Way to Go, Detroit--Now Go a Lot Farther

New-car quality is up, but what about the long term?

When J.D. Power & Associates Inc. released its all-important Initial Quality Study of new cars on May 6, domestic auto makers again crowed that they had narrowed the gap with Japanese vehicles and beat some of the pricey European makes. For four years, U.S. carmakers have been showing signs that they're getting quality right, and here, finally, was the proof. Domestic brands took three of the top six slots as once-moribund names such as Mercury and Buick -- yes, Buick -- jumped ahead of BMW and Toyota (TM ). General Motors (GM ) Corp.'s resurgent Cadillac division trailed only Lexus.

But will Detroit be able to exploit its quality gains? Unfortunately, many consumers still have doubts, and for good reason. Scores for the entire GM, Ford (F ) Motor, and DaimlerChrysler (DCX ) (DCX ) lineups are still below the industry average. Worse, Detroit has yet to make a convincing case that its cars hold up over time as well as Japanese models.

That's the acid test for most consumers. As it is, buyers still remember the bad old days, as recently as the early '90s, when U.S.-made vehicles were unreliable. Michael Austill, a Vestal (N.Y.) aerospace manager, suffered a 1980 Ford Fairmont, a clunky 1984 Pontiac 6000, and a 1995 Oldsmobile Aurora that was in the shop 18 times. He gave up on Detroit and has been happily driving Japanese and European cars since. "I have not [set] foot in a U.S. car showroom," says Austill.

The latest round of quality ratings probably won't convince buyers to abandon their skepticism. Although GM and Ford score well on initial quality -- measured by problems per vehicle in the first three months of ownership -- their cars still register as subpar over longer periods. In the April issue of Consumer Reports, a survey of defects in three-year-old cars finds that all of the big-selling domestic names finished below the industry average. That will only change if Detroit is able to continue pushing tight controls that would allow better-built cars -- such as Lincoln's Town Car, which gets high marks for reliability on the Consumer Reports survey -- to work their way through the market. Says J.D. Power product research director Brian Walters: "It will take years of good performance for the domestic reputation to change."

The Big Three have worked hard over the past decade to adopt many of the quality initiatives of their Japanese rivals -- and have come up with some of their own. All have tightened up inspections at their plants. They are working with suppliers to use proven reliable parts from existing vehicles in future models instead of engineering new parts from scratch. When launching some models, Ford keeps thousands of vehicles in holding yards for months of testing before shipping them to dealers.

To demonstrate confidence in its cars, Chrysler is offering extended warranties that can be transferred to subsequent owners. Says Chrysler marketing boss James C. Schroer: "We need to convince customers that the new vehicles being produced are reliable, and that when they go to trade them in, they'll get a good value." GM plans to launch an ad campaign in June called "Road to Redemption" that fesses up to years of inferior quality -- and points to its Power ratings as evidence of a turnaround.

If only it were that simple. Detroit still has far to go. Imports have built a durable image for quality by focusing much more on the parts of a car that drivers actually feel. Japanese and European autos have plusher interiors and better knobs, switches, and gauges. Consumers have had such a dim view of domestic cars that they regard some foreign cars as better built even when they aren't. They believe European luxury cars made by Mercedes-Benz (DCX ) Audi, and Volkswagen are among the industry's best, says Power. But in actual studies measuring problems, none of them ranks near the top. All were topped in the Power survey by Cadillac, whose sales are up 17% thanks to its new CTS sedan.

There's only one way to change that perception: Keep improving. Power's Walters says strong results in initial quality eventually pay off in long-term studies. So while GM is eager to play up its gains, North America President Gary L. Cowger knows the company still has plenty of work to do. "We want to become the best in quality, bar none," he says. If the Big Three can pull that off, buyers may actually start to listen.

By David Welch, with Kathleen Kerwin and Christine Tierney in Detroit

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