Is Your Car As Good As You Think It Is?
The BMW X5, the sleek $50,000 sport utility, and the Ford Focus, the humble-but-nimble $15,000 compact, have more in common than one might think: Not only are they universally loved by drivers, but they are also two of the most-recalled models in automotive history.
The X5 recently pulled past the Focus, 12 recalls to 11. Among the reasons for the X5 recalls were such relatively mundane errors as "the lower end of the spindle in the steering linkage knuckle may not have been inserted completely into the coupling." While most of these may fall under the "pain-in-the-neck" category instead of the "blow-up-and-die" one, it may be worthwhile for potential buyers to think about whether the high-priced auto they've set their sights on is really as good as it should be.
The automotive industry is full of these kinds of conundrums. Why is it that many vehicles that drivers love--and even consider high quality--are often riddled with problems? And why do vehicles that are made of things that look nasty but never break end up at the top of quality lists?
"Most of the focus in the industry is on things gone wrong," says Joseph Ivers, the executive director for automotive quality and customer satisfaction at J.D. Power & Associates. "But things gone right account for more of a customer's satisfaction."
General Motors' (nyse: GM - news - people ) venerable Buick LeSabre has the best J.D. Power initial quality scores among all midsize sedans, but it also has an interior that features cheap-looking plastic and stodgy, if adequate, engine technology. (J.D. Power bases its research on hundreds of different reports, many culled from driver questionnaires, which gauge such factors as initial quality, long-term dependability and appeal.)
Volkswagen's Audi A6 is drop-dead gorgeous inside and out; it has engine options such as a twin turbo V-6 that turns out 250 horsepower. And, unfortunately, it gets Consumer Reports' lowest reliability ratings and J.D. Power's lowest mechanical quality rating.
Certainly J.D. Power and Consumer Reports ratings are not an exact science--much of their data is based on questionnaires and surveys, an inherently subjective game. An Audi A6 buyer may be more demanding, given what he paid for his car. Or perhaps it's the other way around: The Audi A6 driver may feel so cool--and may be having so much fun--that he doesn't mind if things aren't perfect.
So what is quality anyway? Is quality high-technology, high-performance equipment and features? Is it stuff that just doesn't break? Is it material that feels great or looks rich? What if the high-tech stuff makes for a great car--only if and when it works? Or what if the best-looking material wears out too fast?
The question is complicated, and carmakers and car buyers often come up with different answers. General Motors has spent years trying to improve its quality, measured by the number of things that go wrong with its vehicles, and the company has made gigantic strides. The Chevrolet Malibu made the biggest initial-quality gain over the past five years of any vehicle model, according to J.D. Power, improving by 58%. It now holds the top spot in the entry midsized car segment, beating out that old warhorse of dependability, the Toyota (nyse: TM - news - people ) Camry.
Yet the Malibu is so profoundly unimpressive overall, and downright tacky on the inside, that it has turned into a rental car. GM loses money on every Malibu it sells.
Ultimately, of course, the customer is always right. If he thinks he's sitting in a well-made car, he will pay handsomely for it, padding the profit margins of the hot carmaker. And if the buyer thinks he is sitting in a cheap car, he will buy only if rewarded with low prices and big incentives.
GM definitely needed to work on its quality problems, but fixing the number of things gone wrong was only part of the battle. Buyers have to feel like they are getting a good car, whether they are or not, something automakers call "perceived quality."
"As a corporate culture, we just never paid much attention to that," says GM Vice Chairman Robert A. Lutz. "Engineers say, 'What's your problem with that switch? Does it raise and lower the window every time?' 'Well, yes, but it looks gross!'" Lutz says, characterizing a customer's negative reaction.
The problem for carmakers is that every car buyer performs an extremely complex and unique equation involving style, performance, reliability, expectation, brand cachet and price. Toyota and Honda Motor (nyse: HMC - news - people ) have made fortunes appealing to the large segment of the population that wants good, comfortable transportation that is extremely reliable, prestige be damned.
Other brands depend on cachet, style or innovation. For years Ford's Jaguar brand attracted loyalists who risked regular breakdowns in order to be surrounded by wood and leather. DaimlerChrysler's (nyse: DCX - news - people ) domestic operations made piles of money in the mid-1990s despite below-average quality, because Dodge and Chrysler minivans were the cleverest on the road, and Jeep's SUVs were the coolest.
Brands with a good reputation, such as Mercedes-Benz, can survive a hiccup or two without too much damage. Its M-Class SUV has been riddled with reliability problems, but Mercedes has been regularly setting sales records. Honda, stuck without an SUV during the SUV craze, rebadged Isuzu Rodeos as Honda Passports. The quality was Isuzu-like, but Honda's overall reputation didn't budge.
On the flip side, it takes a long time to get your reputation back.
Volkswagen and Audi only recently emerged from big quality problems, such as Audis' tendency towards random acceleration, in the 1980s and early '90s. Hyundai's cars are much better than they used to be, but it took a ten-year, 100,000-mile warranty to convince buyers to return. GM's improvements haven't sunk in with car buyers who have grown up with what seems like natural law: Domestic cars are clunkers compared with Japanese ones.
But finally, it comes down to making the right match. BMW X5 buyers are overlooking quality problems in droves because they are rewarded with all of the things they really want: sleek looks, great handling, a robust engine and that little BMW symbol. Many would-be Focus buyers, meanwhile, may not care that the car handles better than almost any other small car on the road. They are looking for cheap, reliable transportation, and the history of recalls scares them away.
Automakers, then, need to make sure they boost the number of things gone right, not just wrestle with the number of things gone wrong. Car buyers need to beware: Good performance, sleek design and cutting-edge technology don't always add up to good quality. And, unfortunately, sometimes it makes sense to go with the vinyl seats.
Click here for the Forbes Clunker Index slide show.
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