Ford global warranty costs slashed by $1.2B over last two years
There are several metrics to determine if a manufacturer is producing high-quality vehicles. J.D. Power surveys and Consumer Reports are useful consumer tools, but one statistic tells the automakers how well they're doing perhaps more than any other: warranty costs. At the turn of the 21st century, Ford was dumping billions of dollars into warranty vehicle repair, but the Blue Oval says that recent quality gains has cut warranty costs by $1.2 billion over the past two years. In fact, since 2004, warranty repair work has been reduced by 50%. Amazingly, the warranty cost reductions come as Ford has increased warranty coverage from 3 years and 36,000 miles to 5 years or 60,000 miles.
Ford says it has improved quality by scrutinizing every part of the vehicle creation process. Computer-aided design and engineering is cutting cost while also delivering more precise data, and the Blue Oval's global product development system delivers standardized engineering. Ford has improved its processes at the plant level as well. Each of the automaker's facilities has a variability reduction team that weeds out oddball processes, removing the chance for error.
18 of Ford's 24 models have fewer Things Gone Wrong than the year before, and every vehicle since 2005 has better quality than its predecessor. Ford promises that new models like the 2010 Taurus will continue the tradition of improved quality, giving the Blue Oval a solid shot at passing the Japanese competition in J.D. Power and Consumer Reports. The result for Ford is much-needed cost savings, but the larger victory comes from the fact that customers are spending less time in service and more time on the road. Hit the jump to read Ford's press release.
[Source: Ford | Photo by Justin Sullivan/Getty]
PRESS RELEASE:
DEARBORN, Mich., Feb. 2 /PRNewswire-FirstCall/ -- Ford Motor Company's (NYSE: F) steady vehicle quality improvement in recent years is beginning to translate into significant savings for the company and far fewer trips by customers to the repair shop.
In the past two years alone, Ford has reduced its warranty repairs costs by $1.2 billion, according to the latest company figures. These savings can be attributed to four straight years of quality improvements on Ford, Lincoln and Mercury vehicles. Ford's initial quality is now in a virtual tie with Honda-Acura and Toyota-Lexus-Scion for the 2008 model year, according to the latest U.S. Global Quality Research System (GQRS) study.
Ford strives to be best in class in every phase of vehicle development - from design to pre-delivery - internal measures continue to show the company is making significant quality strides.
For example:
-- The warranty repair rate for Ford, Lincoln and Mercury vehicles in the United States is now almost 50 percent lower than it was in 2004.
-- Ford F-Series Super Duty and Lincoln Mark LT rank atop their respective segments with fewest "things gone wrong" (TGW) and in customer satisfaction.
-- Ford Mustang GT500 had the least number of TGWs among sports cars.
-- Overall, 18 of 24 Ford domestic brand vehicles posted TGW improvements.
"Ford is following a set of standardized processes around the world in product development, manufacturing and purchasing with a discipline this company has never seen," said Bennie Fowler, Ford group vice president, Global Quality.
Continued Improvements
The drive to improve quality is most evident during a new-model launch. Since 2005, each new model from Ford has consistently delivered better quality - as measured by warranty rates and things-gone-wrong metrics - than the models they replaced.
"The last 24 months have revealed some of our best quality results," said Curt Yun, director, Global Warranty. "Our new models have been achieving continuously declining warranty repair rates and lower warranty costs, as a direct result of our overall quality improvements."
In the U.S., for example, owners of Ford, Lincoln and Mercury vehicles have reported fewer concerns at three years in service for each of the past five years, according to the Global Quality Research System (GQRS) survey, compiled for Ford by the research firm RDA Group.
"We've reached the point where our initial quality is second to none among the full-line manufacturers," said Fowler. "We expect that high quality to be reflected in future high-mileage surveys as our new models age."
Built-in Design Quality
Ford's Global Product Development System ensures quality is built-in early in the process. It starts with the company's commitment to develop and implement consistent standardized engineering processes. By fully utilizing Computer Assisted Design toolsets, Ford is signing off on all aspects of its designs even before the first prototype is built.
Ford's design and engineering analysis processes make it possible for problems that previously might not have surfaced until launch to be flagged and corrected in the virtual world. Ford uses cutting edge virtual tools to verify up to 40,000 design standards in its Virtual Engineer Lab. Virtual technology also is used to confirm that the product can be manufactured with quality in the assembly plant for which it is slated.
Manufacturing Quality Process
Ford also provides assembly plant teams the necessary tools to deliver quality in the manufacturing process. For example, the company's Quality Operating System (QOS) is critical for identifying and correcting problems within the manufacturing facilities.
QOS is implemented in each plant by Variability Reduction Teams (VRT) - cross-functional groups of engineers, plant management and product specialists, including the company's most skilled problem solvers who've been trained through Six Sigma. Each team is assigned to one of 12 vehicle subsystems crucial to customer satisfaction, such as paint or body interior, and examines every detail, looking for imperfections so slight that even the untrained eye, or ear, could not detect them.
For example, Ford's 2010 Taurus was subjected to rigorous testing for squeaks and rattles at each design phase. Every inch of the vehicle was scrutinized for unwanted noise from the outside in, down to the sound of the Easy Fuel(TM) Capless Fuel Filler door when it's closed.
Another example includes the development of Ford's new fuel-efficient 3.5- liter EcoBoost V-6 engine. By the time the first twin-turbocharged, direct injection engine is decked to a 2010 Lincoln MKS this summer at the Chicago Assembly Plant, the equivalent of more than one-million grueling test miles will have been logged by EcoBoost prototypes.
Ford also uses a process called Early Claims Binning to help streamline communications about potential quality issues between plants and dealerships. Warranty claims are fed to the assembly plant every day where the issue is dissected and either traced back to the installation process and addressed on-site or fed back to the design engineer for resolution in design.
Customer-driven Quality
Ford's commitment to deliver the best quality possible for its customers is unwavering and the company is committed to pushing its quality levels even higher.
As Ford's newest vehicles hit the road, company officials expect warranty claims to continue their downward trend.
"I see the recent $1.2 billion in worldwide warranty cost savings as a compelling reason to continue down this path," Yun said. "Instead of setting aside those funds to fix cars, we'd much rather invest it in exciting product programs for our customers."
Ford's commitment to world-class quality extends beyond preventing things that go wrong. Customer-driven product features, such as fuel economy, craftsmanship, and quiet interiors are designed into the vehicle to deliver an exceptional and affordable ownership experience.
"This is One Ford at its best," said Fowler. "It has taken thousands of dedicated people, from the plant floor to the executive suite, working together to strive for quality every day."
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Reader Comments (Page 1 of 2)
TigerMil 11:01AM (2/03/2009)
Amen. At last a reasonable metric.
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DJ_Swammi 12:20PM (2/03/2009)
Only if it's warranty cost per/vehicle. If it's just gross costs, then this could be an indication of declining market share; fewer new Fords sold, less cost to service them when they break.
In that case, this would be a rather troubling statistic for Ford.
Randy 1:47PM (2/03/2009)
@DJ_Swammi
Good point but it's an accurate measure! Ford quality is seriously that good now! They are a hair away from toppling Toyota and Honda in quality ratings! If not already have!
I know one thing with certainty about Ford! They are pretty serious about being the best! You can see it in everything they're doing! I for one am happy that Ford stepped up! Now if only GM can get there sh together....
Congrats Ford
DZ 2:11PM (2/03/2009)
Wow Randy!!! Is that an Exclamation Point after every Sentence or are you just happy to see us!!!!! (sorry had to throw that in there)
On the serious side i do agree with you, yes their quality is really improving. Just drive a new ford and and one from even two years ago and its apparent. I had a Fusion for a courtesy car two years when the wifes Altima was in the shop, and it drove and felt horrible. A couple months ago I drove my Dad's new daily driver a Fusion and it was like Night and day.
Josiah 11:09AM (2/03/2009)
Playing devil's advocate for a bit (kudos to Ford though really)....
Could Ford be turning down more warranty claims? Does the new 5 year warranty differ from the old 3 year in what is covered?
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ua5j32a2 11:21AM (2/03/2009)
All this means to me is that there are simply more Ford owners out there unhappy with declined warranty coverage.
nardvark 11:22AM (2/03/2009)
Don't think so. We've never had any trouble getting warranty work done at our Ford dealer.
The bumper to bumper warranty is still 3 years, it's the powertrain warranty that's gone up to 5 years. The fact of the matter is that you really have to abuse a modern engine or transmission to cause a failure within 5 years, so the increase in the powertrain warranty costs them very little. It gives them warm fuzzies to put in their commercials for little extra expense, though Hyundai is still king of the warranty fuzzies.
Gary 11:09AM (2/03/2009)
Good for Ford, although Consumer Reports reliability surveys are questionable. In their most recent car buyers guide, there is an area which shows how many car model's repair frequency in a bar chart (not the little circles). The bulk of the cars were plus or munus 20% of the average. Which car came out on top by a large margin--80% more reliable than the average?
The car that Jesus himself would drive. The Prius. Since smug Prius drivers are the one filling out the surveys, they don't want the world to know that the Prius has any problems whatsoever. They want to encourage everybody to buy a Prius. Even the Camry Hybrid is better than the regular Camry in the CR survey.
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nardvark 11:22AM (2/03/2009)
I think Toyota devoted an inordinate number of resources to the Prius design and production process. They couldn't afford to have it flop due to quality concerns, since it is basically a marketing expense, not a profitable high-volume car.
Eric Liberatore 11:25AM (2/03/2009)
While I agree there are lots of smug Prius owners out there I drive one as a company car and could care less about any image this car gives. It replaced my previous Ford company car, a Freestar and before that a Taurus. The Freestar had the worst interior of any car I've ever been in and things like door seals were falling off within the first year and it had park benches for seats. The Taurus had to be towed in for two new alternators with three months and also suffered from the same lousy interior. I have had the "fleet Prius" now for almost a year and nothing has broken, come loose, squeaked, rattled, leaked or warped. It is a great quality car on its own regardless of image and would buy one with my own money.
Consumer Reports surveys are filled out by the owners of cars. Are you saying that if you filled one out on your Ford that you would lie to protect Ford's reputation? Why would an unsatisfied Toyota owner lie? Are Ford Hybrid Escape/Fusion owners too smug to fill out their reports honestly too?
Tang 11:15AM (2/03/2009)
Woo! Go Ford.
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MajorGeek 11:23AM (2/03/2009)
Ford can almost do no worng over the past 6 months. I will be curious to see how all this positive press translates to additional sales in these weird times. Oh, if anyone from Ford is reading, I am waiting for the Raptor, could you up it 6 months? Thanks!
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Nightcrawler 4:15PM (2/03/2009)
"Ford can almost do no wrong over the past 6 months."
Except for that losing money thing of course. But I agree with you that all the product related news seems very positive lately.
DJ 11:24AM (2/03/2009)
We own three Ford products, a 2008 Mustang, a 2007 Volvo XC 90 and a 2004 Jaguar XJ8. We have owned all three since they were new. So far, we have had only one warranty claim/issue for all three, a punctured air bladder on the Jag's front suspension. And that was really more of an accident than actual part failure. Ford has come a long way since the days of "Fix Or Repair Daily" or "Found On Roadside Dead".
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jw 11:44AM (2/03/2009)
WOW, THAT IS GOING TO HURT THE DEALERS. WARANTY INCOME IS ABOUT 25% OF THE DEALERS NET PROFIT!!!WELL FORD IS JUST BUILDING A BETTER CAR AND IT SHOWS...SORRY CHRYSLER!!!
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BobinCobb 11:31AM (2/03/2009)
When Ford was building Probes on the Mazda MX-6 platform the Probes used inferior parts as compared to the Mazda MX-6 parts, especially electrical parts. The dealers thrived on this. When my spark plug wires failed during warranty, the dealer found the bad plug wire on the first diagnostic test, but ran16 additional tests that gave the same results for a total of $370.00 billed to Ford. The total bill to find and replace a single defective plug wire was $600. plus.
The plug wires were carbon saturated string.
When the next plug wire failed, out of warranty, I went to the Mazda dealer, bought the MX-6 all copper plug wire set for $103.00 and never had another problem.
Fords "cheaper" parts were low quality. It cost the many millions to save a few bucks on the initial building of the car. Cylinder heads, battery and plug wires failed in the warranty period costing them thousands on my car alone and they lost a customer forever !
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miles 12:08PM (2/03/2009)
I understand where you're coming from, but that was about 15 years ago, right? Seems like they've changed...
chconline 11:32AM (2/03/2009)
Go Ford! I am proud of you.
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MikeofLA 11:44AM (2/03/2009)
I wonder if this has anything to do with why they are not borrowing my money to save their ass (yet)... Hey GM, Chrysler, take note. Build a car that works and maybe you won't need a bail out. If I buy American again, it will be Ford... again.
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GusTurbo 11:46AM (2/03/2009)
This is great. I've heard so many people just scoff at the idea that Ford(and the other domestics, for that matter) is getting better. Now there's actually something I can use to convince them.
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