Quality gains driving Hyundai’s success

Roland Jones Business news editor • Profile • E-mail

It’s no secret that Japanese automakers are thrashing their U.S. rivals, producing award-winning vehicles and grabbing an ever bigger share of the North American auto market. But Japan’s venerable carmakers may soon be getting a taste of their own medicine.

South Korea’s No. 1 automaker, Hyundai Motor, scored a stunning victory with American consumers in the latest J.D. Power and Associates Initial Quality Study, released Wednesday, placing third overall behind Porsche and Toyota’s luxury Lexus brand. It was Hyundai's best showing ever in the influential quality study, which is based on responses by just over 63,000 new car buyers and lessees, measuring defects or design problems that occur in the first 90 days of ownership.

While Japan’s Toyota dominated the J.D. Power rankings, taking the top spot in 11 of 19 model categories, Hyundai’s recognition is significant because it means the South Korean automaker is a force to be reckoned in the North American and global automobile markets, said Jack Nerad, market analyst at Kelley Blue Book.

"For the last several years, Hyundai has pitched itself as the next Toyota, and the company has high expectations of where they will rank among world’s automakers,” said Nerad. “They’ve realized that to do well in U.S. market they have to be very strong in reliability and quality perception, and they are looking to bring their brand up-market.”

“Toyota already is concerned about what Hyundai is achieving,” said Nerad. “You’re seeing (Toyota's) subcompact vehicles like the Yaris coming in — it’s a shot across the bow to Hyundai. They are saying, ‘We’re not leaving this market to you at Hyundai.’”

To date, Japan's Toyota, Nissan and Honda have been the leaders of Asia’s emerging dominance of the global car market, tapping into consumers’ desires for dependable, attractive and fuel-efficient cars, and picking up many of the sales lost by their shrinking American rivals.

But now Hyundai, the world's No. 6 manufacturer, is coming into its own.

While Toyota made its U.S. debut in the late 1950s, Hyundai is a relative newcomer to the American auto market, having arrived on the scene only 20 years ago. Early U.S. models like the Excel were plagued by quality problems.

In 1998, Hyundai cemented its position as Korea’s leading automaker by acquiring a majority stake in rival Kia Motors. And in recent years the manufacturer has closed the gap and then some with its rivals.

Last year Consumer Reports ranked Hyundai’s Sonata sedan, built at a plant in Montgomery, Ala., as the most reliable car in the United States. The midsize sedan, which is enjoying record sales, also scored high marks on the National Highway Traffic Safety Administration’s crash and rollover tests. And this year the Hyundai Entourage earned the Insurance Institute for Highway Safety’s best rating ever for a minivan.

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