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Phew, Chrysler, Ford and GM Survived; Time to Resume Worrying About Quality

Now, where were we, before the Great Recession, the worst U.S. auto sales per capita since World War II, and bankruptcy for Chrysler and GM interrupted us in the last couple of years? Oh, yeah, quality.

For a while there, when people asked if it was "safe" to buy a car from Chrysler or GM, they meant whether it was safe to assume the companies would still be in business in the next couple of years. We seem to be past that immediate crisis now, so we can go back to worrying about quality.

There's a lingering perception that the U.S. domestic brands are inferior to Japanese brands in product quality. Korean brands, namely Kia (KIMTF.PK) and Hyundai (HYMLF.PK) have also taken great strides. To an extent the domestic brands still have some catching up to do, but not as great an extent as it was.

According to the results of a survey recently released by Consumer Reports, Ford (F) and GM are closing that quality gap. Chrysler? Not so much, Consumer Reports said.

The need to improve product quality has been one of the few constants in the U.S. auto industry for decades. After a disastrous start in the late 1950s, Japanese brands led by Toyota (TM) got serious about quality and eventually upped the ante for the entire auto industry. By the 1980s, there was no ignoring the fact that Americans had bought into the concept that they didn't have to buy cars with major bits and pieces designed to start failing after a few years.

Chrysler, Ford and GM "got it" years ago that they needed to improve quality; they're not in denial, haven't been for ages. For a long time, they steadily chipped away at it, only the see the Asian competition improve even more. Nowadays, you're starting to see individual models from Ford and GM that outperform their Japanese competitors on quality surveys.

While Toyota and Honda (HMC) still dominate the rankings, Consumer Reports said recently that GM brands Buick, Cadillac, Chevrolet and GMC were much improved. Cadillac was the most-improved brand. About 70 percent of GM models had average or better reliability, the survey said. It said 90 percent of Ford and Lincoln models had at least average reliability.

The Consumer Reports survey is based on responses for 1.3 million vehicles owned or leased by subscribers to Consumer Reports or its Web site, The survey was conducted in the spring of 2010 by the Consumer Reports National Survey Research Center, and covered model years 2001 to 2010. Basically, based on complaints about existing models, survey analysts try to predict the future reliability of models being sold now.

That's a different approach from the J.D. Power Vehicle Dependability Study. VDS measures "things gone wrong" on 3-year-old models, vs. the same models when they were new. In the 2010 survey, the Cadillac DTS model (shown) has the fewest problems in the industry, with just 76 problems per 100 vehicles.

J.D. Power earlier this year bounced those results off another survey, in which people explained why they didn't consider a particular brand. The results showed that Cadillac, Ford, Hyundai, Lincoln and Mercury had the greatest lags between favorable results in actual performance on the dependability study, versus consumer perception. That wasn't enough to save Mercury. Ford is dropping Mercury after this year.

Chrysler has said in recent memory that its quality is greatly improved, and that its warranty costs are down, meaning it has to pay for fewer repairs on nearly new cars. Those are all good things, but as Mercury illustrates, a reputation for poor quality still hurts, even if it's undeserved. It takes a long time to turn those reputations around.


Photo: GM