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Vehicle Dependability Gap Narrows Significantly

October 1, 2006
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WESTLAKE VILLAGE, CA-The gap in long-term quality between luxury and nonluxury brands has been cut in half during the past four years, according to the J.D. Power and Associates 2006 Vehicle Dependability Study (VDS).

The study, which measures problems experienced by original owners of 3-year-old vehicles-2003 model-year-finds that there is an ever-smaller gap in reported problems between luxury and higher-volume brands-averaging 15 PP100 (problems per 100 vehicles), down from 31 PP100 in 2003. Quality improvements with nonluxury brands are seen primarily in two categories-ride, handling, braking, and engine and transmission-which both have a strong impact on customer satisfaction.

The presence of several nonluxury brands among the top-ranking brands in the industry further underscores the shrinking dependability gap between luxury and nonluxury brands. While Lexus is the top-ranking brand in vehicle dependability for a 12th consecutive year and luxury-make Cadillac ranks fourth, three of the top five-ranking brands in vehicle dependability are nonluxury makes. Mercury and Buick, respectively, follow Lexus in the brand rankings, and Toyota ranks fifth.

"The industry continues to make improvements in long-term vehicle quality, and not just among luxury makes that benefit from smaller production volumes on the assembly line," says Neal Oddes, director of product research and analysis for J.D. Power and Associates. "Many high-volume, mass-marketed brands have acquired a foundation of quality products from which to challenge the normally strong performances of the luxury brands. What this means for consumers is that they don't necessarily have to spend a lot of money to get a high-quality used vehicle, and vehicles with high long-term dependability ratings retain more of their original value than brands with lower dependability ratings. This pays off for the consumer when it's time to trade in their vehicle."

The benefits of strong vehicle dependability are particularly high for manufacturers. In addition to retaining their value better, brands that perform well in VDS have higher levels of owner recommendation and repurchase intent, and increased sales volumes compared to brands with average to poor dependability ratings. According to actual retail transaction data from the Power Information Network, a division of J.D. Power and Associates, sales made to loyal customers-those who trade in the same nameplate as the one they purchase-result in an average vehicle gross of $250 more per sale than those made to nonloyal customers.

Additionally, vehicles with high levels of reported problems have higher rates of failure of vehicle components such as brake pads, brake rotors and batteries, which is costly to manufacturers if the failure occurs while the vehicle is still under warranty.

"Perceptions about dependability can have a tremendous impact on an owner's satisfaction with their vehicle, which is no small matter for manufacturers," says Oddes. "In terms of retained value, recommendation and repurchase intent, and component replacement, vehicle dependability can have a direct impact on a manufacturer's bottom line."

Lexus, Toyota and Honda models dominate the segment rankings. Lexus models lead in four segments: GS 300/GS 430, midsize premium car; LS 430, large premium car; SC 430, premium sporty car; and GX 470, midsize premium multi-activity vehicle (MAV). Four Toyota models also lead in their respective segments: Echo, sub-compact car; RAV4, compact MAV; Highlander, midsize MAV; and Tundra, large pickup. Honda models rank highest in three segments: Civic, compact car; S2000, compact premium sporty car; and Odyssey, van. Models by Acura, Buick, Cadillac, Chevrolet, Ford, Mazda, Mercury and GMC each rank highest in one segment.

MINI and Kia are the most improved brands in the study, although both continue to rank below the industry average. MINI, which was first included in the VDS in 2005, earns a 103 PP100 (27%) year-over-year improvement. Kia has improved twice as much as any other brand in the past three years, improving 87 PP100 (22%) from 2005.

The 2006 Vehicle Dependability Study is based on responses from 47,620 original owners of 2003 model-year vehicles. For more information on vehicle ratings, visit the J.D. Power Consumer Center at www.jdpower.com.

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