Ford Cuts Warranty Costs, Improves Quality Scores

February 04, 2009

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DEARBORN, Mich. — In a bit of good news that can certainly boost brand perception, Ford announced it has significantly reduced warranty expenses, which go hand-in-hand with the automaker's spike in its quality rankings.

Ford has cut its warranty costs by $1.2 billion in the last two years, which officials attributed to four consecutive years of quality enhancements on Ford, Lincoln and Mercury vehicles.

Moreover, the automaker's initial quality ranking — based on the U.S. Global Quality Research System study — is now in a virtual tie with Honda and Toyota for the 2008 model-year, executives highlighted.

The automaker indicated that it aims to be top-notch in every phase from design to pre-delivery, and apparently its own metrics show progress in quality.

For instance, in addition to its reduction in warranty costs, the warranty repair rate for Ford, Lincoln and Mercury units is close to 50 percent lower than it was four years ago.

Not to mention, the Ford F-Series Super Duty and the Lincoln Mark LT received the best scores in their segments for fewest "things gone wrong" and customer satisfaction, according to recent studies.

The Ford Mustang GT500, meanwhile, had the fewest TGWs for sports cars.

In fact, 18 of the 24 Ford models improved TGW scores.

"Ford is following a set of standardized processes around the world in product development, manufacturing and purchasing with a discipline this company has never seen," boasted Bennie Fowler, Ford group vice president of global quality.

How has Ford accomplished these goals? Part of it has to do with quality enhancements made before the launch of new vehicles, officials noted.

According to Ford, every single new-model launch since 2005 has shown better quality based on lower warranty rates and TGWs than the models they replaced.

"The last 24 months have revealed some of our best quality results," stated Curt Yun, Ford's director of global warranty. "Our new models have been achieving continuously declining warranty repair rates and lower warranty costs, as a direct result of our overall quality improvements."

For example, during each of the last five years, owners of Ford, Lincoln and Mercury vehicles in the U.S. have reported fewer concerns at the three-year service mark, according to the GQRS survey, which was compiled for Ford by the RDA Group research firm.

"We've reached the point where our initial quality is second to none among the full-line manufacturers," Fowler noted. "We expect that high quality to be reflected in future high-mileage surveys as our new models age."

Moreover, the company utilizes built-in design quality, which includes consistent standardized engineering processes.

For example, Ford said it uses Computer Assisted Design toolsets and officials sign off on all aspects of designs, even before the first prototype is built.

The company's design and engineering analysis processes are designed to help identify and correct problems virtually that previously may not have been noticed until the vehicle was already launched.

Ford officials said they also provides assembly plant teams with the necessary tools to deliver quality in the manufacturing process.

Its Quality Operating System, for instance, is paramount in identifying and correcting problems within the manufacturing facilities, the company added.

"I see the recent $1.2 billion in worldwide warranty cost savings as a compelling reason to continue down this path," Yun stated. "Instead of setting aside those funds to fix cars, we'd much rather invest it in exciting product programs for our customers."

Fowler pointed out: "This is One Ford at its best. It has taken thousands of dedicated people, from the plant floor to the executive suite, working together to strive for quality every day."