US-made cars work to close quality gap
Repair records show steady improvement in US car quality in recent years. But how close have US carmakers come to closing the gap with the Japanese? A look at the costs of repairs done under warranty helps answer that question. John Schnapp, an analyst with Temple, Barker & Sloane, a Lexington, Mass., consulting firm, says that typical warranty costs for cars built in the United States - a leading indicator of quality improvement - have come down significantly. Five years ago, warranty costs for the first year were in the $300-$400 range for domestic cars, says Mr. Schnapp, but ``this has probably dropped by half.''
In the early '80s, there was an enormous difference in warranty costs between domestic cars and imports, particularly the Japanese. First-year warranty costs for the typical early-'80s Japanese car, for example, were $35 to $50, and ``to the best of my knowledge, are still in this range, despite inflation,'' says Schnapp.
In a recent survey by J.D. Power & Associates, a marketing information firm, US and European carmarkers stacked up about the same in product quality. The Americans averaged 268 problems per 100 vehicles and the Europeans 267. The Japanese, by contrast, averaged only 169 complaints after three months of ownership. Toyota had six models in the first 10 positions in the survey. Toyota's Camry led the pack, with 109 problems per 100 new vehicles.
Repair records are important to the manufacturer, since money going to warranty repairs cuts into profits.
When General Motors launched its 6-year/60,000-mile new-car warranty program in late January, chairman Roger B. Smith said, ``Our warranty costs are obviously less than they were or we would have done it earlier.'' Ford asserts quality improvement of its cars is up a whopping 60 percent in the past five years.
Even some Japanese carmakers agree that US manufacturers are doing better. ``Detroit-built cars are far better than they were in the early 1980s,'' admits a Toyota spokesman, who added that ``it's good for business.'' Still, almost everyone concedes that Detroit still has a way to go.
Part of the problem is the difference in management culture and attitude between the US and Japan. The US industry operates from one 10-day sales report to the next as a measure of how well a company is doing in the marketplace. In other words, the operational mentality is short range. The Japanese take a longer-term view.
Also, ``quality is a moving target,'' as Richard Recchia, executive vice-president of Mitsubishi Motor Sales of America and former general sales manager for Chrysler, pointed out in an AutoWeek magazine article. As the quality of US cars improves, so will the quality of the Japanese-built cars.
The biggest problem facing Detroit is how to convince buyers that the quality of domestic cars is up. A lot of motorists either don't believe what they hear and read, or else they brush it off with a shrug. ``The perception is difficult to change,'' sighs a GM spokesman.
But the word is slowly getting through. One confirmed Ford buyer, who lives in the Boston area, says he's ``more than grateful to the Japanese for forcing the American car manufacturers to improve the quality of their products.'' Another local Ford owner says he has all but given up on his '85 Escort because of ``oil leaks, particularly in the transmission.'' He's now thinking of switching - but to a Pontiac, not a Toyota.
To get the car buyers' attention and hold their market share in the face of burgeoning overseas competition, US manufacturers have fired all barrels in their warranty war. Ford, GM, and American Motors have upped new-car warranty coverage to 6 years or 60,000 miles, plus 6 years or 100,000 miles on outer-body rust-through. Not to be upstaged, Chrysler has stretched its policy from 5-and-50 to 7 years or 70,000 miles (100,000 miles on rust).
It seems likely that manufacturers wouldn't be offering these longer warranties if they didn't feel they've licked most of their quality problems.
In his 1987 version of The Car Book, author Jack Gillis cites the Ford Escort and Mercury Lynx among the ``10 best subcompacts.'' The best compacts, by his estimate, include the Dodge Aries/Plymouth Reliant and Buick Skylark. In the intermediate category are the Chrysler New Yorker, Dodge 600, and Plymouth Caravelle. The full-size cars include the Ford LTD Crown Victoria, Mercury Grand Marquis, Chevrolet Caprice, and Pontiac Safari wagon.
US carmakers are a long way from the days when they rolled the cars out the door and buyers had little choice but to buy them. In the 1970s, the Japanese beat Ford, and the others, to a better idea - affordable, reliable, fuel-efficient cars - and consumers soon fell in line. Import sales soared.
Sales were ballooning so fast a few years ago that the Japanese, pressured by the US government, set a voluntary ceiling on the number of cars they would ship each year. The ceiling, now at 2.3 million a year, was extended for a sixth year April 1, thus giving US carmakers even more time to improve the quality of their cars and hold on to market share.