General Motors Co. (GM)’s fight to overtake Toyota Motor Corp. (7203) in quality began with simple things such as relocating door-lock buttons to a more convenient location and using ostrich feathers to dust vehicles before painting.
“It’s a thousand little things that are done just an inch better at a time that adds up to getting a product that’s right at the top of the list,” Mike Hardie, director of global quality strategy at GM, said yesterday in an interview.
J.D. Power & Associates has asked consumers since 1987 to detail all the problems they’ve had with their new cars or trucks. Detroit-based GM as a corporation had the best performance in the industry for the first time, beating the stalwart Toyota. Its GMC truck brand trailed only the Porsche luxury car line. Chevrolet leapfrogged the Toyota brand. Eight GM models had the fewest problems reported within their segment; the next closest was Tokyo-based Honda Motor Co. with three.
The results released yesterday of the Initial Quality Study, which surveys owners after their first three months with their new car, are a sea change for an industry long led by Toyota City, Japan-based Toyota. While GM’s performance was driven by pickups and large sport-utility vehicles that have been its bread and butter for decades, it’s joining Ford Motor Co. (F) and Chrysler Group LLC in introducing the best passenger cars that Detroit has built in a generation.
“There’s been a whole culture change at GM,” David Sargent, J.D. Power vice president of global vehicle research, said in an interview. “They are much better now at thinking about the consumer when they originally design the vehicle. There was a time in the past when they figured they knew how to design and build vehicles and the consumers would buy them.”
Toyota is used to dominating Westlake Village, California-based J.D. Power’s annual study. Its Lexus luxury line slipped to No. 3 after leading all brands the two previous years. The LS large premium car was Lexus’s only segment winner in 2013 after the brand grabbed the most awards each of the previous four years. Lexus cars and SUVs topped every segment that it competed in just seven years ago.
“When GMC and Chevy are above Toyota and Honda, something’s going on,” J.D. Power’s Sargent said. “If you were to ask me the question, what corporation has the best quality in the entire industry, the answer would be General Motors” for the first time, he said.
GM’s new approach is evident with the Chevrolet Camaro, which tied Dearborn, Michigan-based Ford’s Mustang in leading the sports car segment. Designers moved the button of the Camaro’s door lock after customers complained about its previous location in the vehicle’s center console, Hardie said.
“People found it inconvenient because the expectation was that they were on the door,” he said.
GM also looked to address previous quality surveys that found customers complaining about the quality of vehicle paint jobs, in particular on the Camaro. GM joined other carmakers in using feathers from female ostriches to dust their vehicles at the factories before they get a final coat of paint.
“We try to take extraordinary care of all our paint but the Camaro is one that people actually tend to hand wash,” Hardie said. “It’s something that we know about the customers, and so we try to make sure that we have product that’s perfect for them so as their hand washes they don’t notice any defects anywhere.”
Improving initial quality is part of GM’s work to build customer loyalty and retention. That bolsters the company’s strategy to increase the company’s North American operating margins to 10 percent by mid-decade from an average of 7.4 percent during the past three years.
GM figures that it can generate $700 million in revenue for every additional percentage point of customer retention.
‘Customers Are Important’
“This wasn’t something that we just did overnight; it’s been years in the making that we recognize that our customers are important and that we want to be a recognized leader in initial quality and long-term reliability,” Alicia Boler-Davis, GM vice president of global quality, said in an interview.
She’s been leading an effort to improve the customer experience and tracking customer feedback.
“It enables us to respond very quickly when there are issues but it also enables to take that feedback and feed it back into the vehicle development process,” she said.
Complaints about the location of GM’s door-lock buttons, for example, were taken to account for new vehicles such as the Chevrolet Spark before it was introduced last year in the U.S.
GM’s improvements in quality come as the automaker introduces 18 new vehicles in the U.S. this year to refresh its showrooms after its lineup grew stale following its 2009 bankruptcy reorganization. The new product is aimed at improving the company’s profit and U.S market share, which dipped to an 88-year-low in 2012.
GM’s quality was helped by a lack of new products rolled out last year, Larry Dominique, executive vice president of Santa Monica-based auto researcher TrueCar Inc., said in a telephone interview.
“Vehicles that have been in the market longer tend to do better over their life,” he said.
While it’s likely GM will slip next year because of all the new car and truck introductions it’s managing in 2013, the improvements the company has made are likely to stick, J.D. Power’s Sargent said.
“I think if GM’s No. 1 as a corporation next year, I’ll be surprised and they will be surprised,” he said. “They’re not falling below average anytime soon. It’s almost impossible to launch at that level across a wide array of products. If they do it -- fantastic.”
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