One of the most intriguing developments in automotive quality perception has been the deep plunge Ford (F) took in J.D. Power's Initial Quality Study. Long held to be the benchmark in terms of quality surveys, this cannot be other than worrying for Ford and its shareholders. From a 5th place in terms of least problems per 100 vehicles back in 2010, Ford has plunged to 23rd during the 2011 study, and now to 27th during the 2012 iteration, as shown below (source: J.D. Power):
(click to enlarge)
But are things as ugly as they seem? Are Fords breaking apart as they leave the parking lot? Or is there something else at work here?
Actually, there really is something else at work here. It stems from how the Initial Quality Study is constructed. This study is not some kind of measure of mechanical breakdowns which the vehicles are suffering. Instead, it's a broad look into quality, which can include anything from an assembly fault, to some design quirk that irks the customer. To put it into context, a problem can be a wheel falling off, as much as it can be the customer finding 1 cup-holder where he wanted two, or the media system not picking up his voice commands (which can easily happen with the incredibly broad spectrum of accents and different voices).
What happened with Ford was that the introduction of Ford MyTouch as well as PowerShift, and its expansion to the lower rungs of Ford's lineup, made for a substantial increase in the reported problems. Indeed, these are areas that J.D. Power itself had already pointed out as being a substantial source of lowered quality ratings in general back in 2011:
The decline in vehicle launch quality is evident in a number of areas, most notably the engine/transmission and audio/entertainment/navigation categories. There are two primary causes for this quality decline:
- With high fuel prices and more stringent government regulations, automakers are designing engine and transmission software to make their models as economical as possible. However, this sometimes leads to the engine or transmission "hesitating" when accelerating or changing gears, and consumers this year are reporting this as a problem more often than in past years.
- Automakers are also accelerating the introduction of multimedia technology into their models, including hands-free and voice-activation systems. Many consumers are attracted by this type of technology, which is perceived to enhance convenience and safety, but some vehicle owners report that their system is not intuitive and/or does not always function properly.
Finally, although in the past J.D. Power's IQS used to overwhelmingly reflect defects, it's not shifting towards design kinks as those explained above. On this count I highly recommend Car And Driver's article on the subject.
Conclusion
Fords are not falling apart. However, due to a confluence of coincidences, Ford's attempt to drive technology into the lower rungs of its lineup is provoking an uptick in reported problems in J.D. Power's IQS. These are more likely nuisances or indications of lack of training in the use of the new features rather than true defects in its products.
Since a low position in J.D. Power's study can lead to bad publicity and affect Ford's image, Ford will still have to find a way to compensate these developments. As it stands it would look like the problems are overstated.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
