Bug Control At Chrysler

When Robert J. Eaton drove a prototype Cirrus sedan in March, the Chrysler Corp. chairman knew the car needed lots of improvement before it could roll into dealer showrooms. In his two days behind the wheel at Chrysler's proving ground north of Phoenix, Eaton noted the poor fit of dashboard pieces and other plastic interior trim. And he winced at the raucous clatter made by the V-6 engine when he punched the accelerator.

Eaton's vexation is proving momentous for the No.3 auto maker. The chairman quickly launched a major campaign to boost the quality of Chrysler cars. His first move: delaying production of Cirrus and its cousin, the Dodge Stratus, until fixes could be made. By Aug. 9, as production began ramping up--nearly a month behind schedule--Eaton's troops were still scrambling to make last-minute fixes. At stake: the lucrative market for family sedans that's dominated by some of the world's highest-quality cars, such as the top-ranked Toyota Camry. Chrysler "cannot afford to screw this one up," says William Pochiluk, president of Autofacts Inc., an automotive consulting firm.

HELPFUL YEN. Chrysler already has made some changes in the Cirrus. To help hide unsightly gaps, engineers added a five-millimeter lip to the joint where the Stratus' dashboard meets a piece of trim just under the windshield. And engineers are testing thicker steel in the underbody, hoping that such a change will reduce engine noise in the passenger compartment.

The company's aim: to best--or at least match--Japan's vaunted quality. The Cirrus and Stratus, along with a yet-to-be-named Plymouth version due in the 1996 model year, are priced from $13,000 to $19,000 and aimed right at the heart of the 2.5 million family-sedan market. Japanese models dominate the segment, even though the soaring yen has forced price hikes that give domestic models a $2,000 to $3,000 price advantage. That's because many young, affluent buyers remain extremely skeptical of Detroit's ability to build quality products. "This is our toughest market," concedes Steven Torok, general manager of the Chrysler/Plymouth division.

Chrysler has made strides in stamping out defects in much of its line during the past 10 years. In fact, its Town & Country minivans are tied with Toyota for the top spot in J.D. Power & Associates Inc.'s truck quality ratings. But its cars continue to lag the rest of the industry: All of Chrysler's car brands performed below average in J.D. Power's most recent survey of problems encountered during the first 90 days of ownership (table). In fact, of 31 brands, Chrysler's cars all finished in the lower third of the rankings, with the worst, Eagle, finishing 28th. The results were a real blow to the company. "We've been working hard, and I thought we'd end up doing a little better," says Eaton, who took the helm at Chrysler two years ago.

After the survey results appeared in June, Eaton canceled an internal preview of 1995 models at Chrysler's proving ground in Chelsea, Mich. Instead, he assembled the company's top 600 officers in a technical-center auditorium to tell them that "clearly, we need to put more focus" on quality.

To help, Chrysler has hired Process Development Corp., a Taylor (Mich.) consulting firm. Its goal is to help make the company's internal factory audits more closely match J.D. Power's survey. The company's Neon small-car team says PDC's guidance may allow them to equal Toyota Corolla's quality numbers in time for next year's Power survey. "We've talked about quality for 10 years," says executive-engineer John Fernandez. "The difference this time is, we're actually doing it."

POOR RADAR. Better audits could help Chrysler fix glitches before cars get out of dealer lots. Right now, executives often aren't alerted to problems until customers are surveyed 45 days after getting their cars. On high-volume models, that could mean as many as 30,000 unhappy buyers.

For the moment, Chrysler's nagging quality snags aren't hurting sales. With the car industry booming, Chrysler is sold out of nearly every product it builds and has a tight 45-day supply of inventory. Second-quarter earnings hit a record of nearly $1 billion. However, Eaton knows that this success could be short-lived. A few too many defects could drive demanding baby-boomer buyers away forever.

      QUALITY         RATINGS
      Ranking         Score*
       1. LEXUS        54
       2. TOYOTA       69
       3. INFINITI     75
       4. LINCOLN      76
       5. SATURN       78
      AVERAGE         110
      18. PLYMOUTH    122
      24. DODGE       144
      26. CHRYSLER    147
      28. EAGLE       155
      *Problems in first 90 days per 100 cars sold
Before it's here, it's on the Bloomberg Terminal.