In reliability, Detroit forces BMWs, Benzes off the road
When Sajida Bhatti set out to buy a new car recently to surprise his girlfriend, he considered Toyotas, BMWs, and Mercedes-Benzes. He ended up with a Mustang convertible.
The reason: He thought a Detroit product would be more reliable than any of the big-name imports. "Reliability was very important to me," says Mr. Bhatti, a grocery store owner in Medford, Mass. "I did some research on several sites and came to the conclusion the Ford was best in overall quality."
Whether or not he's right, more and more consumers like Bhatti are coming to a conclusion that would have seemed heretical just a few years ago: that Detroit is, in fact, building cars that are equal or superior to imports from Europe and Japan.
That breakthrough in perception has been a long, pot-holed road for the Big Three US automakers, who lost out to Asian imports in 25 years of quality surveys by J.D. Power and Consumer Reports magazine. Over that period, a list of important new models has been hit with recall after recall that sullied the reputations of entire brands - indeed, the whole US auto industry. "Made in America" became a punch line or something for people to consider if they wanted to be patriotic, not to avoid trips to the neighborhood mechanic.
Meanwhile, Japanese companies, led by Toyota, made quality - measured by a lack of defects needing repairs - a priority. They built their reputation - and millions of sales of small, economical cars, SUVs, and pickups - on these studies. Ultimately, they grabbed more than 30 percent of the US car market.
Now Detroit is making substantial gains on the factory floor and in public perceptions. In one widely respected study, for instance, Ford and General Motors fell behind only Toyota in the number of cars ranked most reliable in their class over a three-year period. Similarly, Consumer Reports magazine, in its annual April auto guide, almost gushed about US manufacturers this year. "It's the first time American cars have done so well" compared with imports in its annual survey of hundreds of thousands of car owners in the US, it said.
"The domestics have made a strategic decision that they have to make quality a priority if they're going to win back a share of this market," says Gabriel Shenhar, a program manager at Consumers Union, the publisher of Consumer Reports.
Improvements for Detroit have largely come the hard way - through lots of incremental steps. Automakers have developed tighter relations with suppliers, at the same time insisting they warranty their parts for longer and provide them at lower costs. Factories have been modernized and workers empowered. Better design has made cars easier to assemble. And more parts sharing among models has increased production of the most proven axles and alternators.
While US cars don't quite match up with Japanese name plates across all models, they have passed most European vehicles in quality surveys and gained enough to put Ford, General Motors, and even Chrysler back on Americans' shopping lists.
"It used to be [American cars were] considered second rate in terms of reliability," says Jim Hossack, a senior consultant with AutoPacific, in Tustin, Calif. "Now it's looking about even."
Avoiding costly repair bills was a top concern for Regina Vukson when she bought a red Ford Focus hatchback last month through CarsDirect.com. "I drive 2,500 miles a month for my job," says Mrs. Vukson, "so reliability is important to me." She also considered buying a Toyota Prius, but in the end was unsure about its mechanical solidity. For reliability data, she looked to Consumer Reports and to her father, a mechanic who advised her to stay with the Ford.
"In a qualitative sense, the reliability and durability of American cars has radically improved over last 20 years," says Mr. Hossack.
But if domestic manufacturers are making significant improvements in reliability, consumers' perceptions haven't completely caught up. In a 2002 study by Allison-Fisher International, researchers determined that General Motors increased quality by 30 percent, but that more than 50 percent of American car buyers wouldn't consider GM vehicles because of reliability concerns.
In truth, the reliability of cars is improving among all manufacturers, both foreign and domestic. Indeed, the difference between a gem and a lemon is narrowing dramatically. While marginal cars are getting much better, good cars are continuing to improve as well.
Overall, reliability is increasing 5 percent to 6 percent a year, says Brian Walters, senior director of vehicle research at J.D. Power and Associates in Westlake Village, Calif. "So if you're not improving by at least that amount, you're going to fall behind in the rankings."
But American cars are moving up the rankings. In fact, the top-rated car in Consumer Reports' 2003 study was a Detroit mainstay, the Buick Regal. Over the past five years, US manufacturers have gained 26 percent in manufacturing quality, compared with 25 percent for the industry and only 23 percent for the Japanese.
"In fairness, the Japanese probably still lead the industry," says Hossack, "but I think Americans will close the gap to the point where it's not really significant."
Reliability, of course, is not the only factor consumers consider when buying a car. Nowhere is that more apparent than at this week's New York International Auto Show, where Ford, GM, and Chrysler are showing off their latest designs. They are introducing a flashy new Mustang, redesigned sedans, and even a sexy Buick convertible to win back buyers who have turned to imports because of style, innovation, and efficiency as well as quality.
While imports have taken over the small-car and crossover sport-utility markets, Detroit has clearly made gains, too. Cadillac, for one, is surging. It ranked seventh in reliability in the J.D. Power survey out of 37 brands.
European manufacturers, on the other hand, have declined sharply in quality in their rush to expand model lineups to match US and Asian competitors. For the first time, European brands such as Mercedes-Benz, Volkswagen, and Audi have fallen behind the Americans in both J.D. Power and Consumer Reports studies.
"The domestics are gaining, particularly on the Japanese imports," says Mr. Walters at J.D. Powers.