By Jeremy Cato
Chris Hay isn’t shy about pointing out that for the last five years the Canadian-built Chevrolet Impala has outscored Toyota’s Camry in initial quality. Five straight years.
“I doubt most Canadians know that,” says Hay, who has a reason for bringing this to everyone’s attention – he’s the Assistant Marketing Manager for the Impala, which for 2006 is getting “1,000 refinements and a return of the small block V8 engine.”
2006 chevrolet Impala LT. Click image to enlarge
Still, there is no denying that the Impala was beaten only by its Buick Cousin, the Century, in the most recent J.D. Power and Associates Initial Quality Study (IQS) of owner-reported problems in the first 90 days. Another GM cousin, the Pontiac Grand Prix, was a runner-up in the Premium Midsize Car class of the 2005 study.
Three midsize GM models and not a Japanese import in sight. Yet common wisdom suggests the Japanese, led by Toyota, have completely cornered the market on quality, even though Detroit-based automakers and others have closed the gap and, in fact, lead in quality in at least certain areas.
“It still doesn’t register with the public,” says GM vice-chairman for product development Bob Lutz. “I can’t even expunge the idea of superior Japanese quality from my own mind, even though we have the data that shows it’s not true.”
Peter Renz has a similar lament. The director of marketing for Hyundai Auto Canada is always pleased discuss the most recent Consumer Reports annual reliability survey. It says the Hyundai Sonata was the best-built 2004 model, with only two problems per 100 vehicles. The average problem rate for 2004 vehicles was 16 per 100 vehicles, so the Sonata was significantly better than the average. For more context, consider that Subaru was the most reliable brand overall, averaging eight problems per 100.
“We just have to keep working to get the message out,” says Renz, who previously held a similar position with Toyota Canada, therefore he knows the challenge he is facing first-hand. “It’s not going to happen overnight, but we’ll keep working at it. We know the quality is there.”
2006 Hyundai Sonata. Click image to enlarge
But he acknowledges that Hyundai cannot erase memories of rusting Pony cars, broken down Stellars and problem-plagued Sonatas from the 1980s and 1990s. Bad memories are hard to erase from the public consciousness.
“So what choice do we have?” says Renz. “We’ll just keep getting out our message and wait for it to sink in with the public.”
Hay concedes that it is a similar story for GM. In Power’s recent IQS, three GM brands outscored Toyota. Who knew? Certainly not a large chunk of the public who have yet to absorb the message of a more complex quality reality in the new-car marketplace. The truth is, years of quality problems – decades, really, dating back to at least the 1970s — have left a sour taste in the mouths of tens of thousands of buyers. For every happy Century or Impala buyer today, many more are grumbling about a long list of past gripes.
“We know,” says Hays. “But all we can do is build better cars today and keep working at it.”
Certainly that’s the advice of J.D. Power’s Chance Parker, a long-time senior advisor at the market research company based in Southern California. He also points out that once a good reputation is established, it takes a long time for it to be sullied.
“A brand with a rock-solid reputation, if it doesn’t do anything disastrous, its reputation will stick,” says Parker.
Of all the world’s automakers, Toyota most definitely has the best reputation for rock-solid quality. Japan’s number one automaker and the world’s second-largest continues to lead all others if all the various quality studies are put together. But there are signs the competition is closing in.
One case in point is the Sonata and Hyundai itself. The Korean automaker last year ranked first among all brands for initial quality in the 2004 J.D. Power and Associates study. Hyundai outranked the Toyota brand with 102 problems per 100, versus 104 for the Japanese brand. This year, Hyundai fell back to 11th place with 110 problems per 100, behind Toyota at 105. But clearly Hyundai is within shouting distance.
Similarly, the Impala, Century and other models from General Motors’ various brands have done surprisingly well, besting Toyota models in a number of important areas. For instance, among full-size cars the Buick LeSabre ranked first not only in initial quality, but also in J.D. Power’s three-year study of things gone wrong, the Vehicle Dependability Study or VDS.
But a Globe and Mail survey of several major quality studies (see below) shows Toyota, while getting a huge boost from its Lexus luxury brand, continues to remain well above average in overall quality and a significant number of its models continue to demonstrate an unprecedented level of reliability excellence. For the fifth year in a row, Lexus held the top spot in the IQS, while the Toyota brand came in seventh – behind Lexus, Jaguar, BMW, Buick, Cadillac and Mercedes-Benz. In the IQS, Toyota or Lexus captured first place in more than half of 18 vehicle segments surveyed; GM followed with five winners.
2006 Lexus LS 430. Click image to enlarge
The Lexus division was also the highest scoring brand for the 11th consecutive year in the VDS or Vehicle Dependability Study.
The Lexus LS430 is a perfect example of how a reputation for quality is built. This year among luxury cars, the LS430 ranks first in initial quality, first in long-term dependability (VDI), first in Consumer Reports for reliability and first in Strategic Vision’s Total Quality Index. A grand slam.
2005 Toyota Prius
Similarly, the Toyota Prius gasoline/electric hybrid vehicle ranked first in IQS for its segment and was among the top three in compact cars in the VDS. Consumer Reports says the predicted reliability of the Prius among 2005 models is the very best among family cars.
It all adds up to an excellent overall quality showing for Toyota by any measure. Nonetheless, though GM did not have as many segment leaders as Toyota in the IQS and ranked lower overall, it had more winners than any other automaker save Toyota. And as Hay is wont to point out, in the high-volume car segments GM dominated in IQS: the entry midsize car winner was the Chevrolet Malibu/Maxx; the premium midsize car award went to the Century, with two GM vehicles in runner up positions; and the LeSabre took top spot in the full-size car category.
Perhaps more significantly, Detroit-based automakers can now boast of quality improvements that are long-lasting. In the 2005 VDS, which measures long-term quality and reliability, Detroit-based automakers took the top spot in 12 of 19 vehicle segments, compared with 7 of 17 product categories in 2004.
GM models finished on top in eight segments, and the automaker placed 18 vehicles in the top three of the segments surveyed — the most by any manufacturer. GM’s Buick brand placed fourth behind Lexus, Porsche and Ford’s Lincoln brand.
Winners included the Cadillac Escalade EXT in the light-duty, full-size pickup segment; the Chevrolet Silverado in the heavy-duty, full-size pickup segment; and the Buick Century among premium midsize cars. Chevrolet won in four segments, and was among the brands scoring better than the industry average with 2.3 problems per vehicle, compared to 2.6 in the 2004 study.
Ford, which has been battered in recent years for lagging in its quality efforts, had the top vehicles in four segments — including the Ford Windstar in the minivan segment and the Lincoln Town Car in the mid-luxury car segment.
The improvements made by Detroit automakers that are showing up in J.D. Power studies are also reflected in research from Consumer Reports. DaimlerChrysler, Ford and GM moved closer to Asian automakers with an overall problem rate of 17 per 100, while the Asians were at 12 per 100 in the most recent study.
More than one Detroit-based auto executive laments that North American automakers do not get credit for manufacturing quality vehicle today, conceding that the legacy of decades of lousy quality might take an entire generation to overcome – before many buyers will be willing to give Detroit another chance.
George Peterson, president of the market research firm, AutoPacific, Inc. in Southern California is among those who think Baby Boomers are a lost generation of consumers for Detroit-based automakers. Too many of them vividly recall the disastrously poor products Detroit-based automakers foisted onto the public in the 1970s, 1980s and even parts of the 1990s.
Peterson concedes that “from a traditional definition of quality, Detroit’s manufacturers have made tremendous strides. Now their cars are screwed together just as well as some of the best from Japan and Germany. But the refinement and finesse still aren’t there.” In the lexicon of the car business, refinement and finesse translate into “perceived quality.”
“We recognize there is a gap between perceived and actual quality,” says Ford product development chief Phil Martens.
To bridge the gag, automakers need to use better grade materials in more creative and tasteful designs. In particular, vehicle interiors must look richer, more elegant if they are also to be considered “high quality.”
So automakers must produce vehicles that don’t break, look like they won’t break and design them with a richness that speaks volumes about so-called “perceived quality.” Today’s consumer has grown impatient with anything less. Automakers who fail to produce these kinds of high-quality vehicles face a bleak future.
Ford President Jim Padilla made that clear earlier this year to employees. In an online question-and-answer session obtained by The Detroit News, Padilla told employees that, “Globally, our quality performance and improvement has not been satisfactory. This applies to virtually all brands in all geographic regions. Our competitors are moving faster than Ford to improve their quality and we need to TURN THIS AROUND NOW.”
To emphasize his point, Padilla added: “The cost of poor quality is the single largest waste in our business. Quality reputation is also the largest determinant of brand reputation and loyalty so we need to make major strides in reducing our warranty repairs per thousand, cost per repair and things gone wrong.”
The Ford brand did, in fact, rank above average in the 2005 VDS and the Lincoln brand placed third. But in the IQS, Lincoln in 2005 was barely above average, while the Ford brand was below average. Ford did win two truck segments in initial quality, midsize pickup (Ford Explorer Sport Trac) and light duty full-size pickup (Ford F-150).
No question Ford is striding in the right direction on quality, but so are many others. And all have Toyota in their sights. The trick will be for rival automakers to catch Toyota and its luxury division, Lexus, for a significant period of time – time enough for such a new reality to actually sink into the public’s consciousness.
Toyota Canada president Ken Tomikawa readily acknowledges that rivals are in hot pursuit, but is undeterred. “We are ready for this,” he says. “We are working very hard at improving our quality.”
Ah, quality. It’s a moving target.
With several high-profile vehicle quality studies all battling for attention, it would be reasonable for consumers to find themselves confused by the shear volume of data at their disposal.
J.D. Power and Associates publishes two very closely followed studies of quality, the Initial Quality Study (IQS) and the Vehicle Dependability Study (VDS). Meanwhile, Consumer Reports also publishes its annual auto issue, which in 2005 includes survey results on the quality experience relating to more than 810,000 vehicles. Another study of note is the Total Quality Study by Strategic Vision Inc., a marketing research and consulting firm in Tustin, California. It, too, is done on an annual basis.
The IQS has been done for the past 19 years. This year, Power surveyed more than 62,000 owners after 90 days of ownership to find out what went wrong. The study asks owners to rate vehicle quality on 135 attributes, ranging from cupholder design to engine performance to ride comfort to fuel economy. Of course those surveyed must report if anything actually broke during that first break-in period, too.
The current IQS has been asking the same questions in the same way for eight years. Power officials concede it may need an update to capture information about features that didn’t exist eight years ago. J.D. Power must also consider how to create a meaningful survey in an era when automakers have learned how to engineer and build cars specifically designed to do well on the IQS.
Indeed, the automakers as a group have done their homework well, studying to take the test while at the same time actually improving the quality of their products. The result is a very narrow gap between the best and worst performers.
For instance, in 2005 Lexus was the highest-ranked brand with 81 problems per 100 cars, or less than one complaint per vehicle. The lowest-ranked brand, Suzuki, averaged 151 complaints per 100 vehicles, or 1.51 problems per car. In real terms, then the gap between best and worst is not great. Power officials argue the gap may be narrow but it matters.
Another criticism of the IQS is the tendency for certain buyers to be pickier than others. For instance, older buyers report fewer problems than younger ones. Power officials say a buyer is a buyer and that it does not factor in age at the present time for the IQS.
J.D. Power’s VDS looks at three-year-old vehicles, attempting to asses the long-term quality and reliability factors that are crucial to generating loyal customers and lowering warranty costs for all automakers. For 2005, consumers were polled on 147 attributes, from ride, handling, braking, engine performance and interior design, to even wind noise. This year wind noise was the top complaint, followed by noisy brakes, uneven tire wear, excessive brake dust and vibrating brakes.
Consumer Reports magazine, a bible for many car shoppers, surveys subscribers to both the magazine and its Web site to gather reliability information on vehicles. The magazine says it publishes “the most comprehensive reliability information to consumers, covering over two hundred models with various engine and drive-train configurations.
Critics of Consumer Reports say its results are not scientifically determined and that the readership tends to have a bias towards Japanese imports – a claim Consumer Reports officials hotly deny. What is clear is that the reliability survey is used to help determine which models make the magazine’s recommended list.
Strategic Vision surveyed more than 40,000 consumers who bought new 2005-model vehicles in October and November 2004 for its Total Quality Study or TQS. What sets it apart is that it measures customers’ emotional responses to buying, owning and driving their vehicles, as well as performance problems, says Dan Gorrell Strategic Vision’s automotive partner in charge.
So which study has the true and right answers? There is no way to know. But what we have done is look for the top four winners in all major categories, ascertaining which vehicles appear more than once. Thus, we have created a blended list of the best quality vehicles in North America that reflects the findings of four major studies.
For instance, the Toyota Prius was ranked among the top four vehicles in both the IQS and the VDS and also has best-in-class predicated reliability from Consumer Reports. Therefore, it is among our quality leaders and made our list.
All the vehicles below, in fact, rank among the top four in at least two of the four major studies of reliability – IQS, VDS, Consumer Reports and TQS. Buy one and you should have a very good chance of driving a vehicle that won’t break.
Small and compact car
Premium sports car
Heavy duty full-size pickup
Entry sport utility vehicle
Mid-size sport utility vehicle
large sport utility vehicle