Sergio Marchionne's campaign to find a buyer for Fiat Chrysler
Automobiles was dealt a blow Wednesday, as an influential quality
study ranked three of the auto maker's brands as the worst
performers in the auto industry.
J.D. Power said the Chrysler, Jeep and Fiat brands are rated by
surveyed buyers as having among the most quality problems in the
initial three months of ownership. The California research firm,
owned by McGraw Hill, said South Korean brands and Germany's
Porsche AG top the industry, while Japanese makes have lost their
footing as leaders.
The results, compiled by surveying 84,000 U.S. vehicle buyers
after their initial 90 days of ownership earlier this year,
underscore one of the biggest challenges facing FCA Chief Executive
Mr. Marchionne as he scrambles to find a suitor for the
Italian-American auto maker. FCA faces consistent criticism for
underinvesting in its product line, and concerns that the product
portfolio is insufficient to keep up with technology advances and
increasingly stringent fuel economy standards.
Jeep, Chrysler and Fiat brands were all rated by buyers as
having more than 140 problems per 100 vehicles sold, putting them
well below the industry average of 112. Fuji Heavy Industry's
Subaru and Daimler AG's Smart accompanied the FCA at the
bottom.
Dodge also fell below the industry average, while the Ram truck
lineup finished slightly above.
Fiat's chief executive for more than a decade, Mr. Marchionne
began acquiring Chrysler as part of the U.S. company's 2009
bankruptcy and has recently approached several other auto makers
about a potential merger. Fiat Chrysler has posted solid U.S.
growth in the six years since filing bankruptcy, with much of the
momentum coming amid sustained demand for Ram trucks and Jeeps, but
Mr. Marchionne says his company has less-than-stellar margins, and
the wider industry needs to consolidate if it hopes to thrive in
the future.
J.D. Power's quality analyst, Renee Stephens said during a
presentation Wednesday that the industry's initial quality scores
improved in 2015's study vs. the prior year. She said Japanese
brands slipped below industry average, and domestic Big 3 auto
makers—including General Motors Co.—are essentially equal with
Japan's car companies after years of being far outpaced by
them.
"The big story," Ms. Stephens said, is the emergence of South
Korean auto makers Kia Motors and Hyundai Motors as quality kings
and the strong performance of many of their cars, crossovers and
minivans in a survey it was once known for tanking. While Germany's
Porsche AG is the highest performer with 80 problems per 100, the
two South Korean sister brands are by far the best among mainstream
brands, with Kia owners reporting 86 problems and Hyundai owners
reporting 95.
Together, the pair own about 12% of the U.S. market share. Once
a bit player with a poor quality image, Kia and Hyundai have built
consistent gains in sales and reputation over the past 15 years as
new products have been launched and new North American production
capacity.
This marks the second straight year Hyundai has been a top
performer. Ms. Stephens cited newly-launched products and a focus
on technology as reasons Hyundai and Kia are leading other brands,
including Toyota Motor Corp., Honda Motor Co. and Ford Motor
Co.
"This is a clear shift in the quality landscape," Ms. Stephens
said. "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."
Ms Stephens said Chrysler's relatively new 200 sedan had a bumpy
launch in terms of quality. She said a new 9-speed transmission is
cited by buyers as being below expectations, and is one of the
reasons the 200 and the rest of Chrysler's lineup is suffering.
Ms. Stephens said paint problems, fit-and-finish, and other
"defect malfunctions" hold Chrysler back. These are items that are
often addressed on the assembly line, she said.
Write to John D. Stoll at john.stoll@wsj.com
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