You are here

Hyundai, Kia beat Lexus in quality study amid battle for buyers

Thursday, June 22, 2017 - 13:22

Hyundai.JPG
Hyundai Motor plans to launch a pickup truck in the United States as part of a broader plan to catch up with a shift away from sedans in one of the Korean automaker's most important markets, a senior company executive told Reuters.

[SOUTHFIELD] South Korean carmakers Kia Motors Corp and Hyundai Motor could use a shot in the arm. A big victory in an influential quality study might give them a boost.

While Kia and Hyundai have been losing market share in the US, they scored great marks in JD Power's initial quality study, which measures the number of problems in the first 90 days of ownership.

Kia took first place for the second year in a row and Hyundai's Genesis luxury brand placed second in its inaugural year in the survey. The mainstream Hyundai brand ranked eighth.

That's a change of fortune that has been in the works for several years. Toyota Motor Corp has long ruled over quality studies among American car owners, with its luxury Lexus line being the top nameplate for 14 of the 31 years JD Power has done the survey. This year, Lexus finished below average for the first time, and the Toyota brand trailed all Korean makes, as did Honda.

sentifi.com

Market voices on:

"The numbers across the industry are incredibly low," Christopher Richter, a senior research analyst with CLSA Japan, said by phone on Thursday. "The quality of cars across all brands is very high. And that does create a problem for Japanese automakers like Toyota and Honda, which have built a lot of their brand equity around quality."

That could benefit the Korean brands. Hyundai's market share is on pace to drop for the fifth time in six years in the US, and is down to 4.2 per cent from 4.3 per cent this time last year. Kia's US share has declined to 3.4 per cent from 3.7 per cent, according to Autodata Inc, a research firm.

LUXURY CHALLENGES

Lexus ranked 15th out of 32 brands, falling from seventh last year and first as recently as 2012.

For most of its 28-year history, Lexus has successfully marketed its quality and customer service credentials. The brand once had ads showing a pyramid of champagne glasses on the hood of a car while it runs 145 miles per hour on a dynamometer, and the glassware doesn't budge.

"Like everybody else, they've had challenges with new technology and they haven't shown improvement while many others have," said Dave Sargent, vice-president of global automotive at JD Power, referring to Lexus.

Owners of Lexus reported 98 problems per 100 vehicles in the first three months of ownership, plagued in part by issues with complicated electronics systems. The industry average for brands improved to 97 problems, from 105 a year ago.

Meanwhile, Korean brands have steadily improved. After struggling with a reputation for poor quality in the 1990s, Hyundai chairman Chung Mong Koo started studying Toyota and other high-caliber carmakers and put a similar ethos to work with his companies' vehicles.

Kia's back-to-back showings as the industry's top brand "reflect the exacting standards and craftsmanship our team members instill into every car, crossover and SUV Kia builds," Michael Sprague, chief operating officer of its US sales unit, said in a statement.

The "results reaffirm Hyundai Motor Group's strenuous efforts to build highest-quality vehicles," the carmaker said in an email.

Lexus wasn't the only luxury brand with a weaker ranking this year. 

Mass-market brands performed better than premium counterparts for only the third time since 1987, according to JD Power. 

"Lexus' high quality remained steady in the most recent Initial Quality Study, but we recognise the industry is improving, especially in the area of connectivity," Lexus spokeswoman Nancy Hubbell said in an email. "We are confident we will continue to shine on quality surveys."

Luxury brands have one excuse for the falling rankings: They tend to pack their cars with more of the latest electronic gadgets, opening themselves up to additional opportunities for things to go wrong.

More problems pertaining to features, controls and displays were reported than last year, the only category of eight to diminish in the latest annual study. Problematic features such as adaptive cruise controls and lane departure warnings are some of the tools that will be key to developing autonomous vehicles.

The traditional Detroit Three automakers performed better than import brands for the second year in a row and only the third time in the study's 31-year history. Domestic brands averaged a rate of 93 problems, while import brands had 99.

Ford Motor Co jumped to fourth place this year from 11th and had 16 fewer problems per 100 vehicles than in 2016. General Motors Co's Chevrolet slipped one spot to seventh, but owners reported a rate of seven fewer problems than last year.

Fiat placed last with a rate of 163 problems. Fiat Chrysler Automobile NV's Dodge and Chrysler brands, which share parts with Fiat vehicles, also rank below average. Among the company's brands, only Ram trucks finished above average.

BLOOMBERG

Nespresso
Pair your daily business read with the perfect cup of espresso.

Subscribe to The Business Times today to receive your very own Nespresso Inissia coffee machine worth $188.

Find out more at btsub.sg/btdeal

Powered by GET.comGetCom