GM Goes Back to the Drawing Board on Quality
By Chris Haak
After years of insisting to journalists and the general public that its vehicles had quality on par with its rivals, and that the problem was, instead, just a matter of “perception gap,” two top executives made remarkable statements today that threw all of that out the window.
GM Chairman Ed Whitacre has instructed the company’s Vice President of Global Product Engineering, Mark Reuss, to contact all of the roughly 200 individuals who bought and returned vehicles during GM’s 60-day money back guarantee program to get some unfiltered customer feedback. Of approximately 200,000 GM vehicles sold during the promotion, only 653 opted for the money back guarantee in lieu of an additional $500 cash incentive. This means, of course, that almost a third of the 653 people returned the cars that they bought between 31 and 60 days of their purchase date. According to the company, the majority of the 200 people who returned the vehicles they bought ended up purchasing a different GM vehicle, so they weren’t necessarily lost sales.
The company needs to focus more on customer satisfaction – which goes a long way toward improving its performance on the JD Power surveys – as well as quantitative reliability measures such as those tracked by Consumer Reports or the upstart TrueDelta site. During an hourlong roundtable interview with reporters (which you can download here if you’re so inclined), Whitacre said last week that the Consumer Reports results, released at the end of October, were “very disappointing.” Last week, Whitacre said that he expects a more favorable review from Consumer Reports in 2010. Left unsaid was whether his expectation is based on improvements he knows already in the works, or was more of a threat to Mr. Reuss and others who have responsibility for product quality.
It’s really difficult for the company to claim quality superiority (or even parity) when a publication as widely-read as Consumer Reports is showing so many black marks (literally) on many GM products. The Cadillac CTS and STS, Chevrolet Aveo, Colorado, and Suburban, GMC Canyon and Yukon, and Saturn Vue all have worse than average predicted reliability, according to Consumer Reports. There are also several other GM models with slightly below average predicted reliability, such as the Cadillac DTS, Buick Lucerne V6, Corvette, and Silverado.
GM shouldn’t be surprised by these results, as upstart TrueDelta, through its different methodology yet smaller sample sizes, has been able to document vehicle reliability far faster than Consumer Reports has been able to. TrueDelta noticed over a year ago that the 2008 Cadillac CTS was having reliability problems that were worse than average. Heck, I noticed this myself when I had to take my 2008 CTS to the dealer for warranty work on the interior trim, navigation and OnStar numerous times earlier this year. According to TrueDelta, the 2008 CTS was much worse than average, but recently has been showing closer to average reliability. Meanwhile, the 2009 CTS is doing even better than average – and CR hasn’t yet picked up on either of those trends, and won’t until next year.
TrueDelta, as a startup site, has very small sample sizes for most car models, and this makes some buyers nervous about trusting the data, but there has been a correlation between TrueDelta’s findings and Consumer Reports’ findings time after time, except that TrueDelta’s quarterly reliability result updates beat CR to market by months, and sometimes by nearly a year. Perhaps Mr. Whitacre is aware of TrueDelta’s data showing that reliability has been improving somewhat, and therefore expects that CR’s 2010 results will be better than 2009’s because TrueDelta is pointing toward that happening. Kind of like a statistical crystal ball – or a statistical canary in the mineshaft, whichever you prefer.
Mr. Reuss saying that reliability remains an Achilles’ heel for the company (note that he said it remains one, not that it had been one in the past) is remarkably frank talk from the guy whose job it is to improve it. But such straight talk, while much appreciated, seems to be contrary to statements made by executives such as Bob Lutz, who claim that GM makes some of the best cars in the world.
Further, if GM hopes to boost customer satisfaction, I can only hope that managers will be measured on sales results and not the ridiculous customer satisfaction surveys where customers are strongly encouraged to mark “completely satisfied.” It will be interesting to see how the company claims to be working on quality improvement while at the same time trying to convince potential customers that it already has good quality.
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