Toyota Cruises, Hyundai Stalls

Move over, Hyundai. You had a nice run while it lasted, but it is time to yield the left-hand lane to Toyota (yet again).

Korean "comeback kid" Hyundai stunned the automaking world in May with its second-place finish to perpetual uber-automaker ToyotaMotors (NYSE: TM  ) , in J.D. Powers' survey of initial new-car quality. Moreover, Hyundai only lost out then because Toyota's Lexus division offset a just-under-perfect performance by its eponymous division. (By the way, Lexus also took top honors in this latest survey.)

Back in May, I noted that "The only real caveat to Hyundai's results lies in the nature of the report itself. The J.D. Power new-car survey only reviews problems that surface within the first 90 days of ownership of a new vehicle. Still, Hyundai's vaunted 10-year limited warranty, and the cost of honoring that pledge, give the company a big incentive to ensure that the autos it produces remain relatively problem-free for much longer than 90 days."

Sadly, "incentives" don't always work the way they should in the auto world. The J.D. Power report shows that Hyundai still has some work to do on the long-term quality front. Out of 16 car companies surveyed for the number of problems reported with their products over the course of the last year, Hyundai came in a lackluster 13th. Its score of 375 problems per 100 vehicles was nearly twice as bad as Toyota's 207 (or Honda's (NYSE: HMC  ) 210, for that matter.) Really, the only bragging rights Hyundai collected from this survey was the ability to say it is the best of the Korean automakers (talk about damning with faint praise.)

Meanwhile, aside from Toyota and Honda, the only other companies to beat the industry averages were Porsche, Motley Fool Stock Advisor pick BMW (BMW, traded on the Frankfurt Stock Exchange), and... wait for it... General Motors (NYSE: GM  ) . Yes, folks. It appears that Chevy quality really is once again "like a rock" -- at least over the long term. With only 262 problems per 100 vehicles, GM beat both the industry average of 269, and domestic rivals Ford (NYSE: F  ) and DaimlerChrysler (NYSE: DCX  ) -- not to mention my own personal favorite automaker, Nissan (Nasdaq: NSANY  ) .

Detroit, I take back what I said before about your city only being able to produce white rappers. Stick with making quality cars, try to keep the recalls under control, and in no time you can win back both percentage points of Hyundai's U.S. market share, to the great rejoicing of your shareholders.

Continue this discussion on Motley Fool's Buying and Maintaining a Car board.

Fool contributor Rich Smithowns no shares in any company mentioned in this article. He buys his trucks from GM and his commuter cars from Nissan.


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