Despite rising vehicle costs and gas prices, consumers are giving the auto industry its highest perceived quality rating in a decade, according to a report by the American Society for Quality (ASQ, Milwaukee). Specifically, the society's most recent "Quarterly Quality Report," gives the auto industry a score of 87out of 100, based on data from the society's American Customer Satisfaction Index (ACSI).

According to the report, Japanese brands continue to enjoy a reputation for higher quality among consumers. But, U.S. automakers continue to close the gap, especially among higher-end models. For example, General Motors' Buick and Cadillac brands now occupy the society's "top quality" category, along with Honda and Toyota.

According to the report and the ACSI-which is based on customer interviews and produced in partnership with the University of Michigan's Ross School of Business-customers are increasingly impressed not only with actual product quality, but with the follow-up service and customer support provided by automakers. According to the report, Korea's Hyundai automaker represents the "best turnaround story," with long-term gains of 12.7 percent over the last 10 years.

"The increases in this quarter's ACSI results indicate a stronger focus on improving customer service," says report author, Jack West. "In the auto industry, Japanese manufacturers like Toyota and Honda continue to exploit their competitive distinction in engineering and innovation, while the bigger surprise is that U.S. brands like General Motors and Ford's quality improvement processes are beginning to close the gap with their import competitors."

According to West, "Although Hyundai is a latecomer to the dance, the brand has been steadfast in applying a simple but effective two-pronged quality process.... In addition to its intense focus on consumer input, Hyundai emphasizes process improvement to refine problem areas such as its electrical systems and automatic transmission design. Another contributing factor may be that Hyundai continues to offer the best warranty in the industry."

On the down side, despite recent, quantifiable quality gains in their products, many American models are still failing to break into the top quality ranks. According to the report, "Some may argue that this is largely a matter of perception on the part of car buyers, and perceptions can be very slow to change." But, the report concedes that the general perception of Japanese quality goes well beyond marketing and hype.

"What separates the very best from the rest...might be more a matter of quality focus, constancy and doing many things consistently well," the report says. "The U.S. auto industry hasn't had the same sustained, clear quality focus as the Japanese. For years, Toyota has exploited its particular brand of waste elimination and pursuit of perfection, to the point that these emphases have come to be seen as part of its corporate DNA."

For more on the report, visit www.asq.org.