Want Quality? Buy Domestic.

Now that header is clearly bias and it most definitely is not the perception of the American public. I wanted to make a statement and it's one you'll never see in the national media. However GM recalled 73% fewer vehicles in 2006 and Ford recalled 71% fewer. Chrysler, on the other hand recalled 2.3 million vehicles but most surprising was Toyota - they recalled a whopping 800,000+ vehicles.

What you might not remember however, is that's only 1/3 of the number of vehicles Toyota recalled in 2005. In 2005, Toyota recalled more than 2.2 million vehicles. On January 19, 2007 - Toyota recalled a half-million trucks and SUVs; so already this year is proving to be a bit bumpy for Toyota's quality. Read the Bloomberg article. Arguably, Toyota still has very strong quality. But what's most noticeable, is so do GM and Ford.

The entire standard, for which we measure quality, has been raised. Toyota raised the bar, and they built their reputation on their superb quality. The domestic automakers have responded however, and it's worth taking note.

When GM and Ford were dominating sales charts (late 1990's), they were recalling a large number of vehicles also. Ford has been the #2 retailer and they were the #2 "recaller" also. Today, the tables have turned. Ford has become focused on becoming a smaller and profitable company which focuses on design and quality. Toyota has focused on becoming the #2 (maybe even #1) automaker and with that growth could come quality issues, as they must continue to cut costs to increase the volume and profitability. When you look at recalls as a percentage of vehicles sold, GM, Ford and Toyota - are all very close in quality.

• MSNBC - May 30, 2006 - Toyota recalls 1 million+ cars for faulty parts that cause drivers to lose control of steering.
• USA Today - July 21, 2006 - Toyota recalls 367,594 SUVs for carpet which can cause obstruction of the accelerator.
• Consumer Affairs - July 19, 2006 - Toyota recalls 800,000+ in July alone including Prius hybrids, Lexus hybrids, etc. for faulty crankshaft. *Total includes the above 7/21 article.
• San Antonio News - January 19, 2007 - Toyota recalls 500,000+ trucks and SUVs for steering problems.

The auto industry is very cyclical and we're seeing that take place right now...just today Toyota reported record Q4 profit. Last week Ford reported record Q4 loss.

Comments

[Flexo]

Is the "number of recalls" statistic a good one for determining the overall quality of an automaker's inventory of vehicles? How about the lifespan of vehicles or their parts, or perhaps customer satisfaction after three years?

I'm not doubting that domestic-owned automakers put out quality vehicles, but if they do they need to get the word out and convince the public.

[Cameron]

No you're right, quality isn't - and shouldn't be - measured by "number of recalls." J.D. Power released their "initial quality study" for 2006 which is based on quality of design and quality of production. (# of problems per 100 vehicles.) The industry average is 124 per 100. Ford is just below average at 127 and Toyota is near the top at 106. BMW comes in at 142 and Mercedes at 139.

This study only contacts users 90 days after a new vehicle purchase, so it does not address long term quality. It does, however, make the point that overall quality continues to improve - and the gap between domestics and Japanese made vehicles, continues to shrink. And that's good for everyone.

You're exactly right, getting the word out and "convincing" the public is their real challenge.

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More on that: http://www.jdpower.com/corporate/news/releases/pressrelease.asp?ID=2006082