6/18/2010
By David Silver, Research Analyst

More Articles by David Silver

For the first time in 24 years (as long as the data has been compiled) the domestic automakers surpassed their foreign counterparts in customer satisfaction.  It was only by a slight margin, but the domestic brands averaged 108 problems per 100 vehicles, compared to an average 109 problems for foreign brands, according to the results of this year's survey.  The survey was of 82,000 customers who have purchased a 2010 model year vehicle.  For the first time, Ford cracked the top five, jumping from eighth place last year, with 93 problems per 100 vehicles in the first three months of owning or leasing the vehicle.  Ford's luxury Lincoln brand had 106 problems per 100 vehicles, making it the highest ranking American luxury brand.

Rounding out the top five were Porsche (owned by Volkswagen) with 83 problems per 100 vehicles (P100), Acura (86 P100), Mercedes-Benz (87 P100), and Lexus (88 P100).  Porsche took top honors away from Lexus, which was dinged by the recalls during the time period of the survey (February to May).  Acura was the biggest mover, gaining 12 spots to the second spot overall from 14th last year.  After Ford came Honda, Hyundai Motor Co., Lincoln, Nissan Motor Co.'s Infiniti, and Volvo, all finishing better than the industry average of 109 issues per 100 vehicles.

Toyota was hit harshly in the well respected surveys, as it tumbled to sixth from 21st.  Toyota struggled during the time period but still had the highest ranked minivan; the Toyota Sienna outpaced the Kia Sedona and Dodge Grand Caravan.  Despite the problems surrounding Toyota, its luxury brand, Lexus, performed extremely well, getting four "top-choice" awards. 

Bringing up the bottom of the survey are Land Rover (170 P100), Mitsubishi (146 P100), and Volkswagen (135 P100).  Dodge was the lowest ranked American auto maker, with 130 P100.   

Bragging Rights
For the first time in the 24 years of the survey, Ford cracked the top five, and it seems to be on the back of the redesigned Mustang, the new Taurus and the Fusion.  In addition, as a corporation, Ford Motor Company (including Volvo) has 12 models that rank within the top three in their respective segments in 2010—more than any other corporation. General Motors Company has 10 models that rank within the top three in their segments. Cadillac plummeted from third in last year's survey to 13th this year, tying Chevrolet, which slipped from ninth. Both brands averaged 111 problems per 100 vehicles. However, the success from Ford adds credence to the belief that the domestic automakers' quality is improving.

General Motors and Chrysler were forced into bankruptcy last year, and over the next few years, I expect Buick to continue to move higher.  Dodge and Jeep continue to struggle with quality, however, the Ram brand moved higher. 

The report shows that the domestics have been improving their quality and reliability and have moved basically into parity with the imports.  Some of the weakness from Toyota spread to the other import brands (save for the luxury brands).  We do expect to see Toyota bounce back next year as the quality controls are increased to deal with the problems from a few months ago.  The report shows that the domestics (and all auto makers for that matter) are on the right path (total complaints have declined dramatically over the past ten years), but there is still a lot of work to be done.  It is still difficult to comprehend that for every 100 vehicles sold there is still an average of 108 problems.  So basically every car that is sold in America has a problem with it; doesn't seem like a good business model.

David Silver
Wall Street Strategies