Detroit-based car makers did well in J.D. Power’s annual initial quality rankings. An Austin-based car maker,
Tesla
,
didn’t do as well.
Investors should take note of the results. They should also remember not to overreact to the quality data.
Thursday, J.D. Power released its 2024 initial quality study. It looks at the number of problems experienced by owners in the first 90 days of new car ownership.
’ Dodge Ram brand finished number one, up from second in 2023.
’ Chevy brand finished second,
Ford Motor
’s
brand finished ninth out of almost three dozen auto makers ranked.
Ram’s winning IQS score was 149, up from 141 in 2023.
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Up isn’t the direction car owners want. The data are presented as problems per 100 cars. So a score of 149 means owners complained about 1.5 things per car on average.
Up doesn’t mean quality is going down for Ram or the industry. Cars get more complicated over time. And expectations differ by brand. The average industry score is 195, or about two problems per new car. The average score for luxury brands, for which drivers have higher expectations, and have more features, is about 215, about 12% worse than a nonluxury brand.
Tesla is a luxury brand. Its 2024 IQS score was 266, up from 257 in 2023. Tesla first appeared in the rankings in 2020 with a score of 250. Reported problems are up by about 6%, but overall things look stable.
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The overall IQS score in 2000 was 166. Reported problems across the board are up 17% compared with 2024’s level of 195.
Electric-vehicle-only companies
and
made their first appearances in this year’s survey. Polestar scored 316. Rivian scored 266, right in line with Tesla.
Stellantis, Ford, and GM stocks were down 4.5%, up 1.2%, and down 0.4%, respectively. Tesla stock was up 0.2% while the
and
were up 0.1% and 0.2%, respectively.
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The J.D. Powers IQS report generally doesn’t move stock prices. That appears to be the case again in 2024.
Quality, of course, matters. Investors can look at warranty expenses as a link between quality levels and stock prices. Ford has paid about $4.8 billion to repair cars under warranty in 2023. That amounted to about 2.7% of sales. Tesla paid about $1.2 billion or about 1.3% of 2023 sales.
If Ford lowered warranty spending to Tesla-like levels, that could unlock $2.5 billion in annual cash flow. That’s a number investors care about.
There isn’t much news to pin the Stellantis drop on. Shares have been weak since late April—down some 20%—after the company announced disappointing first-quarter sales.
Write to Al Root at allen.root@dowjones.com
