UPDATE 2-Detroit closes in on Toyota in key quality measure

* Ford, Chevrolet close in on Toyota brand

* Lexus, Porsche rank No. 1 and No. 2 for new car quality

* BMW's Mini ranks last in J.D. Power survey
(Adds study details, Ford comment and background)

By Poornima Gupta and Soyoung Kim

DETROIT, June 22 (Reuters) - 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
GMGMQ.PK 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 (FIA.MI), 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)