Chrysler Says It No Longer Must Be ‘Embarrassed’ Over Quality
By Tim Higgins - Jun 22, 2011
Chrysler Group LLC, the U.S. automaker operated by Fiat SpA (F), said the rate of customer warranty claims dropped 58 percent since 2007 as the company improved its “horrible” quality and customer perception.
“We’ve gotten ourselves, at least with our internal data, to where I don’t think we have to be embarrassed,” Doug Betts, Chrysler senior vice president of quality, said in an interview in advance of researcher J.D. Power & Associates releasing its annual initial-quality survey of new vehicles. He spoke yesterday and said he hadn’t seen Chrysler’s results yet. “Now we have to wait for the third parties to catch up.”
The automaker’s Chrysler brand finished 23rd in the J.D. Power survey last year with 122 complaints per 100 vehicles, Jeep ranked 27th and Dodge was 28th.
Betts, who joined Chrysler in 2007, has pushed the automaker to work better across divisions to find the root of problems that arise and fix them faster.
“We treat every day like it’s a crisis and every car like it’s at death’s door without our intervention,” Betts said.
Chrysler estimates that its rate of warranty claims in 2007 was 60 percent higher than the industry average, Betts said. That rate has fallen to 15 percent below the industry average this year, he said.
The automaker used to focus on warranty costs, Betts said. “That caused us to work on problems that were more expensive, maybe occurred a lot less frequently,” he said.
Chrysler changed “to say if a customer has to bring the car in to be repaired, that reaches a threshold of pain for the customer. We’re going to work on frequency, not cost.”
While he wouldn’t say how much the effort has saved Chrysler, he said warranty-cost declines “correlated” with the claim decreases.
Chrysler has introduced 16 new or redesigned vehicles to increase sales and earn a profit.
The renewed push to improve quality came as Fiat gained control of Chrysler in 2009 from Cerberus Capital Management as part of the U.S. automaker’s bankruptcy reorganization.
Chrysler’s quality “had not been good under the auspices of Cerberus,” Rebecca Lindland, an industry analyst with IHS Automotive, said. “Horrible would be one option” to describe the quality.
“We’ve seen a significant improvement in their products and their reliability,” she said.
Consumer Reports on June 21 said the automaker’s redesign of the Dodge Durango sport-utility vehicle and Charger sedan had improved the vehicles while they continued to lag behind competitors such as Toyota Motor Corp. (7203) and General Motors Co. (GM) Those two vehicles received “very-good” scores, trailing the magazine’s “recommended” rating.
The magazine tested eight of Chrysler’s vehicles and said five of them “remain unimpressive.” The Chrysler 200 and Dodge Avenger sedans and Dodge Journey, Jeep Patriot and Jeep Compass SUVs are “mediocre vehicles,” the magazine said. The Chrysler Town & Country minivan was rated “very good.”
Betts said the Consumer Reports results were important and that he found it “encouraging” that the results showed improvement on vehicles that had been refreshed or redesigned.
“We were disappointed in some of the ones that we just intervened on, like the 200 and the Avenger,” he said. “We thought we had made a bigger impact to those cars than what was reflected.”
The redesigned Jeep Grand Cherokee has helped the automaker boost its U.S. sales this year 19.5 percent through May, according to researcher Autodata Corp.
The SUV went on sale last year with 50 percent fewer problems than the average of Chrysler’s previous three vehicle introductions and returned to the previous model’s warranty- claim rate within four months compared to previous new designs that typically took a year or more, Betts said.