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It's late spring, which means it's time for J.D. Power & Associates, one of the leading arbiters of quality in the auto industry, to reward some carmakers for their hard work and frustrate the heck out of others, who wonder how Hyundai has managed to sidle up next to Toyota and Honda for top honors.



Indeed, as Power released the latest findings from its annual Initial Quality Study on June 7, Hyundai actually topped Toyota (TM) again for the second time in three years as the top-rated nonluxury brand. And Porsche topped perennial leader Lexus as the No. 1 brand.



Power, like BusinessWeek a unit of The McGraw-Hill Companies (MHP), surveys tens of thousands of new-car buyers and has them score their purchase during the first three months of ownership in terms of things gone wrong and how well things work. Out of 100 cars, Porsche owners reported 91 problems to Lexus's 93. Hyundai placed third with 102 problems per 100, with Toyota at 106, Jaguar at 109, and Honda (HMC) at 110.



SURPRISES.

After looking at the brand rankings, I like to look at the winners in each vehicle segment. The Kia Rio and Suzuki Aerio tied for first in the subcompact segment. The Porsche Cayman topped the list of sporty premium cars. The Toyota Camry was the leader among midsize cars.



Surprises? The Pontiac Grand Prix led its category, besting Nissan's (NSANY) Maxima and newcomer Hyundai Azera. The Ford (F) Ranger topped the Honda Ridgeline. The defunct Buick Rainier placed second place to the Toyota Highlander.



Power's rankings have kept auto makers honest and striving ever harder to improve quality. And we have all benefited from that. Before Power began making its rankings public, Detroit auto makers could simply bloviate that the perceived quality of Japanese vehicles over their own was just that -- perceived.



DIFFERENT DEMANDS.

But there's also a certain amount of psychology that can play into unlikely vehicles showing up on the list. The Ranger pickup is pretty old -- in fact, Ford designed the chassis for this truck when Ronald Reagan was President. I would suggest two things about Ranger's terrific showing. First, the same truck has been made for so long that any slight glitch there was ironed out a long time ago.



Second, people buying a Ranger over a more recently designed and more refined Toyota Tacomaor Dodge Dakota are buying on price and have a pretty high threshold for rattles. The Buick Rainier, likewise, attracted Buick owners who tend to be older, extremely loyal to General Motors (GM), and generally more tolerant of wind noise and small glitches.



And while I have no doubt that Hyundai has made substantial improvements to its assembly quality since the bad old days of the rust-bucket Excel, its owner base, I think, cuts Hyundai more slack than, say, Toyota owners do. That said, Toyota dealers have told me that as good as the company is at building high-quality vehicles, the growth and diversity of Toyota's product lineup has affected the company's ability to maintain its leadership. Toyota owners expect their cars to be perfect, and when they aren't, they downgrade them harshly.



TECH CHALLENGE.

Even so, Toyota remains a quality benchmark with its Lexus and Toyota brands. Lexus models lead all relevant categories, and Toyota leads in quality in five categories -- for the Corolla, Solara, Camry, Highlander, and Sequoia. That's more than any other nonluxury brand.



J.D. Power this year overhauled the way it conducts its influential study. The firm found that the publicized ranking wasn't delivering good enough information about quality. BMW, for example, was running high for build quality but had been losing points on design and engineering of its dashboard and electronic controls. BMW fell from third-best IQS score last year among all brands to 22nd under the new ranking formula, which involves scoring auto makers on both defects and design problems separately.



"New vehicles today are often packed with new technologies that unfortunately can be complicated and frustrating for the average consumer when their integration isn't well executed," says Joe Ivers, executive director of quality & customer- satisfaction research for J.D. Power. "In the eyes of consumers, design flaws can have as much of an impact on their perceptions of quality as can a defect. Yet, many manufacturers have tended to address quality solely on the plant floor without considering design factors."



CONSTANT IMPROVEMENT.

Brands with the fewest defects and malfunctions include BMW, Chrysler, Hyundai, Lexus, Porsche, and Toyota. Brands with the fewest design problems include GM, Hyundai, Jaguar, Lexus, Nissan, and Porsche. "Without considering both quality factors, one might fail to recognize vehicles that are, in fact, excellent in certain ways," said Ivers. In other words, the brands that score highest on the new IQS ranking do the best job of balancing manufacturing quality [making sure things don't break] with quality of design [making sure things are easy, pleasant, and useful].



Hyundai continues to impress Power, as well as customers, with how it seems to improve all aspects of quality with each new product it brings out. Hyundai owners had fewer problems with their vehicles than any other nonpremium car or truck brand.



In addition to Hyundai's strong overall showing, the Hyundai Tucson earned the trophy for the highest initial quality in the compact multi-activity vehicle segment. Its Sonata and new Azera sedans, Elantra subcompacts, and Tiburon coupe all finished among the top three in each of their segments. This year marked the first time Hyundai cracked the top three in the study.



HYUNDAI FIRSTS.

The IQS study measures 217 attributes, including the overall driving experience, engine and transmission, and a broad range of defect and design problems reported by vehicle owners. Hyundai has been steadily improving its nonpremium nameplate ranking, ranking third in 2005, up from fourth the previous year.



"Outperforming incredibly outstanding competitors at their own game for the first time in the same year is a major milestone for Hyundai," said Owen Koh, Hyundai's president and chief executive officer. And it's also noteworthy that the Sonata sedan scored as highly as it did, since it was built in Hyundai's brand new Alabama plant, its first manufacturing plant in the U.S.



Power says that due to its changed methodology, scores of past years aren't comparable to this year's study. But it's still worth looking at which brandshave moved in the rankings under the new system. Volkswagen was fourth from the bottom last year and is third from the bottom this year. Land Rover was dead last this year, worse than its third-from-the-bottom ranking last year.



VALUABLE RESOURCE.

Porsche was the shocker, vaulting from sixth from the bottom last year to the best overall brand this year. Power credits the launch of the Cayman, which topped its category. When a single model scores that high at a company as small as Porsche, it has a big impact on the score and ranking.



Mercedes-Benz, on the other hand, dramatically worsened, from a sixth place ranking last year to a 20th ranking this year. In part, this reflects the fact that there are eight tie scores in this year's ranking, including six tie scores that are better than Mercedes' score of 139 problems per 100 vehicles.



Bottom line: When researching a vehicle to buy, gauges such as those offered by Power and Consumer Reports are valuable, as are reviews from experienced industry journalists. But one ranking alone doesn't tell the full story. That BMW 7 Series and 5 Series may have lost points because its electronic joystick, the iDrive, was confusing for some drivers. But if you live by your pocket computer and are a daily video game player, it may be right up your street.



Moreover, some companies are getting good at scoring well in the first three months. To help evaluate how cars handle over the long haul, Power also offers a ranking based on vehicle dependability, which surveys consumers who have owned their vehicle for three years. After all, we're more likely to own our cars for three years than three months.