Report Outlines How Subaru is Coping With Quality Control Issues

Subaru was one of the few automakers experiencing growth going into the Great Recession. When the financial crisis struck in earnest, Subaru’s volume briefly dipped to pre-recession levels before resuming its climb. Thanks largely to an enviable public image and desirable lineup, Subaru’s annual deliveries tripled between 2009 and 2018 inside the United States.

However Subaru’s quality rankings have lapsed in its quest to meet elevated demand. There has been a surge in recalls for the brand and some unsavory claims coming from the factory. According to internal documents seen by Automotive News, one of the primary reasons for this was due to rampant supply chain issues. The papers indicate that nearly half of Subaru’s suppliers were recently operating at quality levels below the company’s internal targets. Subaru is currently overhauling its own production processes and working with suppliers to improve quality and avoid developing a poor reputation with customers.

The automaker is familiar with its problems. An April 26th report by Subaru’s Quality Improvement Committee in Lafayette, Indiana, addressed an unpleasant increase of warranty, recall and other quality-related claims on U.S. vehicles ⁠— going from $241 million in the fiscal year ending March 31, 2015, to $900.1 million in the fiscal year ending March 31, 2019. The outlay over the five-year period surpassed $2.7 billion. It also said 70 percent of new Subaru vehicles are now the object of recalls or service campaigns within two years of being purchased, noting that the “permissible limit” should be around 10 percent.

From Automotive News:

Subaru is now focused on earning, in 2020, the top spot in Consumer Reports’ reliability ranking and escaping the lower ranks of J.D. Power’s Initial Quality Study, which is widely cited in auto advertising. Those goals were outlined in an internal report about Subaru of Indiana Automotive, the company’s manufacturing operations in Lafayette, Ind., issued in April by the company’s quality planning and management department.

In the closely watched Auto Reliability Survey from Consumer Reports, Subaru flourishes, finishing fourth in the fall 2018 report and second when the magazine updated the survey’s scores this spring. It wants to jump to No. 1 in 2020, the Subaru document says.

But in J.D. Power’s IQS report card, Subaru has consistently struggled. In 2018, it ranked fourth from the bottom in the industry, with 115 problems per 100 vehicles.

Subaru’s internal report said it wanted to “break out of the bottom” and improve to 101 problems in 2019, then move up to “middle ranking,” with 90 problems in 2020. But in the 2019 results, released last week, it finished seventh from the bottom, with 113 problems.

While Subaru did not authenticate the files, it did back up their assessment of the situation. “We acknowledge that over the past year we had more recalls than Subaru would like,” a corporate spokeswoman explained. “We want there to be zero. But when faced with a quality problem, we have been able to move quickly to get ahead of issues that might affect our customers.”

Subaru of Indiana Automotive has previously cited high turnover as a reoccurring problem. However, due to the sudden surge in demand and the factory adding more models, Subaru had little recourse but to hire more people after 2014. The internal report only makes minor issue of the elevated turnover and lack of veteran employees saying the site’s “sense of teamwork and sense of process ownership has degraded with the growth experienced since 2015,” adding it had hindered the factory’s “ability and previous strength to solve problems quickly.”

Some of those quality issues surfaced upon the launch of the Ascent, which Subaru President Tomomi Nakamura has noted. “I have already heard from our U.S. dealers that they are worried about brand image,” Nakamura said late in 2018. “It is true quality-related issues have been on the increase … There is a sense of complacency in various areas of our company.”

The company has been working overtime to ensure the sixth-generation Outback launch goes better.

Subaru of America (SOA) has directed most of those quality issues back at Japan. While the Ascent did suffer from supply problems and on-site quality control, the broader issue comes from its engineering if SOA is to be trusted. “The majority are conditions that SOA believes should have been identified during development and pre-production confirmation testing,” the report states.

It’s, of course, more complex than that. While internal reports from June 5th showcased improvements within Subaru’s domestic supply chain. Each month of the fiscal year that ended in March of 2019 showed suppliers missing Subaru’s target average defective part rate. The target, measured in parts per million (ppm), currently stands at 6 ppm. In four of the months, the average remained at 20 ppm or higher. Despite 107 suppliers having met Subaru’s internal quality goals, 101 others didn’t. Of those that failed, 32 had an average defect rate over 50 ppm.

That said, the company is still bending over backward to solve these problems. Headway is being made and internal documents stipulate that SOA is asking that Japan allow it to make more decisions for itself, rather than waiting for blessing from Asia to make supply chain changes. Hopefully, it comes together for the brand — lest it risk its stellar reputation to become the cheeky AWD manufacturer with the pleasant demeanor and some unpleasant quality problems.

[Image: Subaru]