“Thou shalt have great quality.” It’s practically a commandment in the auto industry.
Indeed, it’s become so entrenched as part of our conventional wisdom that it ought to be chiseled in stone tablets for all to worship.
One of the main reasons cited as to why the Detroit auto makers are losing share in their home market is because their quality is not as good as the Japanese. However, the data tell us a different story.
Take a look at J.D. Power and Associates’ 2007 Vehicle Dependability Survey. This measures the quality and reliability of vehicle brands after three year’s of service, which provides a pretty good track record. Astonishingly, Buick is No.1, tied with Lexus. And this is no flash in the pan. Buick consistently scores well in most quality surveys and has for years.
Cadillac is in third place. Mercury is in fourth. Lincoln is tied with BMW!
Jaguar is rated better than Acura, Mercedes-Benz and Infiniti. And all these brands score better than the industry average.
But you know what Buick, Cadillac, Mercury, Lincoln and Jaguar all have in common? They are losing sales and market share. In fact, there almost seems to be a perverse relationship between their gains in quality and their losses in market share.
Now let’s go to the other end of the spectrum. Land Rover is dead last in the Vehicle Dependability Survey and has been near the bottom forever. It has twice as many defects as Buick. Worse still, Land Rover only makes gas-guzzling SUVs at a time when fuel prices are soaring. Goodness, the worst quality and lowest fuel economy! Must be a recipe for disaster, right? Nope. Sales are up a strong 7% this year.
And it’s not just Land Rover. Suzuki is rated second to last in the VDS. It, too, has twice as many defects as Buick. Yet, sales are up in a market that’s down.
Wait a minute, how can they be doing so well when their quality is (relatively) bad? Because this business isn’t only about quality. It’s about having a blend of strong attributes, including head-turning design, fresh product, the latest technology, attractive pricing, strong residual values and friendly service. And, yes, it’s about quality, too.
But in a word, this business is really about perception. And that’s where the brands I mentioned earlier are losing out. In fact, this is where the Detroit auto makers are losing out. Their biggest challenge isn’t improving quality, it’s improving the public’s perception of their products.
And therein lies the next great opportunity in the automotive business. Whoever can crack that code and produce tangible results quickly is going to get rich.
So all you struggling OEMs out there, please continue your investments to boost quality and come out with better cars. But you should also figure out how to set some shekels aside to work on this perception problem. I guarantee that you’ll get a better return on that investment because as the saying goes, “Perception is reality.”
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