Detroit's top-selling auto brands, Ford and Chevrolet, have almost eliminated a long-criticized gap with Toyota in new car quality, according to a closely watched survey released on Monday.

Luxury brands captured the top three spots, while Chevrolet, Ford and Toyota were in what amounted to a statistical dead heat further down in the rankings, the survey by J.D. Power and Associates found.

Have the leading domestic nameplates caught up with Toyota? The answer is almost, Dave Sargent, vice president for auto research at J.D. Power, said at a briefing in Detroit.

Sargent said the gap is as narrow as it has ever been.

New vehicles sold by the three U.S. automakers have improved in initial quality by an average of 10 percent compared with 2008, according to the survey, which records difficulties faced by new car owners in the first 90 days of ownership.

The results underscored the competitive pressure on the industry at a time when U.S. sales have been driven to 30-year lows and both GM and Chrysler have been forced to rely on federal financing to restructure through bankruptcy.

Overall vehicle quality improved at its fastest rate since 2004, reflecting improved consumer satisfaction with 2009 model-year vehicles and fewer reported problems.

Toyota Motor Corp's <7203.T> Lexus brand took the title for highest quality followed by Porsche. General Motors Corp's Cadillac was No. 3 in J.D. Power's Initial Quality Study.

Boosted by a strong reception for its high-end Genesis sedan, Hyundai Motor Co <005380.KS> pushed ahead of both Toyota and Honda Motor Co <7267.T> to become the top-ranked mass-market auto brand and No. 4 overall.

Honda ranked No. 5, followed by Mercedes-Benz, Toyota, Ford and GM's Chevrolet.

It is gratifying to see our commitment to quality paying off, said Bennie Fowler, Ford group vice president of quality. We're now tied with the best of the Japanese automakers.

The results of the survey, the most comprehensive benchmark of new car quality, are used heavily in auto industry marketing and are seen as influential in shaping consumer perceptions. It is also watched as a barometer for resale values and as a proxy for warranty costs.

CLOSING THE GAP

U.S. automakers have spent heavily in recent years in a bid to close the gap with the Japanese automakers led by Toyota and Honda, which have established a reputation for eliminating flaws from engineering and manufacturing.

GM says its warranty claims have dropped 45 percent in the last three years, evidence of the progress it has made under a renewed push to improve quality.

The automaker is routinely spending more on invisible components like engine mounts and dashboard pads to improve the driving experience, said Jamie Hresko, GM's quality chief.

We're moving in the right direction but I would not say we're satisfied, Hresko said. We still have a perception problem and that's not something that will change overnight.

On average across the industry, U.S. consumers reported 108 problems per 100 vehicles sold, J.D. Power said. That was down from 118 problems per 100 vehicles a year earlier.

Among domestic U.S. auto brands, Ford, Chevy and Mercury performed better than the industry average. By contrast, Chrysler's three brands -- Chrysler, Jeep and Dodge -- placed in the bottom 10 brands in terms of reported problems.

Chrysler said its own measures showed it was improving in quality and the J.D. Power data showed that its brands taken together were gaining ground.

While the improvement is encouraging, we have by no means arrived at a resting place, Doug Betts, Chrysler's senior vice president for quality, said in a statement.

The operating company for Chrysler was sold out of bankruptcy earlier this month. Operational control of Chrysler has passed to Italy's Fiat SpA , which has a 20 percent stake.

BMW's MINI was the lowest-ranked brand with 165 reported problems for every 100 cars sold.

Among vehicles, Toyota's Yaris was placed top for quality among subcompact cars, Nissan's Altima was ranked first among mid-size sedans while Chevrolet Trailblazer, Ford's Edge and Toyota's 4Runner tied for the top place among midsize SUVs.

Among full-size pickups, Ford's best-selling F-150 and Toyota's Tundra tied for the top rank.

(Reporting by Poornima Gupta and Soyoung Kim; writing by Kevin Krolicki; editing by John Wallace and Matthew Lewis)

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