By John Porretto
The Associated Press

DETROIT - The average initial quality of new cars and trucks rose significantly in the past year, and once-suspect Korean brands topped domestic and European rivals for the first time, according to a closely watched study of 2004 models released Wednesday.

Overall, initial-quality problems dropped 11 percent from 2003, according to J.D. Power and Associates. The industry average of 119 problems per 100 vehicles in 2004 was the lowest since the study was redesigned in 1998.

Among the 169 models studied, 129 posted improved results, 35 saw quality decline and five were unchanged.

Toyota Motor Sales USA Inc., which includes the Lexus luxury brand, repeated as the company with the highest overall initial quality. Toyota Motor Sales had 101 problems per 100 vehicles - 18 fewer than the industry average.

Toyota's North American manufacturing headquarters is in Erlanger and it employs more than 8,300 people at three locations in Kentucky. Toyota has the capacity to build 1.48 million vehicles a year in North America, but plans to increase that to 1.66 million by 2006, officials said in March.

Korean-branded vehicles, led by Hyundai Motor America, made marked gains.

Hyundai, in particular, was the most improved of the 37 total nameplates, scoring 29 percent better than 2003 and moving up 16 positions to rank seventh.

Korean models from Hyundai and Kia Motors America had 117 problems per 100 vehicles this year. That was five fewer on average per 100 vehicles than their European rivals, and six fewer than domestic brands.

The Koreans still trail Japanese nameplates by six problems per 100 vehicles, though the Hyundai nameplate topped even perennial quality stalwart Toyota in the 2004 survey.

Toyota's Lexus brand was again tops among all nameplates with 87 problems per 100 vehicles - six fewer than No. 2 Cadillac. Those same brands were first and second, respectively, in last year's study, although Cadillac then trailed Lexus by 27 problems per 100 vehicles.

"A decade ago, as Korean manufacturers struggled with a universally poor reputation for vehicle quality, no one would have predicted they could not only keep pace but actually pass domestics and other imports in terms of initial quality," said Joe Ivers, J.D. Power's executive director for quality/customer satisfaction. "This demonstrates how vastly more competitive the market has become."

The study, in its 18th year, is based on responses from more than 51,000 people who bought or leased new 2004 cars and trucks.

Among manufacturers, No. 1 Toyota was followed by American Honda Motor Co. and Hyundai (both with 102 problems per 100 vehicles) and BMW of North America (116.)

One company that registered a big drop since last year, Nissan North America, has had a few major product launches. Such upticks are not uncommon when manufacturers introduce new vehicles.

Made in the USA

Detroit automakers showed year-over-year improvement.

General Motors Corp. fared best, with 120 problems per 100 vehicles, an improvement from 134 problems last year. In a breakdown of nearly every nameplate available on the market, GM had two brands in the top five - Cadillac (93) and Buick (100) - a repeat of last year.

DaimlerChrysler AG had 123 problems, 16 fewer than last year. Ford Motor Co. had 127 problems, an improvement from last year's 136.

Other nameplates reporting significant improvement: Honda and Hummer (both 23 percent), Land Rover (22 percent) and Jaguar and Mercedes-Benz (both 20 percent.) Porsche Cars North America Inc. ranked last with 159 problems per 100 vehicles, followed by Kia (153.) Still, Kia's score was 9 percent better than a year ago.