Published Wednesday, July 9, 2003
American Cars Show Gains in a Survey of Dependability
By DANNY HAKIM
DETROIT, July 8 ?Mercedes-Benz has fallen behind its sister brand Chrysler in a closely watched report on vehicle dependability, while General Motors has surged. And Japanese vehicles continue, over all, to hold up the best.
The report, issued today by J. D. Power & Associates, focuses on problems that arise over three years of ownership. Its rankings are important because most consumers say a vehicle's reputation for long-term durability is their top consideration in buying.
Lexus, Toyota's luxury brand, had the fewest reported problems in the report, which was based on responses from 55,000 owners of 2000 model vehicles. Owners were asked about 147 potential problems. The most common complaint over all was wind noise, followed by noisy brakes and uneven tire wear.
According to the report, Lexus owners reported 163 problems per 100 vehicles, versus the industry average of 273. Infiniti, Nissan's luxury brand, came in second, with 174 problems. The Buick brand of G.M. was third, with 179 problems.
The most surprising results involved DaimlerChrysler. Since Daimler-Benz bought Chrysler in 1998, auto experts have often asked whether the manufacturer of the Mercedes could bring respectability to a struggling American icon.
But in the J. D. Power report, both the Chrysler and Dodge brands outperformed Mercedes-Benz, which in turn only narrowly edged out Chrysler's Jeep brand. Mercedes averaged 318 problems per 100 vehicles, versus 295 for all the Chrysler Group brands.
While automakers are not far apart in initial quality ?which spans the first three months of a vehicle's life ?the report shows that there are still wide gaps in performance over longer periods. Automakers covet even small gains in the J. D. Power report, knowing that it takes years of sustained results, either good or bad, to change the perceptions of buyers broadly. And customers will pay more for both new and used cars with fewer problems.
"Some vehicles age gracefully," said Joe Ivers, a partner at J. D. Power, "and others get disproportionate problems."
Most of G.M.'s major brands scored better than the industry average, including Cadillac, Chevrolet, Saturn and GMC. Pontiac, with 293 problems per 100 vehicles, was below average. So was Oldsmobile, which is being discontinued.
"The world turned upside down," said David Healy, an analyst at Burnham Securities, describing both Mercedes's decline and G.M.'s rise.
The report was particularly well timed for G.M., which recently began a major advertising campaign ?with the slogan "Road to Redemption" ?that claims its vehicles' quality is improving and asks consumers for a second chance. It was the only one of the Big Three to rank better than the industry average.
"This is consistent with the message we've had out there," said Pat Morrissey, a spokesman for G.M. "The quality initiatives we have had in place over the last three years are starting to pay off."
Still, Mr. Healy said G.M. had miles to go. "G.M. has the problem of making some of their alienated ex-customers, like me, actually go into a showroom," he said.
Japanese automakers continue to lead in durability, with 228 problems per 100 cars for the average Japanese brand, 282 for the average Big Three brand, 331 for European brands and 406 for Korean brands.
Not all European automakers fared poorly. Porsche was among the industry's best, and BMW and the Jaguar division of Ford were better than average, as was G.M.'s Saab division.
But Volkswagen and its Audi division continued to have quality problems: Volkswagen was among the five worst brands in the industry, among 37 ranked. Ford's Volvo and Land Rover divisions also performed below average, with Land Rover ranking behind the beleaguered Daewoo brand and better only than Kia, made by the Korean automaker Hyundai. According to the study, Kia made the two least durable vehicles: the Sportage sport utility and the Sephia sedan, which has been discontinued.
At Mercedes-Benz, the report said, the most troublesome vehicles were the M-Class sport utility and the E-Class, one of its highest-volume sedans, which starts just under $50,000 and can cost considerably more.
The E-Class showed the highest rate of deterioration over three years among all vehicles, with 215 percent more problems after three years than owners reported after three months. The most common reported problems were excessive brake dust, which can be a result of worn brake pads; malfunctioning side windows; and uneven tire wear.
Donna Boland, a spokeswoman for Mercedes, dismissed the comparison to Chrysler's performance. "If we're coming in below industry average, we're troubled," she said. "But this is one measurement, and our feeling is that quality is a more holistic thing that takes into account how owners feel at the end of the ownership experience. Do they stay with the brand or walk away?"
She said that Mercedes had one of the highest customer loyalty rates in the industry and added that many of the problem areas identified by owners had been fixed in later models.
Analysts said it would take a prolonged slide in results to damage Mercedes's sales or image. "I don't see it as a meaningful indicator for projecting sales," said Susan Jacobs, president of Jacobs & Associates, a New Jersey firm that tracks luxury cars. "The real indicator is what customer care and corrective actions Mercedes has already taken."
"Your brand cachet would begin to suffer if you maintained a position below average over an extended life cycle of products, five to eight years," she added.
Ronald A. Tadross, auto analyst at Banc of America Securities, said warranty costs were a more pertinent indicator of vehicle dependability than survey data. "I would argue it's hard to derive a conclusion from a survey, because you don't know what the consumer is thinking," he said. "It begs the question: what is vehicle dependability? Is it warranty costs or the nuances of wind noise?"
In the past, J. D. Power surveyed owners after they drove a vehicle for four and five years. The firm switched to examining vehicles after three years so that automakers ?its clients ?could better use the information as they developed future models. The typical car or truck is on the road five years, but plans for a major redesign are typically under way three years into a vehicle's life.
