GM Makes Quality Gains
Friday, August 10, 2007
For 12 years, Toyota Motor Corp.'s premium Lexus brand was the undisputed leader in J.D. Power and Associates' influential vehicle reliability survey. But in this year's poll, Lexus shares top billing with one of General Motors Corp.'s brands, Buick.
Buick's impressive showing in the 2007 Vehicle Dependability Study released Thursday is the latest sign of steady improvement in the quality of GM vehicles.
All of its brands scored better in the survey than they did in 2006, and Hummer registered the biggest gain of any brand after GM tackled consumer complaints about wind noise and loose-fitting door seals on the SUVs.
But GM still has a ways to go to close the gap with the leading Japanese brands. Its high-volume nameplates -- GMC, Chevrolet, Pontiac and Saturn -- scored below the industry average of 216 problems per 100 vehicles, and several notches below the Honda Motor Co. and Toyota brands.
Of the three GM brands rated above the industry average, the Cadillac nameplate best reflects GM's strenuous efforts to improve its manufacturing processes, enhance quality and design attractive interiors.
The high-scoring Oldsmobile brand, in contrast, was discontinued in 2004, and Buick still struggles to appeal to younger buyers. Its customers are typically in their late 60s -- a statistic that partly reflects both the brand's dated image and intense customer loyalty.
"Maybe in quality they're close" to Lexus, financial analyst Brad Rubin at investment bank BNP Paribas said of Buick. "But the negative consumer perception -- it's a hard sell."
Still, GM executives were encouraged by the survey results.
"These numbers are from cars that were produced three years ago," GM Vice Chairman Bob Lutz said in Traverse City while attending the auto industry's annual Management Briefing Seminars. "We've made tremendous strides in dependability and durability since then. We will not rest until all our brands are above average."
One of the reasons Japan's leading automakers have been so successful in the U.S. market is that they offered higher-quality vehicles for years -- and many American consumers switched permanently to import brands.
Jamie Hresko, GM vice president for quality, said the U.S. automaker is working on accelerating the pace of quality improvements.
"We've got to push harder. We're aiming for double-digit improvements, not 6-1/2 percent," GM's gain in the most recent survey, Hresko said Thursday.
But GM is already seeing the benefits of its quality drive.
"The durability piece allows us to turn the sales piece around," Hresko said. For instance, at Buick, newer vehicles such as the Enclave are attracting consumers in their fifties.
In addition, GM is seeing lower warranty costs on newer vehicles. "That has added hard savings to the bottom line and allows us to afford the best warranty in the business," Hresko said.
J.D. Power's director of product research Neal Oddes said there is a strong correlation between high dependability scores and vehicle resale values.
That's significant because vehicles that retain their value command higher prices, while consumers expect big discounts on models likely to depreciate rapidly.
The J.D. Power dependability survey results show an improvement in the quality of vehicles built by domestic manufacturers.
Ford Motor Co. registered gains for its Ford and Lincoln brands. While Ford's Mercury brand had more problems than in 2006, it was still rated among the top five.
Cadillac and Honda were among the top five nameplates, as well, in the poll of original owners of three-year-old vehicles.
"With three non-premium nameplates -- Buick, Honda and Mercury -- ranking within the top five, consumers seeking a vehicle with strong dependability have good choices at various price levels," Oddes said. "Consumers don't necessarily need to pay premium prices to obtain high quality and dependability."
Buick and Lexus customers reported 145 problems per 100 vehicles, on average, while Land Rover had the worst score of 398 problems. Among individual vehicle segments, the Buick Century and Regal sedans led their categories.
But Toyota captured the most segment awards. Its Lexus brand won five, the most of any marque in 2007, for the GS300/430, LS430 and SC430 cars and for the GX470 and LX470 SUVs.
Toyota's Scion xA was rated the most dependable subcompact, while the Toyota-brand RAV4, Sequoia, Tacoma and Tundra trucks were leaders in their segments.
"Our three franchises won in 10 of the 19 segments," said Bob Carter, general manager of Toyota in North America. "We're proud of that, but we're continuing to push our quality to higher levels."
You can reach Christine Tierney at (313)222-1463 or email@example.com.