xcel
09-13-2006, 10:54 PM
In J.D. Power and Associates' recent study of dependability, Buick and Cadillac both scored above Toyota, Honda and Acura. (http://www.forbesautos.com/news/headlines/2006/september/fdc090706-warranty.html)
Jonathan Fahey - Forbes.com - Sept. 7, 2006
http://www.cleanmpg.com/photos/data/501/Cadillac_CTS.jpg
Cadillac CTS (EPA 18/27 w/ the 3.6) - 5 Year/100,000 miles warranty and decent quality.
The complaints from General Motors insiders have gotten ever more shrill over the past five years, both in public and in private: The world is against us! Media! Analysts! Customers! We make good cars, dammit!
"We've been saying for a long time our quality is equal to or better than the Japanese," said GM sales and marketing chief Mark LaNeve. "Now we are putting our money where our mouth is."
GM says all of its 2007 vehicles will come with a five-year, 100,000-mile warranty that covers the so-called powertrain - engine, transmission and other parts that move the car from point A to point B. Moreover, the warranty goes with the car - even if it's sold.
"We feel it's a huge validation of what we’ve been saying - the quality gap has been closed," said LaNeve.
A long-term warranty is not a new idea, and it has a mixed record. Hyundai began offering a 10-year, 100,000 mile warranty when its cars were still punch lines to bad quality jokes, and the plan helped spur a meteoric rise in sales. DaimlerChrysler's Chrysler Group later followed with a 70,000-mile warranty, to no discernible effect on sales whatsoever.
This summer Ford Motor announced a five-year, 60,000-mile warranty that isn't exactly inspiring stampedes at Ford dealerships. Comparable warranties at Toyota Motor, Honda Motor and Nissan Motor also last for five years and 60,000 miles. The previous Detroit standard was three years, 36,000 miles.
But GM's 100,000-mile number, LaNeve hopes, is going to open people's eyes about GM's improved quality. He says GM's plan is tailored to the way people actually use their cars. The average new-car buyer holds on to his car for 52 months and 82,000 miles.
The plan has some nice attributes. It includes roadside assistance, and it is transferable if you sell the car. Those who already have bought 2007 GM vehicles, some of which have been on sale since January, will also get the warranty.
GM is going to back its plan with "a huge amount of advertising" in September and October, said LaNeve, starting with the first game of the NFL season on Thursday.
But are GM vehicles as good as GM thinks? Some are, for sure. In J.D. Power and Associates' recent study of dependability after three years of ownership, Buick and Cadillac both scored above Toyota, Honda and Acura (though Lexus scored best).
But GM’s six other brands scored below the industry average.
It's a similar situation in J.D. Power and Associates' study of initial quality: Cadillac, GMC and Chevrolet beat the industry average, but Saturn, Pontiac, Buick, Saab and Hummer fell below.
More important even than those studies, as GM acknowledges, is what people think. And while GM's lineup includes some excellent vehicles, like the Cadillac CTS, the Chevrolet Impala and the Buick Lucerne, it still also contains a big handful of real duds, like the Saturn Ion and GM's minivan clones, the Saturn Relay, the Chevrolet Uplander and the Buick Terraza.
Also, a car has to look and feel well-made, no matter what its survey scores are. Volkswagen builds wonderful interiors and shapely exteriors, and drivers therefore feel as if they are in a high-tech, well-engineered machine. Yet Volkswagen consistently lands near the very bottom of quality studies.
As LaNeve acknowledged, "To get people to consider a vehicle, it's not about any one thing, it's a thousand things.”
The overall goal here, of course, is to get GM's vehicles to start earning a meaningful return. As it now stands, GM has to coax too many buyers with low prices or rebates. This eats away at what are already meager profit margins because of GM's high fixed costs. GM desperately needs people to pay full price.
Buyers are not stupid. They pay for what they get, and for cars a reputation for reliability is crucial.
Here's how it works for Honda and Toyota: People scramble for used Hondas and Toyotas, because their reputation for quality is so high. This keeps resale values high for buyers of new cars. If a new-car buyer knows he can get a pile of cash for the car when he wants to sell it, he'll be willing to pay more for it at the dealership. This puts profits in the pockets of Honda and Toyota.
By standing behind all of its vehicles with a 100,000-mile warranty, GM thinks it will get the world to believe in GM cars the way GM believes in them. "This is being done to build our brands over time. This is not a short-term tactic," promised LaNeve.
It will take time. Time for GM to flush the duds from its lineup. Time for resale values to climb. And time for people to start believing in their bones that GM's vehicles can compete.
Jonathan Fahey - Forbes.com - Sept. 7, 2006
http://www.cleanmpg.com/photos/data/501/Cadillac_CTS.jpg
Cadillac CTS (EPA 18/27 w/ the 3.6) - 5 Year/100,000 miles warranty and decent quality.
The complaints from General Motors insiders have gotten ever more shrill over the past five years, both in public and in private: The world is against us! Media! Analysts! Customers! We make good cars, dammit!
"We've been saying for a long time our quality is equal to or better than the Japanese," said GM sales and marketing chief Mark LaNeve. "Now we are putting our money where our mouth is."
GM says all of its 2007 vehicles will come with a five-year, 100,000-mile warranty that covers the so-called powertrain - engine, transmission and other parts that move the car from point A to point B. Moreover, the warranty goes with the car - even if it's sold.
"We feel it's a huge validation of what we’ve been saying - the quality gap has been closed," said LaNeve.
A long-term warranty is not a new idea, and it has a mixed record. Hyundai began offering a 10-year, 100,000 mile warranty when its cars were still punch lines to bad quality jokes, and the plan helped spur a meteoric rise in sales. DaimlerChrysler's Chrysler Group later followed with a 70,000-mile warranty, to no discernible effect on sales whatsoever.
This summer Ford Motor announced a five-year, 60,000-mile warranty that isn't exactly inspiring stampedes at Ford dealerships. Comparable warranties at Toyota Motor, Honda Motor and Nissan Motor also last for five years and 60,000 miles. The previous Detroit standard was three years, 36,000 miles.
But GM's 100,000-mile number, LaNeve hopes, is going to open people's eyes about GM's improved quality. He says GM's plan is tailored to the way people actually use their cars. The average new-car buyer holds on to his car for 52 months and 82,000 miles.
The plan has some nice attributes. It includes roadside assistance, and it is transferable if you sell the car. Those who already have bought 2007 GM vehicles, some of which have been on sale since January, will also get the warranty.
GM is going to back its plan with "a huge amount of advertising" in September and October, said LaNeve, starting with the first game of the NFL season on Thursday.
But are GM vehicles as good as GM thinks? Some are, for sure. In J.D. Power and Associates' recent study of dependability after three years of ownership, Buick and Cadillac both scored above Toyota, Honda and Acura (though Lexus scored best).
But GM’s six other brands scored below the industry average.
It's a similar situation in J.D. Power and Associates' study of initial quality: Cadillac, GMC and Chevrolet beat the industry average, but Saturn, Pontiac, Buick, Saab and Hummer fell below.
More important even than those studies, as GM acknowledges, is what people think. And while GM's lineup includes some excellent vehicles, like the Cadillac CTS, the Chevrolet Impala and the Buick Lucerne, it still also contains a big handful of real duds, like the Saturn Ion and GM's minivan clones, the Saturn Relay, the Chevrolet Uplander and the Buick Terraza.
Also, a car has to look and feel well-made, no matter what its survey scores are. Volkswagen builds wonderful interiors and shapely exteriors, and drivers therefore feel as if they are in a high-tech, well-engineered machine. Yet Volkswagen consistently lands near the very bottom of quality studies.
As LaNeve acknowledged, "To get people to consider a vehicle, it's not about any one thing, it's a thousand things.”
The overall goal here, of course, is to get GM's vehicles to start earning a meaningful return. As it now stands, GM has to coax too many buyers with low prices or rebates. This eats away at what are already meager profit margins because of GM's high fixed costs. GM desperately needs people to pay full price.
Buyers are not stupid. They pay for what they get, and for cars a reputation for reliability is crucial.
Here's how it works for Honda and Toyota: People scramble for used Hondas and Toyotas, because their reputation for quality is so high. This keeps resale values high for buyers of new cars. If a new-car buyer knows he can get a pile of cash for the car when he wants to sell it, he'll be willing to pay more for it at the dealership. This puts profits in the pockets of Honda and Toyota.
By standing behind all of its vehicles with a 100,000-mile warranty, GM thinks it will get the world to believe in GM cars the way GM believes in them. "This is being done to build our brands over time. This is not a short-term tactic," promised LaNeve.
It will take time. Time for GM to flush the duds from its lineup. Time for resale values to climb. And time for people to start believing in their bones that GM's vehicles can compete.