Ford says J.D. Power quality score may rise 20%

NEW YORK April 1, 2002 BLOOMBERG NEWS reported that Ford Motor Co., plagued by recalls and defects that hurt vehicle sales last year, said a quality-control program will improve its score in an annual industry survey by as much as 20 percent.

The second-largest automaker may score as low as 130 customer complaints per 100 cars in a J.D. Power & Associates survey to be published in May, down from 162 last year, Ford executives said. A score of 130 would have placed Ford second behind Toyota Motor Corp. instead of seventh last year.

"We've made substantial improvements," said James Padilla, group vice president for North American operations. Whether the gain in the quality survey "will be 20 percent or 18 percent or 15 percent remains to be seen," Padilla said.

Ford lost $5.45 billion last year because sales declined 6.1 percent, and the 2002 Explorer sport-utility vehicle and other cars had to be recalled to fix defects. Chairman William Clay Ford Jr. replaced Jacques Nasser as chief executive officer in October, saying Ford had lost focus on its automaking business.

An advance by Ford in the quality survey rankings may lead to more-effective advertising and increased sales, analysts said. The report by J.D. Power, a market-research firm in Agoura Hills, California, reviews complaints by owners within 90 days of purchase and is used by automakers to lure customers.

"If they can pull this off, it means people have been too quick to conclude that Ford is toast," said Dan Luria, an auto analyst at the Michigan Manufacturing Technology Center in Plymouth. "It means we should start to see stronger sales."

Ford shares have dropped 41 percent to $16.49 in the past 12 months, while the stock of larger rival General Motors Corp. has gained more than 17 percent.

Customers of Ford had 162 complaints per 100 vehicles last year in last year's initial-quality survey, compared with 154 for DaimlerChrysler AG's Chrysler unit, 146 for General Motors and 115 for Toyota.

Gary Cowger, group vice president for North American operations at General Motors, and James Schroer, executive vice president for sales at Chrysler, each predicted gains of more than 10 percent in their companies' J.D. Power scores in May.

Cowger told analysts on a conference call last week that General Motors will meet its target score of 130 to 140 in this year's Power study and that the largest automaker expects to rank in the top three.

In an interim report J.D. Power sent to automakers in October, Ford improved to 158 problems per 100 cars, according to a person familiar with the data. General Motors was unchanged at 146, while Toyota improved to 109 and Chrysler slipped to 166.

J.D. Power spokesman Michael Greywitt declined to comment on automakers' performance in this year's survey.

"If Ford gets a 20 percent improvement, their advertising agency will go nuts," said Sean McAlinden, an analyst at the Center for Automotive Research in Ann Arbor, Michigan.

To improve quality, Ford assigned 70 research experts recruited from laboratories and universities to concentrate on eliminating defects. The group, called "the black belts" by Padilla, visited plants, such as a Wayne, Michigan, factory that makes Focus compact cars.

At that plant, specialist Adrian Hall specified a more precise shape for metal body panels attached to the car's engine and front suspension. Hall's analysis ended complaints by customers that the Focus's hood wouldn't close properly, and eliminated $1 million in annual repair costs, Ford said.

The J.D. Power report coming in May will show Focus owners reported fewer than 100 problems per 100 cars, compared with 164 complaints last year, according to Marty Aschoff, manager of quality strategy for Ford's North American vehicle operations.

The quality issues aren't all licked yet. Just yesterday the company said it's been working since June to try to resolve oil leaks in an undetermined number of 5.4-liter engines on trucks including the F-Series pickup and Expedition sport-utility.

"Not all of the fixes have worked as well as we had hoped," spokesman Todd Nissen said. "We continue to work on it."