Nonpremium brands overtake premium, boosted by improvements in technology
Kia overtook Porsche to lead the industry in J.D. Power’s annual report card on vehicle quality, marking the first time in 27 years that a nonpremium brand has topped the list.
Kia, with 83 problems reported per 100 vehicles, joins Toyota as the only nonpremium brands to have finished first in the 30-year history of the Initial Quality Study, J.D. Power and Associates said today in releasing the results at the Automotive Press Association here. Toyota came in at No. 1 overall in 1989.
In a scorecard that saw overall gains for the industry, the Jeep, Chrysler and Subaru brands showed the strongest improvement. Jaguar plunged from third place last year to 27th overall.
This was the second consecutive year that the nonpremium brands were led by Kia. The South Korean marquee finished second overall in 2015, with a score of 86. This year’s first-place finish marks the culmination of a steady ascent from 18th in 2012.
Last summer, Kia vowed to take the title this year to fight the perception among consumers that its quality wasn’t up to snuff. J.D. Power says vehicles with the fewest problems tend to have owners who are most likely to buy that brand again.
“Ranking [No. 1] in the entire industry for initial quality is the result of Kia’s decade-long focus on craftsmanship and continuous improvement, and reflects the voice of our customers, which is the ultimate affirmation,” said Michael Sprague, COO of Kia Motors America.
Kia narrowly topped Porsche, which finished second overall with 84 problems and had ranked first in each of the previous three years. Hyundai, Kia’s sister brand, finished third overall with 92 problems, while Toyota (93) and BMW (94) rounded out the top five.
Overall, new-vehicle quality improved at its sharpest pace since 2009, J.D. Power said. Quality was up 6 percent, compared with a 3 percent year-over-year increase last year, as scores rose among 21 of the 33 brands studied.
“It’s been quite a while since we’ve seen this much improvement in the industry,” said Renee Stephens, J.D. Power vice president of U.S. automotive quality. “It’s very important because what we’re seeing is that our automakers and our supplier base really listen to what consumers are saying, and also consumers are benefiting from that.”
As a whole, nonpremium brands topped premium brands for the first time in a decade, Stephens said. Overall, nonpremium gains were driven by a “simplification” in technology features, she said.
“What we’re seeing with the nonpremium brands is that they’re also adding content, they’re also adding functions” to their vehicles like premium brands, she said. “Nonpremiums are adding content as well, but they’re experiencing lower problem rates.”
The Korean and domestic automakers were also able to make gains thanks to improvements in technology, Stephens said.
“When you see the weight that this has in the industry and how consumers are talking about their vehicle, their experience with technology is very, very important,” she said. “Seeing some of the Korean results, as well as the domestics’ results, in this area has helped move them in the right direction and really shifted the balance in the industry.”
Stephens said reliability remains the most important factor for consumers, who are less likely to stick with a brand if they experience numerous problems.
“Even a one-point drop in share can mean millions in lost revenue for an OEM,” Stephens said.
She said 64 percent of issues are design-related, a reversal from a decade ago when defect malfunctions accounted for most problems.
The study is based on more than 80,000 responses from owners and lessees of 2016 model-year vehicles after 90 days of ownership. Consumers were surveyed from February through May.
Detroit 3 gains
J.D. Power said the Detroit 3 automakers made a “strong improvement” in this year’s study, averaging 103 reported issues per 100 vehicles, better than the industry average of 105 problems and beating import brands’ average of 106 problems. The Detroit automakers have only topped their foreign competition once before, in 2010.
“The other portion of this, which was really gratifying to see, is that all three domestic manufacturers saw this great level of improvement, so we’re really seeing it across the board,” Stephens said.
Jeep (113) and Chrysler (115) improved by 28 points each, more than any other brand. However, both brands remained well below the industry average, as did Fiat Chrysler’s Ram (114), Dodge (117) and Fiat (174), which came in second to last and added 13 problems from 2015.
“Fiat brand results continue to be skewed by limited models and sample sizes. Fiat has done well in recent third-party surveys that measure customer satisfaction and vehicle quality,” FCA said in a statement.
Ford topped domestic automakers with an average problem rate of 99. Lincoln finished tied for seventh overall with 96 problems, vs. 103 in 2015, while the Ford brand finished 11th with 102, five fewer than last year.
General Motors averaged 102 problems per 100 vehicles as strong performances by Chevrolet (95), Buick (96) and GMC (103) were dragged down by a below-average showing from Cadillac (112). Each GM brand improved its average by at least six points.
GM received seven awards for highest-quality models, leading all automakers. Toyota Motor Corp. followed with six, while Hyundai and Volkswagen AG had four.
Aside from Chrysler and Jeep, Subaru (with 24 fewer problems), Nissan (20 fewer) and Volkswagen (19 fewer) made the biggest improvements.
Smart finished last by a wide margin, with 216 problems, and was also the brand that saw the largest increase in problems, up 62 year-over-year.
Jaguar, which finished third in last year’s study, plummeted to 27th overall with 127 problems, up from 93 in 2015. Volvo saw its average problems rise by 32 from 120 in 2015 to 152 this year, putting it third-to-last overall.
While declining to comment on specific brands, Stephens said most nameplates that declined were hurt by model launches that can be more likely to have problems.
“There was really, when I looked across all of the ones that really went backwards, there was a pretty big element of launch,” Stephens said.
Toyota rejoined the top five after finishing tied for 9th last year. The brand averaged 93 problems per 100 vehicles, down from 104 last year. Lexus finished tied for seventh overall with a score of 96, while the outgoing Scion brand placed 26th.
Honda tumbled to 24th overall after finishing 14th last year. Infiniti, with a score of 103, also fell out of the top 10.
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