Chrysler Counting Its Quality Chickens

Edward Niedermeyer
by Edward Niedermeyer
chrysler counting its quality chickens

Way back in 1995, a certain Robert A Lutz, then president of Chrysler, proclaimed “there is no other area in the field of human communications that is as rife with disinformation as the story on Chrysler quality.” Much water has passed under the bridge since ’95. These day, Chrysler’s quality occupies the basement of most reliablle rankings, while overstuffed suits cry perception gap. Despite flying under the industry standard in J.D. Power and Consumer Report rankings, Chrysler has recently taken to trumpeting a 29 percent decrease in warranty costs. Now the Cerberusian dog is putting its lack of money where its mouth is, telling the Detroit Free Press that it’s setting aside less money for warranty costs. “When you ship a car, you reserve the money for its whole lifetime of warranty. Based on where you think you’re at, that’s how much money you reserve,” explains Chrysler’s chief customer officer and former Nissan man Doug Betts. “A decrease of “30% … is hundreds of millions of dollars.” But the Freep catches something that deserves some attention. “Betts said Chrysler is measuring quality by the rate of warranty claims within a new vehicle’s first 3 months in service, a reliable bellwether for predicting total problems for the life of a vehicle’s warranty.” But doesn’t reliability become most important towards the end of a vehicle’s life? Isn’t that why Chrysler introduced its “lifetime powertrain warranty?” And all this while Chyrsler’s is squeezing suppliers for a 25 percent cost reduction? Auburn Hills must be incredibly cash-starved confident to light this financial time bomb now.

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  • Geotpf Geotpf on Sep 05, 2008

    Pig_Iron-I agree with jaje that Chrysler is the weakest of the Detroit Three. They are the smallest of the Three, have the weakest domestic product line, and have extremely minimal overseas business to fall back on. By all rights, they should collapse first (and save Ford and GM in the process-they people (and companies, such as rental car agencies) who buy Chrysler products will still purchase vehicles from somebody, and Toyota and Honda don't have enough spare production capacity to make up for all the unfilled Chrysler demand). As for the specific article, warranty claims are, in fact, a good indication of quality, even beyond the warranty period. If they really have decreased their warranty costs, that is a good sign for Chrysler's future. Of course, the current private nature of Chrysler means they could basically just make shit up and nobody would be the wiser.

  • Y2kdcar Y2kdcar on Sep 05, 2008

    Pig_Iron : This whole situation pains me to no end. Chrysler had the most potential of the bunch. I fear they are now past the point of no return. ... I hope you're wrong about Chrysler being past the point of no return, because I've always had a warm spot in my heart for the company and its products. The full-size Plymouths that my dad owned when I was growing up were better handlers than the comparable Ford and GM cars of the day and had a unique style and character. Even some of the later Mopars from the K-car era and beyond were distinctive. While this wasn't always good (Chrysler's TC by Maserati, anyone?), it did make for a more interesting and competitive auto market. I hope the company stays alive long enough to address the weaknesses in its product line and show some of its old-time creativity and audacity again.

  • Tony-e30 Tony-e30 on Sep 05, 2008

    As there is a reaction for every action, it seems quite likely that this will require dealers to tighten up their standards for what is deemed a warranty repair/replace. I'm not quite sure who sets that standard, actually, so perhaps it will be Chrysler changing the standard? Either way, the dealership repair experience for customers is not likely to improve. This will be interesting to keep an eye on.

  • Geotpf Geotpf on Sep 05, 2008

    tony-e30-Yeah, you might have a point. One way to lower warranty costs is to deny a bunch of claims for warranty repairs. That just pisses people off, of course.