2004 Initial Quality Study.

The study showed Hyundai vehicles as having 102 defects per 100 vehicles, whereas Toyota vehicles had 104 defects per 100 vehicles. The survey -- taken of 51,000 new-car owners after 90 days of ownership -- makes no differentiation between a major gaffe, such as a transmission failure, and something more discretionary, such as wind noise or a glove box squeak.

The Toyota figures do not include those of Lexus Division, which again won the title for best-quality vehicles. It also didn't include those of its Scion youth division, which finished a staggering fourth-worst.

In examining a corporate IQS rating -- which includes Toyota, Lexus and Scion in one rating -- Toyota still finished first among automakers. Hyundai Motor America, finished a close second, tied with American Honda's combined scores for Honda and Acura brands.

Hyundai's improved score underlines the compression of quality in the J.D. Power ratings. Although vehicles manufactured by Japanese automakers as a whole continue to lead the survey, their lead has been diminished continually over the past decade. And although Hyundai sibling Kia continues to struggle with its quality -- it finished seventh-worst in the survey -- Korean-badged vehicles passed both European and U.S.-branded vehicles in quality this year.

"A decade ago, as Korean manufacturers struggled with a universally poor reputation for vehicle quality, no one would have predicted they could not only keep pace, but actually pass domestics and other imports in terms of initial quality," said Joe Ivers, partner with J.D. Power and Associates, in a release. "The question now is whether Hyundai can demonstrate this same level of improvement in terms of new-vehicle launch and long-term vehicle quality."

On the domestic front, Cadillac, Buick, Mercury and Oldsmobile were the only American-branded vehicles to finish with above-average quality scores. Chevrolet had a defect rate at the industry average of 119 defects per 100 vehicles.

However, some of the domestic plants are on the rebound. In past years, ratings of the top manufacturing plants in North and South America typically went to Japanese transplants. This year, the top two plants in North or South America belonged to General Motors, and third-best was a Ford Motor Co. plant.

Other items of note in the survey:

Ratings of the top vehicles by model line were still dominated by Toyota Motor vehicles. Of 18 categories, Toyota or Lexus vehicles took the best rating seven times, and were runners-up in another seven categories.

BMW was the only other corporation outside of Toyota Motor, American Honda and Hyundai to have a corporate quality score above the industry average. However, when Mercedes-Benz's results were peeled away from those of DaimlerChrysler, the Mercedes-Benz scores fared better than BMW.

Although Ford Motor Co. has been on a quality mission in the past year, the Ford Division quality scores were still the among the worst of any domestic-badged volume brand. Only Jeep and Saturn fared worse.