w J.D. Power Reports: Initial Quality Improves Significantly in China as the Quality Gap Between Domestic and International Brands Continues to Narrow Porsche Ranks Highest in Initial Quality among Luxury Brands And Volkswagen Ranks Highest among Mass Market Brands; Mercedes-Benz, GAC Toyota and Shanghai General Motors Receive Two Model-Level Awards Each Shanghai: 31 October 2014 New-vehicle initial quality in China continues to improve significantly, with Chinese brands further narrowing the quality gap with international brands, according to the J.D. Power Asia Pacific 2014 China Initial Quality Study SM (IQS) released today. Now in its 15th year, the study serves as the industry benchmark for new-vehicle quality by examining problems experienced by new-vehicle owners within the first two to six months of ownership in two distinct categories: design-related problems and defects and malfunctions. The overall initial quality score is determined by problems reported per 100 vehicles (PP100), with a lower number of problems indicating higher quality. Overall initial quality averages 104 PP100 in 2014, an improvement from 119 PP100 in 2013. Defect/ Malfunction problems have decreased by 14 percent year over year to 59 PP100 in 2014, while designrelated problems have decreased by 3 percent to 34 PP100. The industry has made tremendous efforts to reduce the number of defect and malfunction problems, said Dr. Mei Songlin, vice president and managing director at J.D. Power Asia Pacific. While that success is worth celebrating, the industry needs to pay more attention to design-related problems. The initial quality score for domestic Chinese brands improves to 131 PP100 in 2014 from 155 PP100 in 2013, while the quality of international brands improves to 95 PP100 from 104 PP100. As a result, the gap in quality scores between domestic brands and international brands continues to narrow for the fourth consecutive year, and stands at 36 PP100 in 2014. Among all domestic brands, there are six brands whose initial quality score is above the mass market industry average (110 PP100): GAC Trumpchi (99 PP100), Southeast (106 PP100), Venucia (106 PP100), Luxgen ( PP100), Roewe ( PP100) and Zhonghua ( PP100). When examining initial quality by city tier, owners of domestic brand vehicles report fewer problems in Tier 2 (136 PP100) and Tier 3 (118 PP100) cities than in Tier 1 cities (146 PP100). The quality advantage in Tier 2 and Tier 3 cities has not yet translated to improved demand for domestic vehicles as evidenced by the J.D. Power Asia Pacific 2014 China New-Vehicle Intender Study SM (NVIS), released in August, which finds that purchase consideration among new-vehicle shoppers of domestic brands in China has decreased in those two tiers to 16 percent and 20 percent, respectively. Brand image of domestic brands has lagged behind their quality improvement. The domestic brands are focused on, and have been successful in, improving initial quality, said Tony Zhou, automotive research director at J.D. Power China operations. However, more marketing actions (Page 1 of 2)
should be taken to build brand image and influence, which are other critical elements for the Chinese brands, especially in Tier 2 and Tier 3 cities. Key Findings High initial quality is an important driver of brand advocacy which can influence the consideration and shopping for a brand. Among owners who do not experience any problems with their vehicle, 40 percent say they definitely would recommend the make to others. The recommendation rate drops to 25 percent among owners who experience one or more problems. The quality improvement is greatest in the driving experience category, which has a 19 percentage point decrease in problems to 22 PP100. Engine/ Transmission is the most problematic category (30 PP100). Excessive fuel consumption remains the most frequently reported problem for the eighth consecutive year. The other top five reported problems are breaks are noisy; engine loses power; excessive wind noise; and abnormal engine noises. 2014 China IQS Ranking Highlights Porsche ranks highest in initial quality among luxury nameplates, with a score of 37 PP100. Volvo (45 PP100) ranks second among luxury brands and BMW ranks third (49 PP100). Volkswagen ranks highest among mass market nameplates with a score of 52 PP100. Subaru ranks second (58 PP100) and smart ranks third (59 PP100). Among the 15 model-level segment awards, Mercedes-Benz (M-Class and smart fortwo), GAC Toyota (Highlander and E Z) and Shanghai General Motors (Cadillac XTS and Buick Encore) each receive two awards. Chinese brands collectively have three models that rank highest in their respective segments: BAIC E Series; Great Wall Tengyi C30; and Changan Taurus. In total, 14 vehicle segments are eligible for awards in the 2014 China Initial Quality Study. Models receiving segment awards are: Compact Mini: smart fortwo
Compact: BAIC E Series Compact Upper: Kia K2 Midsize Basic: Great Wall Tengyi C30 Midsize: Hyundai Langdong Elantra Midsize Upper: Volkswagen CC Midsize Luxury: BMW 5 Series and Cadillac XTS Compact SUV: Buick Encore Midsize SUV: Subaru Forester Large SUV: Toyota Highlander Midsize Luxury SUV: Volvo XC60 Large Luxury SUV: Mercedes-Benz M-Class Midsize MPV: Toyota E Z Mini Van: Changan Taurus The 2014 China Initial Quality Study (IQS) is based on evaluations from 21,311 owners of new vehicles purchased between October 2013 and June 2014. The study analyzes models in 21 vehicle segments and includes 212 different passenger-vehicle models from 62 different brands. The study was fielded from April to August 2014 in 51 major cities across China. Media Relations Contacts Michelle Meng; Beijing, China; +86 01 6569 2702; yutian.meng@jdpa.com John Tews; Troy, Michigan USA; 001 248 680 6218;john.tews@jdpa.com About J.D. Power Asia Pacific: www.jdpower.com About J.D. Power and Advertising/Promotional Rules www.jdpower.com/about-us/press-release-info About McGraw Hill Financial www.mhfi.com # # # (Page 3 of 3) Note: Three charts follow. (Page 2 of 3)
Year / Project / Study Name J.D. Power Asia Pacific 2014 China Initial Quality Study SM (IQS) 2014 Nameplate IQS Ranking Luxury Problems per 100 (PP100) Vehicles Porsche 37 Volvo 45 BMW 49 Land Rover 49 Mercedes-Benz 52 Lexus 55 Luxury Average 58 Source: J.D. Power Asia Pacific 2014 China Initial Quality Study SM Charts and graphs extracted from this press release for use by the media must be accompanied by a statement identifying J.D. Power Asia Pacific as the publisher and the study from which it originated as the source. Rankings are based on numerical scores, and not necessarily on statistical significance. No advertising or other promotional use can be made of the information in this release or J.D. Power Asia Pacific survey results without the express prior written consent of J.D. Power Asia Pacific.
Year / Project / Study Name J.D. Power Asia Pacific 2014 China Initial Quality Study SM (IQS) 2014 Nameplate IQS Ranking Mass Market Problems per 100 (PP100) Vehicles Volkswagen Subaru smart Jeep GAC Toyota Beijing Hyundai Dongfeng Honda Dongfeng Yueda Kia Guangqi Honda Renault Changan Mazda Dongfeng Nissan FAW Toyota Dongfeng Peugeot GAC Trumpchi Skoda Dongfeng Citroen Southeast Venucia Changan Ford Luxgen Roewe Shanghai Volkswagen Zhonghua Mass Market Average 52 58 59 76 82 85 86 86 87 88 94 97 97 99 99 99 105 106 106 110 Source: J.D. Power Asia Pacific 2014 China Initial Quality Study SM Charts and graphs extracted from this press release for use by the media must be accompanied by a statement identifying J.D. Power Asia Pacific as the publisher and the study from which it originated as the source. Rankings are based on numerical scores, and not necessarily on statistical significance. No advertising or other promotional use can be made of the information in this release or J.D. Power Asia Pacific survey results without the express prior written consent of J.D. Power Asia Pacific. (Page 2 of 3)
Year / Project / Study Name J.D. Power Asia Pacific 2014 China Initial Quality Study SM (IQS) Top Three Models per Segment in Initial Quality Compact Mini* Highest Ranked: smart fortwo Suzuki Wagon R Compact Highest Ranked: BAIC E Series Chery Fulwin2 Geely Freedom Ship Compact Upper Highest Ranked: Kia K2 Honda Fit Hyundai Verna Midsize Basic Highest Ranked: Great Wall Tengyi C30 Venucia D50/R50 Roewe 350 Midsize Highest Ranked: Hyundai Langdong Elantra Nissan Sylphy Kia K3 Midsize Upper Highest Ranked: Volkswagen CC Honda Accord Citroen C5 Midsize Luxury Highest Ranked: BMW 5 Series Highest Ranked: Cadillac XTS Lexus ES Compact SUV* Highest Ranked: Buick Encore Ford Ecosport Midsize SUV Highest Ranked: Subaru Forester Jeep Compass Honda CR-V Large SUV* Highest Ranked: Toyota Highlander Toyota Land Cruiser Prado Midsize Luxury SUV Highest Ranked: Volvo XC60 BMW X3 Mercedes-Benz GLK-Class Large Luxury SUV* Highest Ranked: Mercedes-Benz M-Class Porsche Cayenne Midsize MPV* Highest Ranked: Toyota E Z Volkswagen Touran Mini Van Highest Ranked: Changan Taurus Wuling Rongguang Changan Star *No other model in this segment perform above the segment avaerage. Source: J.D. Power Asia Pacific 2014 China Initial Quality Study SM Charts and graphs extracted from this press release for use by the media must be accompanied by a statement identifying J.D. Power Asia Pacific as the publisher and the study from which it originated as the source. Rankings are based on numerical scores, and not necessarily on statistical significance. No advertising or other promotional use can be made of the information in this release or J.D. Power Asia Pacific survey results without the express prior written consent of J.D. Power Asia Pacific.