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TWO STATISTICAL STUDIES described in Automotive News, July 4, 2016, caught my eye. One has to do with new car quality; the other, with a car’s country of origin. This first comes from the J.D. Power U.S. Initial Quality Study based on responses from purchasers of new cars. The second comes from Cars.com, based on information provided by manufacturers in what’s familiarly called the Monroney stickers on new cars. Both items contained a few surprises and led me to a bit more research.
J.D. Power’s Initial Quality Study queries new car owners 90 days after purchase. The results are assessed model by model, then combined for each manufacturer by sales weighting of its products. According to J.D. Power, “The study examines 233 problems, which are organized into eight categories: exterior, seats, driving experience, engine/transmission, features/controls/displays, interior, heating/ventilation/air conditioning and, last, audio/communication/entertainment/navigation.”
The company has been performing independently funded surveys since the early 1970s. Initial Quality Studies were introduced in 1987 and have become widely accepted assessments of new-car buyer perceptions. The 90-day strategy has two-fold significance: It’s after the blush is off the rose. It also gives some time for problems to crop up.
Koreans Hyundai and its Kia subsidiary are continuing their success stories. When Hyundai introduced its cars into the U.S. in 1986, the Excel was essentially a Korean knockoff of Japanese product. In the Road & Track October 1986 comparison of 12 economy cars, the Excel GL’s $4995 list price beat the class average by $645, about 11 percent less expensive. On the other hand, dealers of this import new to the U.S. could move their buyers upmarket with the option list: The R&T Excel GL’s as-tested $6965 was higher than the as-tested average of the class, $6826. Overall, R&T gave the Hyundai a C- as an enthusiast’s buy.
By the way, to put all these prices in perspective, a $5640 average list price in 1986 dollars works out to $12,363 today; the average as-tested $6826, $14,962 today. By comparison, 20somethingfinance.com’s least expensive ten cars in the 2016 market have an average list price of $15,847.
However, no amount of money could balance the poor quality, durability and reputation of the Hyundai Pony, the company’s initial entry into North America. Mechanics back in the mid-1980s gave the Pony a reputation right up there/down there with the Yugo, an out-of-date Fiat knockoff from a country allegedly without a profit motive.
Around 1998, Hyundai began to turn things around. The company invested heavily in all aspects of the business. It’s said that Japanese engineers were cajoled with high salaries to bring their expertise to Korea, no mean feat given the complex feelings between the two countries.
The strategy worked. In 2004, J.D. Power ranked Hyundai second in its Initial Quality Study. The company and its Kia subsidiary have bounced up and down in the IQS since then, but they’ve been well in the upper half of automakers surveyed.
For 2016, Kia ranks no. 1; Hyundai, no. 3, behind Porsche. Toyota’s Lexus brand dropped from 1st in 2012 to a 7th-place tie in 2016. Surprisingly, Honda and its Acura high-end cars were toward the bottom of the bunch, 24th and 25th, respectively, of 34 automakers listed.
The most evident looser was Jaguar, surprising many for several years by being in the top ten. Indeed, Jaguar was No. 3 in the 2014 IQS, dropping to 27th in 2016. Bouncing around the bottom of the list have been automakers not exactly renowned for high quality, Fiat and Land Rover among them. An interesting list, though I must also wonder about perceptions, expectations, remorse and other buyer-subjective aspects of IQS.
There’s less wiggle room in the Cars.com listing of new car origins. As noted in its description, “Domestic-parts content stems from Congress’ 1992 American Automobile Labeling Act, which groups the U.S. and Canada under the same “domestic” umbrella. It’s one of the bill’s imperfections, but the AALA is the only domestic-parts labeling system car shoppers can find on every new car sold in America.”
Entries on recent Monroneys include the final assembly point for a particular car, the countries of origin for engine and transmission, and a breakout of parts percentages identified by country.
Cars.com notes a subtlety in assembling data: whether to use production figures or those of actual sales. Because of this, there’s a good competition between the Honda Accord built in Marysville, Ohio, and the Toyota Camry, built in Georgetown, Kentucky, and Lafayette, Indiana.
No Ford models, with plenty of Mexican production, make Cars.com’s 75-percent domestic cutoff. The anomaly of Canada yes/Mexico no is responsible. Also, these days, most Buicks are built in China.
What an interesting international business. ds
© Dennis Simanaitis, SimanaitisSays.com, 2016