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| Impressive Improvement 1999 - 2010 |
My cousin David recently posted an MarketWatch article: Car quality is slipping. He is one of my most faithful readers. He routinely provides sound critiques that are either positive, suggestions for improvement, or simply another perspective on my take. David did not alert me to this article. He didn’t have to. I am sure as he was posting it, he just assumed I would notice it, read it, and dedicate a blog post to the topic.
As readers of this blog know, I cut my career and corporate in the specific field of automotive quality. I started working at Ford Motor Company in the mid-1970s. My first job was as a Warranty Analyst responsible for tracking and detecting early problems on about fifteen minor subsystems of cars and light trucks. The goal was to detect increases in defect rates before a burgeoning problem got out of hand to minimize the costs to the company and… oh yeah… to improve quality and nurture customer loyalty. This was my job. I took data from mainframe printouts, entered select parts into an HP precursor to the personal computer and create reports. With today’s ERP systems, I could have probably done that reporting job in about 5 minutes and for the entire company, not my measly fifteen subsystems.
We looked at warranty repairs from two perspectives: 1 month-in-service and 3 month-in-service data. We reported repairs per 100 vehicles (R/100). In their Initial Quality Study (IQS), J. D. Power looks at complaints from new vehicle customer complaints in the first 90 days, essentially 3 months-in-service, of ownership per 100 vehicles which is represented as problems per 100 vehicles (P/100 or PP100). It must be noted that the R/100 was based on actual repairs where the PP100 is based on complaints which might not all necessitate repairs.
Per a paper, Recovering from a bad reputation: changing beliefs about the quality of U.S. autos:
In 1980, the Big Three averaged 740 defects per 100 vehicles assembled, whereas Japanese imports averaged 205. The cost to Chrysler of such defects was $274 per car (see Kwoka, 1991). By 1989, however, substantial effort to revive production techniques, labor relations, and parts procurement had been made. The result was a 78% reduction in the number of defects, to 161 per 100 vehicles.
The 1980 data seems about right to my recollection. The defect rate was 7.4% for the US auto companies. The defect rate dropped to 1.61% as a result of the Quality Revolution triggered by the groundbreaking NBC White Paper, If Japan Can, Why Can’t We?, which aired on June 24, 1980. It was an incredible decade of employing sound quality engineering and quality improvement methods.
From the graph of the J. D. Power IQS, we see that in 1999 US Brands were 177 PP100 and the imports were at 150. By 2010, the US Brands at 108 and the Import Brands were at 109. There seemed to finally be quality parity. The refocusing and downsizing of the Great Recession closed the gap.
Since then, things have crept up with the following results being reported in the MarketWatch article:
New car owners are experiencing more problems in the first 90 days of ownership than ever before… This year’s cars showed the worst overall initial quality in the study’s history… The numbers had been trending down in recent years. Last year, the industry average was 162 owner complaints per 100 vehicles. In 2020, that figure was 166.
This year, it was 180.
The number reported here were the consolidation of the US and Import Brands. Surprisingly, to me as I am so removed from the industry, GM has four brands in the top 10 with Buick at #1 with 139 PP100. There are a whopping six American brands in the top 10, two Korean, BMW, and just Lexus representing the Japanese. Astonishingly, Toyota is #14 and Honda is #16.
I have been awfully hard on Ford and GM in this blog over the years, but I must backtrack and take my hat off to them for this performance that took decades to achieve… especially GM.
So, why is quality going in the wrong direction. Again, not being in the industry I can only conjecture. I think there are two factors. First and foremost are the supply issues the industry is facing. It is well reported that the inventory of available cars are low because of supply chain issues of parts of various types with chips being the most notable. I am sure the supply production issues out of China due to their massive Covid lockdowns. Other labor shortages have disrupted truck transportation due to the Great Resignation/Retirement further hampering efficient supply chain operations.
When there are supply shortages, everyone is pushing to increase production to meet demand. This demand ripples through the entire supply chain. Suppliers are more likely to ship parts slightly out of specification and the manufacturers are more like to accept and use such parts. I guess the lay term we would calling cutting corners or in this case sacrificing quality to meet demand. It may be just this simple.
Another factor could be the complexity of cars has increased dramatically since the 1980s and 90s. Complexity can bring more defects and more complaints. Cars are laden with electric motors to power everything from seats and mirrors and the use of electronics in almost every subsystem have simply mushroomed. It makes me wonder how many of the “complaints” are not being able to figure out the nuances of the navigation system or changing the clock to and from daylight savings time.
Lastly, here is a list of from the articles of all the PP100’s by brand. Tesla is notably missing. The MarketWatch article noted, “Tesla did not provide complete data. It received an unofficial score of 226 based on the limited data available.” Wow. If this is true, the innovative maverick and darling of Wall Street until recently would be in the bottom quartile of quality. Per an article in hotcars.com, these issues do not seem to matter to some Tesla buyers as much as one might expect:
Then there are those buyers that don’t even consider quality when shopping around for a vehicle, instead looking for what would project their desired image. Tesla fits nicely in most people’s minds because their cars are state-of-the-art, trendy, and expensive. Anyone who is image-obsessed is instantly drawn to products like Teslas, as they have a luxury vibe about them.
Even though I have not worked in the automotive industry since 1989, the subject of automotive design and quality are of great interest to me. It will be interesting to how Toyota and Honda respond to being behind GM and Ford in quality as defined by J. D. Power’s IQS. I am certain I will blog about this again.
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