The J.D. Power 2020 U.S. Initial Quality Study was released recently. It took people by surprise as Tesla (TSLA - Free Report) vehicles ranked the last among the 32 major brands in its annual quality study. J.D. Power relies on customer reporting and its study is considered an industry benchmark for quality. It surveys the owners of the vehicles and then ranks the cars in terms of the number of problems reported per 100 vehicles (PP100). The lower the score, the higher the quality. The latest results were based on responses from 87,282 buyers and lessees of new 2020 model-year vehicles during their first 90 days of ownership.
Kia & Dodge Grab the First Spot
If you are a Dodge or Kia driver, there’s some good news for you! Kia and Fiat Chrysler’s (FCAU - Free Report) Dodge brand tied for the first place with scores of 136 PP100. It's the first time one of the Big Three Detroit automakers occupied the numero uno position. In fact, Fiat Chrysler’s overall performance was better than the industry average for the first time in the study’s history. The Dodge Durango and Dodge Charger models both ranked very high in their respective segments. Fiat Chrysler’s RAM pickup grabbed the third spot this year, after ranking 21st last year. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tesla Bottoms the Survey
If you are a Tesla fan, you will be disappointed as Elon Musk’s company ranked last in the closely watched survey of customers satisfaction conducted by J.D. Power. While the EV maker is viewed as a leader in automotive technology, Tesla car owners reported more problems than any other auto brands included in the study. Tesla lagged the auto industry in quality, receiving an initial score of 250 PP100. In other words, Tesla cars suffered 250 problems per 100 vehicles. This is well above the industry average of 166 PP100. The surveyed Tesla owners had issues with build quality and problems like paint defects, poorly fitting body panels, etc.
But hold on, there’s a caveat! While this is the first time Tesla was profiled by J.D. Power, the firm was not officially ranked among the other brands because it did not fulfill the ranking criteria. Doug Betts, president of the automotive division at J.D. Power said:
“Unlike other manufacturers, Tesla doesn’t grant us permission to survey its owners in 15 states where it is required. However, we were able to collect a large enough sample of surveys from owners in the other 35 states and, from that base, we calculated Tesla’s score.”
Nonetheless, the red-hot EV maker has been struggling with quality issues. According to CNBC reports in July 2019, Tesla employees were cutting corners on Model 3 production to meet Musk’s aggressive output goals. Tesla is currently facing major production issues with the current Model Y as well. The defects reportedly cover a variety of areas, including paint and trim issues, seat indentations, along with a loose seat belt. Moreover, the firm is under investigation by the U.S. National Highway Traffic Safety Administration for touch screen failures on Tesla’s Model S vehicles.
On a slightly positive note, Dave Sargent, vice president of automotive quality at J.D. Power, stated: “It's important to note that the primary reason for Tesla's lowest score is not EV-related aspects of the vehicle — they perform well here.”
Overall, Hyundai was placed as the top overall automaker in the study, as its seven models ranked highest in their respective segments. The models include Genesis G70, Hyundai Tucson, Hyundai Veloster, Kia Forte, Kia Sedona, Kia Sorento and Kia Soul.
General Motors (GM - Free Report) took the second spot with six top-ranked vehicles in their respective segments. The models include Cadillac CT5, Cadillac CT6, Cadillac Escalade, Cadillac XT4, Chevrolet Malibu and Chevrolet Sonic.
BMW AG (BAMXF - Free Report) retained the third slot with three high-ranked models — namely BMW 8 Series, BMW X6 and MINI Cooper — in their respective segments.
Ford (F - Free Report) took the fourth position with three top-ranked models —Ford Mustang, Ford Ranger and Ford Super Duty.
Unfortunately, Japan-based brands did not witness much improvement compared with Korean and domestic brands. Nissan (NSANY - Free Report) was in the fifth spot with three top-ranked models namely Nissan Armada, Nissan Maxima and Nissan Murano. Toyota (TM - Free Report) grabbed the sixth spot, with two top-ranked models — Lexus GX and Toyota Tundra. Mitsubishi, Lexus and Nissan were the only Japan-based brands to rank above the industry average.
Overall, domestic brands including Dodge, GMC, RAM, Chevrolet, Jeep, Cadillac and Buick fared better in this year’s study than the foreign counterparts.
Most premium brands lagged the industry average. As premium brands are equipped with complex technologies, the odds of having issues increase. Genesis, Lexus and Cadillac are the only premium brands that outperformed the industry average. In fact, Genesis was the highest-ranked premium brand in its segment for the fourth consecutive year.
Chevrolet Sonic took the title of the Highest Initial Quality Model with a score of 103 PP100.
Per the survey, issues related to infotainment were one of the major causes of problems, as cited by new vehicle owners. Top complaints included touch screens, built-in voice recognition and navigation systems, Android Auto/Apple CarPlay connectivity, as well as Bluetooth issues.
Kia Sedona and Toyota Tundra were ranked the highest in minivan and large light duty pickup segments, respectively. Ford Ranger and Ford Super Duty took top slots in midsize and large heavy duty pickup, respectively.
Meanwhile, Land Rover — owned by India’s Tata Motors since 2008 — was the second-worst performer after Tesla.
General Motors’ Yantai Dongyue 2 plant in China received the Platinum Plant Quality Award for producing vehicles with the fewest defects or malfunctions. Fiat Chrysler’s Toluca plant in Mexico and Toyota’s TMMT plant in Turkey received the Gold Plant Quality Award for the Americas and Europe/Africa regions, respectively.
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