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30 Years of IQS: Perspectives on the History of New Car Quality

30 Years of IQS: Perspectives on the History of New Car Quality

By Dave Sargent, June 14, 2017

Widely considered to be the industry benchmark of new-vehicle quality, the J.D. Power Initial Quality StudySM (IQS) will celebrate its 30th anniversary in 2017. Since 1987, the study has measured problems experienced by original owners of new cars, trucks, vans, and SUVs during the first 90 days of ownership.

2017 U.S. Initial Quality Study (IQS)

Highlights and results from the 2017 IQS will be released on June 21, 2017. In anticipation of this year’s study release, let’s take a look back and see how it all started, and how the study has evolved over the years.

How it All Started
Like many significant discoveries, the Initial Quality Study kind of started by accident. We were conducting a completely different survey of new-vehicle buyers and had a little extra space on the questionnaire and someone—probably Dave Power, our visionary founder—said “Hey, why don’t we ask them if they had any problems with their car?” So we did. We created a list of possible problems, added them to the survey, stuck a dollar bill in the envelope, and waited to see what happened.

It was astonishing. More than 40% of people that received the survey responded, providing details on the problems they had experienced with their new vehicles. We tallied the results and could easily see which models and brands had the best initial quality and which didn’t. Thus, IQS was created, and 30 years later it remains the single most well-known study that we publish, and the world’s most-watched measure of new-vehicle quality.

The Importance of IQS
In the early days, the Initial Quality Study didn’t make us very popular with some of the automakers, especially those that had some quality issues. No one particularly liked being called out for being near the bottom of the rankings; they would prefer that information didn’t get out. I guess that is still true today. In particular, Dave Power and the team had some spicy meetings with the domestic automakers—Chrysler, Ford and GM. But we persisted, and ultimately the automakers realized that the information and insights gleaned from IQS was extremely useful. It showed them the quality of their vehicles and how it was perceived through the eyes of their most important critics—their customers. And, just as important, it showed them how they measured up to their competitors.

Similar to the impact it has had on the automakers, the Initial Quality Study has also become really important to consumers. Google “new vehicle quality” and see what happens. The main reason for this is that IQS is a “study of hard-to-figure-out-by-yourself things.” While consumers can easily check out the styling, driving performance, roominess or features on a vehicle before they buy it, they can’t easily determine many of the aspects of quality themselves. They need the help of other people who already own new vehicles and can tell them about their experiences.

IQS provides an aggregation of the reviews of around 80,000 normal consumers that have sampled a variety of over 200 different makes and models. It’s like Yelp on steroids. People want to know what other people think about a new pizza joint before they spend $20 for dinner. Well, we tell you what 80,000 people think about their new vehicle before you spend $20,000 on a new car.

The Evolution of IQS
How has the Initial Quality Study changed over the years? Back in 1987, people experienced problems with their carburetors, cassette players, and their manual wind-up windows. They worried about their vehicle not starting in the morning and not being able to get them where they needed to go without breaking down. Over time, cars have become much more reliable, and much more sophisticated. Now, people worry about their voice-recognition system not being perfect, or their lane-departure warning system being too sensitive or providing inconsistent feedback.

The IQS has remained at the forefront of automotive research for the past 30 years by evolving to identify the changes in the content of new vehicles, changes in technology, and changes in consumer expectations. We are now in the fourth generation of the study…and thinking about the fifth. The content of the study has changed to include the new technologies and features that exist in today’s vehicles. The study has evolved to reflect the focus of today’s consumer on whether something was well-designed as much as whether or not it was well-assembled. Additionally, we now conduct the survey online…not really possible back in 1987.

The Globalization of IQS
Another milestone in the development of IQS is that it is not just a U.S.-focused study anymore. We now conduct the Initial Quality Study in several key markets around the world including China, India, and Japan. It is fascinating to see how consumers in different markets react to their vehicles in different ways. We have learned that Chinese consumers are more sensitive to “fit-and-finish” items, unwelcome noises, and the smell of a new vehicle, while U.S. consumers are generally more concerned with function and ease of use.

All of this reinforces what a complex task the automakers have, especially if they are trying to design and build the same car to sell globally. We try to help them understand the different needs and desires of consumers and how to best satisfy their sometimes conflicting wishes.

From Japanese Dominance to Parity among Automakers
Every year, it is fascinating to see which car brands and models perform well and those that are falling behind. This has changed over time. In the early years of the U.S. study, the Japanese manufacturers performed exceptionally well, particularly Honda, Nissan and Toyota, including their luxury brands Acura, Infiniti and Lexus. Mercedes-Benz was also a top performer in the early years. The domestic manufacturers and many of the other European automakers had their challenges. But if we look at the most recent results from 2016, we see that many domestic and European manufacturers are performing just as well as the Japanese, and in some cases better. And now, it is the Korean manufacturers—Kia and Hyundai—that are outperforming the competition after struggling mightily in the beginning.

Poor Quality: A Recipe for Disaster
We know who the quality “winners” are, but what about the brands and models that have historically been found toward the bottom of the rankings? Some of those poorer-performing brands from the early days have actually exited the market. In fact, six of the 10 lowest-ranked brands in the 1987 IQS subsequently left the U.S. market. One of these, Alfa Romeo, has since returned, but Yugo, Saab, AMC/Renault, Pontiac, and Plymouth are no longer here. In contrast, all of the top 10 brands in the 1987 study remain in the market to this day.

This shows how critical quality is. Brands with poor quality struggle to compete and ultimately can lose their place in the market altogether. In contrast, brands with high quality levels tend to thrive. Clearly, poor vehicle quality—in conjunction with non-competitive product—has doomed some brands.

Big or Small, All Problems are Problems
We have a saying at J.D. Power that “if the consumer thinks it’s a problem, then it’s a problem.” What we mean is that the customer is the real judge of quality, not the engineer. It is a different way of using the old adage, “the customer may not always be correct…but they are always the customer.”

In the Initial Quality Study, when defining what constitutes a problem, one of the main distinctions is between “defects” and “design problems.” Defects are the problems that people traditionally think of: things breaking, not working as intended, or not working at all. “Design problems” occur when something works as intended, but the original design intent is inadequate. Some people think of defects as “big” problems, like the transmission falling out of the car in the middle of the road, while design problems are “little” issues, such as a control that’s slightly awkward or difficult to use.

In reality, it is more often the other way around. Design-related issues comprise some of the most annoying problems, even when it is something as seemingly trivial as a cupholder. I recall one instance where a particular luxury model had cupholders that gripped the cups so tightly that they would puncture holes in paper and Styrofoam. I felt sorry for people driving around helplessly as their coffee slowly leaked into the center console. And, in particular, one unfortunate driver who grabbed his coffee cup and only half of it came out of the cupholder, the coffee pouring all over the center console.

We often get asked whether a design problem (such as a poorly designed cupholder) is as bad as a defect (such as a rattle from the door panel). The answer is “yes.” Most defects are fairly straightforward, get fixed by the dealer, and the customer may even forget about them over time. In contrast, most design problems cannot be fixed by the dealer, and the customer just has to learn to live with the problem.

Every year there are some people that experience all-new problems that no one else seems to have experienced. People are people, and it is hard to predict what they will do. But the vast majority of problems are variations of things we see every year.

What’s Next for IQS?
The Initial Quality Study has remained so critical and relevant to automakers and consumers alike because it has evolved over time to meet the changing automotive market. And it will remain critical as it continues to evolve in the future. We will include all of the new technologies that are coming to market. We will adapt the study to measure autonomous vehicles and all of the advanced technologies and customer concerns that this will bring. At the same time we will use our own technology to allow the consumer to complete the survey in new ways such as via a smartphone app or voice input. And we will allow the consumer to provide photos, videos, and other inputs. All of this is designed to allow consumers to provide as much information as they want in the manner in which they want. By doing this, J.D. Power will continue to help the auto industry design and build better vehicles for the next 30 years, just as we have for the past 30.

—Dave Sargent is Vice President, Global Automotive at J.D. Power. He oversees all of the company’s vehicle quality research globally, including the Initial Quality Study (IQS); Automotive Performance, Execution and Layout (APEAL) Study; and Vehicle Dependability Study (VDS), as well as vehicle quality tracking studies.

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