NEW YORK (TheStreet) -- J.D. Power, the quality testing organization, validated what many in automaking already knew: South Korean automakers Kia (KIMTF and Hyundai (HYMLF have figured out how to build cars that American motorists find pleasing.
Of the 33 industry brands sold in the U.S., Kia scored No. 2 and Hyundai No. 4, making them the top mainstream automotive names in terms of initial quality, the first time either have ever achieved such marks. J.D. Power's initial quality survey measures the number of defects found by buyers in the first 90 days of ownership, as well as difficulty in operating equipment or features.
The best individual models by type included the Hyundai Accent and Kia Rio small cars, Kia Optima midsize sedan and Hyundai Tucson small SUV. Porsche topped the quality list with 80 problems per 100 vehicles surveyed; Kia had 86; Jaguar 93 and Hyundai 95. The industry average was 112 problems per 100 vehicles surveyed.
Tellingly, the average of all Japanese brands for the first time was below industry average.
"What we saw this year is that the improvement rate of Hyundai and Kia outpaced the Japanese brands, rather significantly," said Renee Stephens, vice president of U.S. automotive quality at J.D. Power, which is a unit of McGraw Hill Financial (MHFI.
But all is not rosy for Hyundai and Kia, which together are the world's fifth-largest automaker. Last week, the companies announced that they were cutting production in South Korea due to the weakening yen and its reliance on sedans. The weaker yen makes Japanese cars more competitive overseas, while the two companies have failed to capitalize on booming global demand for SUVs.
Both automakers have been stellar performers on the South Korean stock exchange over the past decade. Hyundai has gained 153% and Kia 237%, while the Kospi Index of 200 largest stocks has risen 96% over the same period.
Through the late 1990s, Hyundai, which owns a third of Kia, and Kia were at the bottom of quality surveys and shopping lists. The publicly-owned automakers belong to the Hyundai chaebol in South Korea. Starting in the 1980s, they were trying to sell vehicles based on affordability. By 1998, Hyundai changed course, aiming to build vehicles that could compete on a world-class level.
Like other South Korean brands, such as Samsung (SSNLF, that have evolved into mainstream names to U.S. consumers, Hyundai and Kia have worked relentlessly to connect and identify with American themes.
Kia signed an endorsement deal with NBA star LeBron James last year for the promotion of the company's K900 luxury sedan. Sales of the sedan have been minimal, hardly worrying to the likes of BMW (BAMXY , Daimler AG's (DDAIY Mercedes Benz or even GM's (GM Cadillac. But the companies' determination to break into the luxury segment could upset a future generation of rival auto execs.