Automotive News [sub] reports that Ford has reduced its global warranty costs by a not inconsequential $1.2b during the past two years. My initial thought: fewer sales, fewer warranties to honor. But the per-vehicle warranty repair rate has dropped by 50 percent for U.S. Ford, Lincoln and Mercury vehicles since 2004. “Ford’s biggest quality gains have been on newly launched vehicles compared with the vehicles they replaced,” pronounceth Curt Yun, Ford’s director of global warranty. “The last 24 months have revealed some of our best quality results.” Yes, BUT while the results may have been revealed in the last two years, the headline numbers don’t strictly apply to cars built in the last two years. Ford made its largest reliability gains in the 2005 and (especially) the 2006 model years. Recently the rate of improvement has slowed: savings in 2008 only account for $100m of the $1.2b total. Why didn’t FoMoCo save more in ’08? This suggests that the low-hanging fruit has been picked. Of course, the factory warranty is only three years on Fords and four on Lincolns. How will these new models hold up after the warranty expires, as has recently been the case for the 2005s?
[To view Ford’s performance in TrueDelta’s Car Reliability Survey, click here]
My mom has a 2005 Ford Taurus and it has held up well. She has never had a single problem with it, just regular maintenance.
Ford also has a way of either not issuing a recall…or just flat out refusing to pay for what they should, morally and legally, pay for.
I agree…Its a very insidious way of reducing warrenty costs while saving money on axtual quality improvements.
When I worked for Magna, an engineering rep explained that Ford would pay the dealer only once for a warrenty claim. If the same problem recurred, Ford would refuse to pay the dealer claiming that it was the dealers fault for not repairing the car right the first time. Either the dealer ate the costs, or more likely would go out of his way to deny the claim, and lose a customer.
Another even more insidous way of saving money and playing the blame game.
Claims by CR, JD Power, Strategic Vision, RDA and others carry far more weight. And they all say that Ford quality has improved drastically in the last four years. So, no, I don’t think it’s because they are being dishonest here… all the real evidence (not some guy I know) suggests they are doing it right.
claudster :
“When I worked for Magna, an engineering rep explained that Ford would pay the dealer only once for a warrenty claim. If the same problem recurred, Ford would refuse to pay the dealer claiming that it was the dealers fault for not repairing the car right the first time. Either the dealer ate the costs, or more likely would go out of his way to deny the claim, and lose a customer.
Another even more insidous way of saving money and playing the blame game.”
That’s not true. The dealer simply needs to obtain an overrride to get paid the second time. If the dealer can show the repair is legit, no problem.
There are damn good reasons for this policy, which is hardly unique to Ford. All the OEs flag or bounce duplicate repairs.
1. Warranty fraud is a huge problem. When the same operation code and part numbers show on a vehicle twice, it often indicates funny business. “Penciling,” as it is known, tends to focus on a small number of relatively obscure but lucrative repairs. When you see this pattern on a spreadsheet it jumps right off the page at you.
2. A duplicate repair can also indicate that the first repair was diagnosed improperly and the service department is simply throwing parts at the car. This one is pretty easy to spot as well: The same part was replaced twice and the car still wasn’t fixed — it keeps coming back with the same problem.
3. It can also indicate that the first repair was performed improperly. For example, gaskets and seals do not ordinarily fail by themselves; they need some help. If a new gasket leaks, either the technician installed it improperly or missed the the underlying problem the first time he had the car apart.
Ford has on multiple occasions made note of their warranty cost savings.
If they really did improved quality in ’04, then the costs of warranty repairs in 2006 for 2003-2006 cars should be much greater than the repairs in 2007 for 2004-2007 built cars. If you cycle off the ’04 cars for ’05 cars like in 2008, the difference in quality would not be as significant and therefore you don’t get such massive savings.
That’s shown in the cost savings they report. So I guess the answer is don’t buy a 2003 or older Ford?
“Savings in 2008 only account for $100m of the $1.2b total. So why didn’t FoMoCo save more in ‘08?”
Diminshing returns. Note these figures are not expenditures but reductions in expenditure. Unless the warranty cost begins at infinity the reduction will be smaller each year.
I actually have had tangible proof of Ford improving their quality from the beginning of the decade until now.
In 2006, my mom bought a 2003 Mercury Sable LS. It was loaded to the gills. None of the body panels lined up, and the interior panels were all misaligned. The hood sat a quarter inch above the frond fenders, the end of the trunk sat a half inch below the rear fenders, the door had a cheap, tinny feel when shut, and overall, the car seemed to be built with all the care of a Trabant. On top of that, it had all kinds of reliability problems, including a number of electrical maladies that required multiple trips to the dealer.
That piece of shit got stolen (If you ask me, the thief was the REAL sucker), last January, so she replaced it with a 2005 Taurus, which ironically was in almost the most basic form. All of the body panels and interior panels fit properly, and she has not had nay reliability problems, just regular maintenance.
So when they say that Ford has dramatically improved their quality since the early 2000s, I believe it.
“1. Warranty fraud is a huge problem. When the same operation code and part numbers show on a vehicle twice, it often indicates funny business. “Penciling,” as it is known, tends to focus on a small number of relatively obscure but lucrative repairs. When you see this pattern on a spreadsheet it jumps right off the page at you.”
Many moons ago I spent a summer working as a car salesman at a small town Ford dealership. I know for a fact that warranty claims in excess of what really had gotten done went to Ford from the dealer. They played ever game in the book to put more cash in the owner’s pocket.
The experience left me motivated to get back to college and do well so as not to end up in the den of thieves know as the car business. AFAIK, almost every dealer in that day and time padded their warranty claims to some degree. They justified it by saying the factory screws me, so I’m going to get ’em back. Similar justifications for mistreating customers were made as well.
“Ford made its largest reliability gains in 2005 and (especially) 2006 model years. Savings in 2008 only account for $100m of the $1.2b total. So why didn’t FoMoCo save more in ‘08?”
Do you mean, why didn’t they save more on model year 2008 vehicles? Perhaps it is because of the time-to-failure curve which leads to warranty claims. Big, expensive problems rarely show up in the first several months of driving a new car. In my experience they show up as the years go on. Thus, reliability improvements built into 2005 model year cars may not start really hitting the bottom line until several years later.
The only true vehicle reliability information is in CR. Consistent standards over many years. Ford built poor reliability to save a few bucks and the buyers were non maintenance inclined. Junk within a few years. I gave our 87 Sable to a family member last year, 21 years old and RTR to 25 provided it gets proper maintenance. We have an 05 Sable LS to replace. So far, very good with DOHC 24v and AX4N last generation transmission. Ford could have made the Sable/Taurus equal to Camry/Accord had they wanted. They wanted fleet cars and high end SUV’s/PU’s and are now on the ropes. Ford made specific management decisions every year to cheap their sedans. Toyota/Honda did the opposite. And Ford did better than GM and much better than Chrysler. Screwed themselves and now want a taxpayer bailout. Their retired exec’s did very well. That’s the name of their game.
i can beleive it. I have an 05 Escape Limited that has 93,000 trouble-free miles on it already
I’ve watched ‘Autoline Detroit‘ its a great show about Auto Industry news.
Host of the show was interviewing Alan Mullally and the question was: Why Ford quality improved dramatically in the past few years? Alan’s answer was: It’s a lot cheaper to make quality product at the factory then to pay dealer for warranty work.
And as you can see from Delta or CR, Ford Fusion has pretty good quality. Even friend of mine 2000 Taurus is more reliable then same vintage VW Passat, that he no longer owns.
Years ago one of my buddies who worked at an OEM took his car in for service. It was a whining noise near the timing belt. We both knew that on that particular engine, the timing belt tensioners were a known problem for noise. Well the dealership, who knew full well what they were doing, replaced the alternator and tensioner under this warranty claim as a way to make extra cash.
We were both thinking that the alternator engineer was probably getting a hundred returned parts per week as showing up in his system. And the whole time, nothing is wrong with these parts! The dealership made out though.
My mother bought a MKZ two years ago – just after the Zepher nameplate got the boot. Zero trips to the dealer for repairs. One thing makes me concerned about the long term though, and its not the cheap interior materials. A lot of items under the hood-battery, hoses, various modules-have thermal pads wrapped around them to protect them from underhood heat. Makes me wonder if these things are being pushed to the max, thermally. If so, after 8 or 9 years will things hold up? My Sable station car is 17 years old and still quite reliable, but it doesn’t have any of those insulation pads…
Ummm going a little contrary to the thread here, but I actually had a POS Ford 2007. You see, my car went to the dealership about 10 times (plus being sidelined for almost a month once) during its 1st year. As that’s how long the warranty is down here, and not trusting the car to make it any better from there on, I just took the financial hit and got rid of the thing and bought myself another car from, of course, another maker. Of course, lemons happen and I’m willing to admit that was the case with my car, but try to fight the manufacturers down here. You guys up north have it so easy…
Anyway, in retrospect I should have just refused to take delivery of such an obvious POS (everything poorly aligned, gaps galore, misalignments galore), but.
So be careful. If a car does not look right when they give it to you it must be pretty bad.
magoo: I understand what these figures represent and diminishing returns, but I’m surprised to see returns diminish so much from one year to the next.
John Horner :
“Many moons ago I spent a summer working as a car salesman at a small town Ford dealership. I know for a fact that warranty claims in excess of what really had gotten done went to Ford from the dealer. They played ever game in the book to put more cash in the owner’s pocket.
The experience left me motivated to get back to college and do well so as not to end up in the den of thieves know as the car business. AFAIK, almost every dealer in that day and time padded their warranty claims to some degree. They justified it by saying the factory screws me, so I’m going to get ‘em back. Similar justifications for mistreating customers were made as well.”
* * * *
Exactly. Back in the Day it was game, perhaps a war. The dealer and the service zone chiseled on each other on warranty claims as much as the system would bear. Dealers kited claims, manufacturers sent it auditors to steal some back. And as I am sure you know, there are a zillion ways to do play in the front end of the store as well.
You can see how modern IT and statistical controls made the system more rational and manageable. A dealer with supernaturally high warranty claims sticks out like a sore thumb. The game is still played but at a much lower level.
As highrpm alluded to, there is another perfidious aspect of warranty fraud, misdiagnosis, and misrepair: Cars do not malfunction in random walks. Get 20,000 units out there in the world and failure patterns quickly emerge. The manufacturer can inspect the parts, bring in the vendor, get field service engineers out there, talk to its best dealers and technicians, quickly develop a fix. But if the warranty claims are baloney the task of identifying known problems becomes far more difficult if not impossible.
My only warranty issues with any new car were with BMW. The dealer and the home office worked to fix my blooey Satnav system. I was treated well at all times (and I was always civil and cordial). Upgraded parts were provided, and the issue was, I was informed, fixed at the production side.
Thank you BMW. This is why you are an ‘aspirational’ brand.
he factory then to pay dealer foIt’s a lot cheaper to make quality product at tr warranty work.
Or you could do what Volkswagen does: make a car that gives the impression of quality and screw the dealer out of warranty work.
make a car that gives the impression of quality and screw the dealer out of warranty work.
psarhjinian, that’s ALL the German manufacturers!
The 60K mile extended warranty on my 2006 Freestyle passed entirely unused on Friday night.
Total warranty repairs were a set of rear brake pads and rotors (Ford paid for second replacement in warranty period), flashing the computer because of intermittent airbag light turn-on, and un-jamming the fold-down second seat once.
My biggest complaint is the chintzy carpet on this SEL model. Wouldn’t surprise me to have to replace it during my ownership.