Quality Is Apparently Job One ... at Hyundai

South Korean automaker Hyundai Motor Co. roared past European and American rivals to finish in a stunning second place Wednesday in a J.D. Power & Associates survey of model year 2004 vehicles.

Japanese automaker Toyota Motor Corp. topped the market research firm’s “initial quality” ratings for the sixth year in a row, largely on the strength of its flourishing Lexus luxury brand.

But Hyundai climbed eight rungs in the J.D. Power survey, tying with Honda Motor Co. of Japan for second place based on consumer complaints about all brands that a carmaker sells.

“No one would have dreamed it possible a decade ago,” Brian Walters, J.D. Power’s vehicle research director, said of Hyundai’s rise.

In the early 1990s, Fountain Valley-based Hyundai Motor America could barely give its cars away. Hyundais then were cheap vehicles plagued by problems with their cooling and braking systems and poor assembly.

Hyundai executives in Seoul decided to make quality a priority. As the cars began improving, Hyundai Motor America in 1998 launched an unheard-of 10-year, 100,000-mile warranty on crucial powertrain parts. The idea was to show consumers that the company stood behind its quality claims, and sales have since picked up.

Hyundai Motor spokesman Chris Hosford said, “Everybody in the building is walking around with huge smiles, but this already is history. What we have to focus on is to keep improving. Doing this again next year is the goal.”

The J.D. Power survey is based on responses from 51,000 buyers who purchased new cars and trucks in November and December. They were asked about problems in the first 90 days of ownership, and complaints ranged from squeaky dashboards to engine failures. Because J.D. Power’s study rates all defects evenly, it tells more about production and showroom preparation quality than long-term durability, which the Westlake Village market research firm covers in a separate survey.

Overall, the new-vehicle study shows that the quality gap between American and import models is closing and that most automakers are continuing to improve product quality, Walters said. The industry average this year was 119 problems per 100 vehicles, down from 133 problems last year.

Toyota’s brands averaged 101 problems per 100 vehicles sold, while Hyundai and Honda each had an average of 102 problems per 100 vehicles. Honda’s score includes its Acura brand.

BMW, including its Mini brand, finished fourth with 116 problems per 100 vehicles. All other automakers finished below the industrywide corporate quality average of 119 problems, with Porsche of Germany dead last with a score of 159.

In J.D. Power’s rankings of individual brands, Toyota’s Lexus luxury vehicles topped the initial quality ratings, for the fourth year in a row, with 87 problems per 100 vehicles sold.

Cadillac, owned by General Motors Corp., placed second at 93, followed by Ford Motor Co.’s Jaguar at 98; Honda at 99; and GM’s Buick and Ford’s Mercury at 100 each.

Hyundai finished seventh among individual brands with 102 problems per 100 vehicles, while Toyota and Infiniti, Nissan Motor Co.’s luxury brand, tied at eighth place with scores of 104. DaimlerChrysler’s Mercedes-Benz brand, plagued in recent years by problems with complex electrical systems, rounded out the top 10 with 106 problems reported per 100 vehicles sold.

But Toyota’s new youth- oriented brand, Scion, finished near the bottom of the pack at 34th of 37 brands rated, with 158 problems. Most of the Scion complaints were related to customer preference issues -- the ride was too stiff or the air conditioner didn’t get cold enough fast enough -- rather than actual quality flaws, Toyota said.

Volkswagen, which has seen its U.S. sales plummet, was the second-worst-performing major brand, with 164 complaints per 100 vehicles sold. GM’s military-style Hummer brand brought up the rear with 173 problems.

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Best and worst

Hyundai made the biggest jump in the J.D. Power annual survey of auto problems in the first 90 days of ownership.

Top five

*--* Rank Company Score* 1 Toyota 101 2 Hyundai 102 (Tie) Honda 102 4 BMW 116 5 General Motors 120

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Bottom five

*--* 10 Volkswagen 141 11 Nissan 147 12 Suzuki 149 13 Kia 153 14 Porsche 159

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*Problems per 100 vehicles

Source: J.D. Power & Associates