Automakers want top-notch quality in their vehicles because a good reputation for quality sell more cars. The pleasant side effect of high quality is spending less to repair your own vehicles. Millions of dollars can be saved per one percentage point improvement in warranty costs. Cerberus was quick to crack down on quality woes when it took over Chrysler, and the early fruit of its labor is hundreds of millions of dollars in warranty costs avoided. Chrysler cars and trucks are hitting the dealer less for repairs than before, which has resulted in a 29% drop in warranty claims for the automaker. That's good news for the cash-strapped automaker, and a big reason the privately owned company has earned $1.1 billion since the company's sale. The positive swing in warranty claims means Chrysler can appropriate less money for warranty claims in the future, giving it more money to spend on R&D, engineering, and, hopefully, interiors.
If you're asking yourself, "Aren't Chrysler products close to last in J.D. Power initial quality studies every year?" you're not alone. Chrysler does tend to fare poorly in those surveys, but they concentrate more on things like cup holders, fit and finish, and general interior quality, all of which don't necessarily cost a lot to fix. The Pentastar is going to de-emphasize J.D. Power results going forward, and instead focus on the arguably more influential Consumer Reports rankings. Unfortunately, the Chrysler vehicles haven't fared very well there either, but that can always change. Thanks for the tip, Mike!
[Source: Detroit Free Press, Photo by Scott Olson/Getty]