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May 27, 2012

News & Features

Sweeping auto improvements making for a lack of lemons

The Associated Press

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The Ford Focus, left, and Chevrolet Cruze, right, are closing in on the Toyota Corolla's lead in the compact-car segment.

Car shoppers today are less likely to end up with a lemon. In the past five years, global competition has forced automakers to improve the quality and reliability of their vehicles — everything from inexpensive mini-cars to decked-out luxury SUVs.

The newfound emphasis on quality means fewer problems for owners. It also means more options for buyers, who can buy a car from Detroit or South Korea and know it will hold up like a vehicle from Japan.

With few exceptions, cars are so close on reliability that it's getting harder for companies to charge a premium. So automakers are trying to set themselves apart with sleek, cutting-edge exterior designs and more features such as luxurious interiors, multiple air bags, dashboard computers and touch-screen controls.

"It's a great time to be a consumer," says Jesse Toprak, vice president of industry trends for the TrueCar.com auto-pricing website. "You can't really screw up too badly in terms of your vehicle choice."

The newfound emphasis on quality has closed the gap between best and worst in the industry. In 1998, J.D. Power and Associates, which surveys owners about trouble with their cars after three years, found an industry average of 278 problems per 100 vehicles. By this year, the number fell to 132.

In 1998, the most reliable car had 92 problems per 100 vehicles, while the least reliable had 517, a gap of 425. This year, the gap narrowed to 284 problems.

"We don't have total clunkers like we used to," says Dave Sargent, automotive vice president at J.D. Power. Nearly all automakers are improving in quality, with manufacturers at the bottom of the rankings improving even more quickly than those at the top, Sargent says.

The competition helps consumers by giving them more choices and more car for their money. Some examples:

Compacts: It used to be that the Toyota Corolla and Honda Civic were far better than the rest, and they cost more. But the new Chevrolet Cruze, which went on sale in 2010, and the vastly improved Hyundai Elantra and Ford Focus are giving consumers more options. General Motors sold 231,000 Cruzes last year to pass the Civic for second place and come within 9,000 of the Corolla, the small-car sales leader.

Midsize cars: Toyota's Camry and Honda's Accord used to be dominant. But Ford's Fusion, Nissan's Altima and Hyundai's Sonata are cutting into their sales. The Camry kept its long-held title as the nation's top-selling car last year, but the Altima and Fusion passed the Accord, which is typically No. 2.

"It's very hard to find products that aren't good anymore," says Jeremy Anwyl, CEO of the Edmunds.com automotive website. "In safety, performance and quality, the differences just don't have material impact."

With quality, fuel economy and price close to equal across the U.S. market, companies also are pushing the edge on exterior design to differentiate their cars. Honda, for instance, unveiled a daring new Accord coupe at the Detroit auto show in January, while Ford did the same with its new Fusion.

"It's got to be beautiful," says Mary Barra, GM's product development chief.

Another way to stand apart is to lower a car's base price, sacrificing profits to gain market share, at least initially.

That's what Chrysler is hoping for with the new Dodge Dart compact, which starts around $16,000, about $700 less than a Cruze and $500 less than the Ford Focus, the Dart's two main competitors.

CEO Sergio Marchionne says the company won't make much money on a basic Dart. But the lower price will get the car on shopping lists, and Marchionne is hoping people will add features and pay more.

Chrysler in the past spent little on compact-car development. But being late has its benefits. Chrysler has been able to avoid mistakes made by other companies, says Ralph Gilles, the company's chief designer.

"Coming last to the party, you can bring a nice bottle of wine," he says.

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