Quality No Longer Job No. 1 for Detroit

Posted by Gary Hamel on January 20, 2009

My abbreviated diagnosis of Detroit’s ills in my last two posts provoked a number of thoughtful and impassioned comments. Many readers pointed to Detroit’s improved quality ratings. A sampling:

“I have read many articles, including yours, that blame Detroit on everything from A to Z. They are building the best products ever, today! Their quality has surpassed many European makes, and is on par with Toyota and Honda.” (Michael Burns).

“This guy that wrote this is clueless just like the drive by media…Ford Motor has the most 5 star safety rated vehicles and is ahead of the curve on design and innovation. Getting over the perceptions and stereotypes of the clueless is just gonna take time . . .” (Tony in Ohio).

“Look, Detroit makes great cars. Buick is actually TIED with Lexus as the highest quality cars you can get. The Chevy Malibu is the highest ranked in quality car in its segment and the Ford F-150 is the truck of the year. Most people making anti-Detroit comments have driven Toyotas and Nissans out of habit.” (James Sexson).

My response: Yes, GM and Ford have (finally) closed the quality gap with their Japanese competitors. Problem is, quality is no longer a competitive differentiator—at least not for the under-40s who’ve owned only Japanese cars and have come to regard reliability as a given. Yet in taking nearly 25 years to match their foreign rivals, Detroit lost the loyalty of an entire generation of buyers. These consumers are not going to be won back by claims of superior quality—they view quality as yesterday’s battleground. Today they’re focused on new benchmarks: handling, vehicle dynamics, powertrain engineering, and interior aesthetics.

While it’s true that perception often lags reality, it’s also true that GM and Ford have spent millions trumpeting their top-tier quality ratings. There can’t be many prospective buyers left who’ve escaped this marketing blitz. The problem isn’t clueless customers, but savvy consumers who know the battlefront has now moved on.

My argument, therefore, is simple: You can’t (re)build a reputation for product leadership by reclaiming lost ground—at some point, you actually have to lead. Yes, GM and Ford make some standout vehicles (like the Cadillac CTS and Buick Enclave), but it’s hard to think of a single GM brand that has succeeded (so far) in staking out a global leadership position on forward-looking product attributes.

Nevertheless, GM really does seem to be trying. Cadillac appears genuinely committed to taking on BMW in delivering “sporty luxury,” while the folks at Buick are working hard to match Lexus in vehicle refinement—and at a better price point. But once again, this is catch-up ball.

To lead, to become the benchmark to which others aspire, takes a deep and sustained passion for product. No company can lead on all fronts, but every organization needs a commitment to leading on at least some. It is this focused passion that ultimately imbues a brand with lasting value. When BMW claims to make “the ultimate driving machine,” it’s easy to believe there are hundreds of engineers in Munich who aspire to do exactly that—and who win more than their fair share of arguments with the corporate bean counters. Without such a stern and unyielding passion for leadership, it’s all too easy to accept compromises that undermine long-term brand equity—a fate that seems to have befallen nearly all of America’s car brands.

Another reader wrote: “The real benchmark for automotive sex appeal lies in Europe. If Detroit can exhibit European build quality, design and styling, while hitting reasonable price points for the U.S. market, the whole game changes overnight.” (From Phil Black).

I couldn’t agree more, Phil. Truth is (as some readers rightly pointed out), most of Toyota’s cars are about as inspiring as oatmeal. The formula that turned Toyota into the world’s most profitable car company (impeccable quality and lean manufacturing) won’t produce the same sort of results in the years ahead—again, buyers are demanding more. Does anyone really want a car that’s merely an “appliance”—if they can get reliability and something more?

Finally, a couple of readers chastised me for my “out of date” analysis of the U.S. car industry. So let me close with some hard, cold facts. In 2008, the U.S. market share of the “Big 3” declined once again, from 51.1% to 47.5%. (This data, from Automotive News, includes both cars and light trucks). Toyota, Honda, Nissan, Volkswagen, BMW, and Mercedes all posted small share gains.

Can Detroit lead again? Sure—and there’s a good chance it will. Nothing focuses the mind like a near-death experience. But reversing 30 years of share declines will take more than solid quality, the occasional styling triumph (ref. Chrysler 300C), or a technological Hail Mary pass (the Chevrolet Volt). The American car industry won’t truly be out of the woods until there’s no one left in it who’s content to be a follower.

Lastly, this week’s prize for the best reader comment goes to Phil Black for his excellent suggestions on what U.S. automakers could do to rekindle a passion for product leadership. Thanks Phil.

Readers, do you agree? What will it take for Detroit to lead again?


Hamel wins!!!

Really is a big shame Detroit does not recognize its own fails... Detroit needs to ear customers and all employees as first step.

However, Where is innovation?, the current paradigm at Detroit is based on the "experience of their old managers",but in reality this is a trap. Today is not the same thing that yesterday.

Nobody talks about Kansei Engineering and even nobody talks about Kano┬┤s Model. In fact, if we try to understand competitiveness of japanese firms, we need to understand first their perspective about customers and their employees.

The real problem behind it, is not about of aestitic design, quality or price. The problem is the way Detroit designs, is not the result, the problem is the process. The problem is their way of thinking and management.

Detroit needs urgent a genetic therapy change...Detroit needs to experiment. The customers and their employess will be thankful.

Juan Rivas.