U.S. carmakers show gains in quality
Two new reports are pointing to a rapidly changing auto world where American and South Korean brands are equaling the quality of the top manufacturers and making large gains in market share.
The data show that Ford Motor Co. is beginning to solidify its position as the top auto seller nationally and it, along with the Buick division of General Motors Co., are edging out luxury brands such as Lexus and Mercedes-Benz in the latest quality rankings.
Ford’s Lincoln brand trailed only Porsche in the J.D. Power and Associates 2010 Vehicle Dependability Study to be released Thursday. Lincoln owners reported problems at a rate of 114 per 100 vehicles during the first three years of ownership, slightly higher than the 110 rate reported by Porsche owners. Buick and Toyota Motor Corp.’s Lexus brand tied for third at 115.
All three Ford brands -- Lincoln, Ford and Mercury -- outperformed the industry. While GM’s Buick and Cadillac lines also scored better than average, its Chevrolet division had 176 problems per 100 vehicles, worse than average. Chrysler Group’s Jeep brand, Volkswagen, Suzuki and Land Rover scored the poorest, logging problems at double the rates of the top makes.
Steady quality improvements are one reason Ford has logged huge gains in market share over the last year, according to a study of march car sales by TrueCar.com, an auto information company. During the first half of March, Ford was the leading auto seller in the United States, with 19.2% of the market. That’s up from 14.6% during the same period last year.
“Everything is aligning just perfectly for Ford. What is propelling them is their product lineup. It is the best they have ever had in their history, and they have improved quality and design, and not needing government help improved their image,” said Jesse Toprak, an analyst at TrueCar.
Other domestic brands are making gains.
“Buick has for several years been a top performer in this study. The LaCrosse is a vehicle that is really doing well for them. It is the No. 1 vehicle in the mid-size segment,” said Steve Witten, a J.D. Power analyst.
Buick’s improved quality image is allowing what many in the industry once considered an aging brand to start to make sales gains. Its market share rose above 1% in early March, TrueCar said.
In its study, J.D. Power collected 52,000 responses from owners, asking them about their experiences with their vehicles.
The surveys were conducted in late 2009, which for the most part was before recent large recalls by both Toyota and American Honda Motor Co.
Witten said the recalls, and steady quality improvements by many brands, are starting to reshape sales.
“It could be that this has opened consumer eyes that these other brands have just as good quality,” Witten said.
The dependability report found that seven of 10 models with the lowest incidence of problems are from Ford and GM, including the 2007 Buick LaCrosse, Buick Lucerne, Cadillac DTS, Ford Five Hundred, Lincoln MKZ, Mercury Milan and Mercury Montego.
Overall, the industry continues to make steady quality improvements, with 25 of the 36 vehicle brands increasing long-term dependability ratings in 2010 over 2009, he said.
On average, owners experience just 155 problems per 100 vehicles during the first three years of ownership, Power said. That’s a drop from 167 a year ago.
“There are not a whole lot of problems with vehicles that are three years old,” Witten said.
Hyundai, also rising in J.D. Power’s rankings, has surpassed Nissan and held 9% of the auto market in early March, up from 7.6%, TrueCar said.
“Hyundai has increased in quality over the last several years. It is another one of those brands where its quality perception is just starting to catch up with its true quality,” Witten said.
The Korean automaker has an aggressive discounting strategy and has positioned itself “as a value brand, and that’s what consumers want to hear right now and they match up well against Toyotas and Hondas,” Toprak said.
GM, now the No. 2 auto seller, is holding steady with a 17.8% market share.
Toyota, which had seen a large drop last month, is back up to 15.5% of the market, the same it held at this time last year. Aggressive sales and financing incentives and lease deals helped it regain sales lost to its recalls and image problems, Toprak said. He estimates that Toyota incentives rose from $1,800 per vehicle in February to $2,550 in March. That compares with $1,600 in March 2009.
Honda, possibly hurt the most by Toyota’s sales strategy, has seen its share drop this month almost a full percentage point to 9.4%, Toprak said. Chrysler Group also continues to give ground, falling to 9.9% of the market from 11.8% a year ago.
