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Few cars qualify as 'lemons' nowadays; Global competition has boosted quality

Car shoppers today are less likely to end up with a lemon.

In the past five years, global competition has forced automakers to improve the quality and reliability of their vehicles -- everything from inexpensive mini-cars to decked-out luxury SUVs.

The newfound emphasis on quality means fewer problems for owners. It also means more options for buyers, who can buy a car from Detroit or South Korea and know it will hold up like a vehicle from Japan.

With few exceptions, cars are so close on reliability that it's getting harder for companies to charge a premium. So automakers are trying to set themselves apart with sleek, cutting-edge exterior designs and more features such as luxurious interiors, multiple air bags, dashboard computers and touch-screen controls.

"It's a great time to be a consumer," says Jesse Toprak, vice president of industry trends for the auto pricing website. "You can't really screw up too badly in terms of your vehicle choice."

It wasn't always this close.

In the 1990s, Honda and Toyota dominated in quality, especially in the key American market for small and midsize cars. Japan began building high-quality small cars and tapped into America's growing appetite for fuel efficiency in the 1970s. With their sterling reputation, they were able to charge more than Detroit automakers and cut Detroit's U.S. market share from 78 percent in 1980 to just under 43 percent in 2009, according to Ward's AutoInfo-Bank.

Cars from Detroit generally weren't as trouble-free in the 1980s and '90s. Hyundai executives concede their quality used to be poor.

However, around 2006, as General Motors, Ford Motor Co. and Chrysler Group LLC were heading into financial trouble, they realized that people were shifting away from trucks and sport utility vehicles to smaller cars and car-based crossover SUVs. Gas prices were on the rise again, and the companies, which relied on bigger vehicles for their profits, had few cars to offer.

Fearing the shift, Detroit decided to go after the Japanese and shifted research dollars from trucks to cars after years of neglect. Detroit also realized that Hondas and Toyotas were quieter and more reliable, so they spent more on engineering and parts to close the gap.

Meanwhile, Korean automakers Hyundai Motor Co. and Kia Motors Corp. were busy redesigning their cars, changing to more cutting-edge looks to boost sales. Then, Toyota's reputation was tarnished by a series of safety recalls, and Honda played conservative with new models that looked similar to the old ones.

The newfound emphasis on quality has closed the gap between best and worst in the industry. In 1998, J.D. Power and Associates, which surveys owners about trouble with their cars after three years, found an industry average of 278 problems per 100 vehicles. By this year, the number fell to 132.

In 1998, the most reliable car had 92 problems per 100 vehicles, while the least reliable had 517, a gap of 425. This year the gap closed to 284 problems.

"We don't have total clunkers like we used to," says Dave Sargent, automotive vice president with J.D. Power. Nearly all automakers are improving in quality, but manufacturers that are at the bottom of the rankings are improving more quickly than those at the top, Sargent said.

Detroit's three automakers have narrowed the quality gap considerably against brands from other countries. In 1998, J.D. Power found 42 more problems per 100 vehicles with GM, Ford and Chrysler cars and trucks. This year the gap had narrowed to just 13. While car prices are still rising, the narrow gap keeps Japanese automakers from charging a premium over rivals with similar models.