Market Overview

JD Power Auto Quality Recap: Japanese Makers At 29-Year Low

JD Power Auto Quality Recap: Japanese Makers At 29-Year Low

Shares of Fiat Chrysler Automobiles NV (NYSE: FCAU), Toyota Motor Corp (ADR) (NYSE: TM), General Motors Company (NYSE: GM), Ford Motor Company (NYSE: F) and other automakers were falling on Wednesday, following the release of JD Power’s Auto Quality report.

According to the report, Korean brands continue to extend the quality gap with other auto manufacturers, while Japanese makes, known for their consistently high quality, are collectively falling below the industry average for the first time in 29 years.

The study assesses the quality of vehicles based on the number of them experiencing problems during their first 90 days out of the dealership, measured as a percentage; number of vehicles with problems per 100 vehicles.

In 2015, the industry saw a 3 percent year-over-year increase in initial quality, from 116 PP100 in 2014 to 112 PP100 in 2015 (lower numbers imply higher quality). Korean automakers average 90 PP100, European average 113 PP100, U.S. average 114 PP100 and Japanese also 114 PP100. While the latter’s quality improved year-over-year, the surge did not suffice to surpass the overall average.

Like Toyota, other Japanese makers such as Honda Motor Co Ltd (ADR) (NYSE: HMC) were also falling on Wednesday.

“This is a clear shift in the quality landscape,” said Renee Stephens, Vice President of U.S. automotive quality at J.D. Power.

“For so long, Japanese brands have been viewed by many as the gold standard in vehicle quality. While the Japanese automakers continue to make improvements, we’re seeing other brands, most notably Korean makes, really accelerating the rate of improvement.

"Leading companies are not only stepping up the pace of improvements on existing models, but are also working up front to launch vehicles with higher quality and more intuitive designs.”

Check out each brand’s score in the chart below.

Fiat is considered to be the worst brand by quality, and Chrysler, from the same company, the third worst.

Latest Ratings for FCAU

Jun 2020RedburnUpgradesNeutralBuy
Feb 2020CFRAReiteratesBuy
Dec 2019Evercore ISI GroupUpgradesIn-LineOutperform

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