The U.S. auto industry announced in 2013 that it was back in full force with unit sales increasing to 15.6 million, up better than 7% from 2012, and crossing the 15 million mark for the first time since 2007.
A combination of an improving economy, lower unemployment rates, and historically low lending rates have encouraged consumers to jump into what could be a once-in-a-lifetime opportunity to purchase their dream car at a very attractive lending rate.
Needless to say, a lot of thought and effort goes into which car a consumer will purchase. Consumers often look at fuel economy, read reviews online, test drive the vehicle (perhaps a number of times), ask for advice from family and friends, and also plot out how much they're willing to spend on their vehicle over the life of a loan if they choose to finance it.
One thing that consumers often overlook, though, is the dependability of the vehicle they're considering buying. For a new car buyer, the expectation is that they'll encounter few maintenance problems for the first couple of years, and if they do, that their warranty will cover those snafus. For a used car purchaser, dependability is everything since there's rarely any warranty attached to a used car purchase.
Not only is dependability important for your pocketbook in that more dependable vehicles will cost less to maintain, but it's also the silent advertiser for a brand. As J.D. Power & Associates has demonstrated through its research, 56% of car owners who report having no problems return to the same brand, while 42% who reported three or more problems kept their same brand of vehicle with their next purchase. Therefore, vehicle dependability can, at least partially, help us predict which brands' sales may move higher and which brands may struggle based on this vehicle dependability-brand loyalty correlation.
America's five most dependable automotive brands
To that end I turn to J.D. Power & Associates annual vehicle dependability study for 2014. The study itself looks at three-year-old models from a number of brands (i.e., all 2011 models) and asks consumers if they experienced one or more of 202 noted problems. J.D. Power then ranks those car brands from top to bottom based on how many problems were reported per 100 vehicles, commonly known as its PP100 metric. Dependability is especially important this year when you consider that J.D. Power's study uncovered the first rise in reported problems, especially engine and transmission problems, since 1998!
Let's have a look at the five top automotive brands according to J.D. Power's study and then note what brands really stood out, as well as which brands faltered.
As a warning, you may be shocked to discover which brand decisively took the No. 1 spot in vehicle dependability!
No. 5: Buick (112 problems per 100 vehicles)
Rising from the sixth spot into the top five this year is Buick, owned by General Motors (NYSE:GM) which had consumers report just 112 problems per 100 vehicles as opposed to 118 PP100 in last year's study from J.D. Power. The real standout for Buick was the Lucerne which took top honors in the large car category, besting Toyota's (NYSE:TM) Avalon and Ford's (NYSE:F) Taurus. As Foolish auto analyst John Rosevear notes, Buick is doing a really nice job transitioning into a global brand.
No. 4: Acura (109 problems per 100 vehicles)
Honda Motors' (NYSE:HMC) Acura was another big mover in 2014, vaulting higher by four spots to fourth place from eighth with 109 PP100 reported compared to 120 PP100 last year. Like GM's Buick, Acura only took top honors in one category (compact premium CUV) with its RDX, but it also claimed a tie for the third-highest rating in the midsize premium CUV category with the Mercedes-Benz M-class. Honda and Acura are relatively synonymous with economical but dependable vehicles in the U.S., making this ranking not too surprising.
No. 3: Cadillac (107 problems per 100 vehicles)
Chalk up another victory for General Motors which can claim its second top-five brand for dependability in Cadillac. Year over year, Cadillac surged 11 spots to No. 3, with vehicle owners reporting only 107 PP100 compared to 128 PP100 last year. This huge jump came in only second to Jaguar which vaulted 13 spots higher in J.D. Power's rankings. Cadillac took home the top honors for its large premium CUV, the Escalade, as well as large premium car, the DTS, which tied for the top spot with the Lexus LS. Cadillac has certainly done its best to focus its efforts on a slightly younger crowd, and these improved dependability ratings should help.
No. 2: Mercedes-Benz (104 problems per 100 vehicles)
Jumping three spots in 2014 to No. 2 with only 104 PP100 compared to 115 PP100 reported in the prior year is Daimler's (NASDAQOTH:DDAIF) Mercedes-Benz. What's particularly interesting here is that Mercedes-Benz didn't win any of the 22 vehicle categories as outlined by J.D. Power, but it did place or show in quite a few which speaks to its overall consistency. Mercedes-Benz ranked second in midsize premium car with its E-Class sedan/wagon, second in large premium CUV with its GL-class, second in compact premium CUV with its GLK-class, and tied for third with the Acura MDX in the midsize premium CUV category with its M-class. Simply put, if consumers are going to pay a premium price, they expect premium results, and Mercedes-Benz appears to be delivering on that promise.
And the real shock (at least to me)...
No. 1: Lexus (68 problems per 100 vehicles)
I guess it shouldn't be that much of a shock since Toyota-owned Lexus was first in last year's ratings as well, but I recall shortly after I got my license, nearly two decades ago, how I was admonished from buying a Lexus because of their dependability issues. This rating simply confirms how far the brand has come in less than two decades as its PP100 of just 68 is light years ahead of second-place Mercedes-Benz, and even lower than the 71 PP100 that J.D. Power reported last year. Lexus tied its LS for top large premium car with the Cadillac DTS, was the top midsize premium car with the GS, and nabbed both the No. 1 and No. 2 spots in compact premium car with the ES and IS, and midsize premium CUV with the RX and GX.
Here are J.D. Power's full rankings based on PP100:
Obviously brands in the top five can be construed as winners, but General Motors, Toyota, and Honda deserve special recognition since they brought home eight, seven, and six, of the top category awards, respectively – that's 21 of 22 categories won by just three companies!
As I stated above, Toyota and Honda generally build no-frill vehicles, choosing instead to focus on improving fuel economy and storage space. The end result for years has been a reliable vehicle that will get the consumer from point A to B with ease, and without too many automotive issues.
The real shock here is the dominance by General Motors' vehicles and the total absence of Ford, save for a runner-up effort in the midsize pickup category with its Ranger. GM is hoping to translate these key wins into strong sales for its recently redesigned trucks, the Silverado and Sierra, which it hopes will give Ford's dominant F-Series a run for its money. Early sales of GM's Silverado have been mixed with winter weather and parts shortages eating into total unit sales, but as Foolish auto guru John Rosevear recently pointed out, it's actually spending fewer days on dealership lots than either of its foes, signaling that GM may indeed be on the up-and-up.