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GM takes the Hyundai road

Posted by: David Welch on September 7, 2006

Here’s a true story. Back in 1992, I took my ‘85 Pontiac Grand Prix to a transmission shop because it was shifting like a cheap lawn tractor. Mind you, the transmission had already been replaced a couple of years before. The mechanic took it for a spin, told me I’d need to replace or rebuild the tranny for about $600. Then led me into the garage. Up on lifts were a couple other Grand Prix and I think a Chevy Monte Carlo. They were essentially the same car. “Your transmission is putting my kids through college,” the mechanic told me with a curious blend of satisfaction and disgust.

After that, I abandoned GM. I bought a new but troublesome ’93 Ford Ranger pickup a few months later. After it gave me plenty of trouble, I eventually ditched Detroit altogether. I drive a Mini Cooper S today. What’s even sadder than my tale of woe is the fact that a big chunk of the letters I get from readers are just people whining about bad experiences with their American cars.

Those tales and letters are exactly why GM announced Sept. 6 that the company will offer extended warranties of five years and up to 100,000 miles for the engine and transmission on 2007 model years vehicles. Hyundai did something similar back in 1998 and still offers great warranties. GM has different brand issues than Hyundai did back then. But the reason for offering these deals is the same. Both companies are trying to overcome bad reputations for quality and get noticed by consumers who don’t even consider their brands.

It makes a lot of sense. GM has been climbing up J.D. Power’s initial quality rankings for about five years. Warranty costs have fallen 40% during that time, says sales GM sales boss Mark LaNeve. But consumer surveys show that buyers still think GM ranks near the bottom in quality. Chairman and CEO Rick Wagoner said at the press conference that the perception gap is still a big challenge.

Here’s another problem. GM’s quality is much better. In some cases it’s better than the Japanese companies like Nissan and Subaru that coast on a great reputation even when their cars turn up glitches. But GM has, at best, reached parity in quality with chief rivals Toyota and Honda. And in long-term testing, which measures cars made three to five years ago, GM still isn’t on par with those two vaunted carmakers. The bottom line is that GM still hasn’t given loyal Toyota Camry and Honda Accord owners a reason to trade up. Wagoner conceded that better quality, paired up with catchy styling and better value in other ways will accomplish that mission.

That’s why GM needs to do something like this. It proves the company is will to back up its claims of better reliability with its own cash. And it offers value to buyers who think they’re already getting a great deal in a foreign car.

This ploy won’t turn droves of buyers toward GM dealerships overnight. But it worked for Hyundai. It could work for GM.

Reader Comments

Dr Darrel Edwards

September 8, 2006 11:55 AM

GM needs to match Hyundai. You can't fool the consumer with a powertrain warranty when they are essentially now just fine. There has to be a balance between dealership income and GM expenses that leads to the message: "We [GM] trust our product."

By the way: GM can't easily use Power's IQS as their standard when there is no measure of what's important versus what's a problem. You never knew and still don't know what Power is talking about -- something trivial or something important.

In addition now that IQS means design and TGW you don't know what's up. With no measure of importance and design "flaws" also counted so Power will have anything to talk about, we don't know where to go.

Strategic Vision has been doing Total Quality since 1994 in automotive and you know what's important and what's not. Power is a mess. That's my opinion; what do you think?


September 14, 2006 11:21 AM

I sympathize with your quality issues from the Big 3. One of the best cars I have owned was a 1990 Chevrolet Corsica. The build quality was lousy, but the powertrain was good. My 1995 Mercury Tracer(Ford Escort) was a joke. The LTS Version used a 1.8 Liter sourced from Mazda, but mine used a 1.9 Liter engineered by Ford. It was a total disappointment and I never went back to Ford. I had a 1987 Dodge Ram 50(Mits. Mighty Max) and it was a decent vehicle, but unfortunately I discovered how expensive Chrysler Parts are. I had a 1998 Honda Civic and discovered how weak automatic equipped Hondas are. They are not built like they use to. The better Civics were 95 and below, but no matter what Honda says the quality of each car is reflected in the package designation: LX vs EX. The more you pay, the more you get. There are blogs on the internet with multiple complaints of transmission failures in Civics and also Accords. I traded my Civic for a pre-certified 2001 Saturn L300 Sedan. It was a maintenance and lemon law disaster till I got rid of the car. The latest vehicle in my possession is a 2005 Nissan Sentra. It was not my first choice, but a compelling one for different reasons. I was upside down with the Saturn and the $2500 Rebate from Nissan (vs $500 for the Corolla)offsetted this situation considerably. I did not want to downsize my vehicle size, but cost constraints (vehicle pricing and higher fuel efficiency) limited my choices. So far so good. I was not in a hurry to buy another Mexican built vehicle after the Ford incident, but Nissan demonstrated higher quality than Ford as it relates to cars. One of the qualities I enjoy about Nissan is its sporty nature. All Nissans are torque driven which allows for very low RPM shifting especially with the automatic and great top-end power. I guess in this case it goes back to your original statement: More blogs are reporting problems with American Vehicles and automakers are desperate to change your mind.


October 2, 2006 2:36 PM

Nissan has lower quality scores than Focus, even from the import-friendly Consumer Reports scoring. Their SUVs are more reliable, some of them, but not the Sentra, not at all.

GM is doing so much better, I can't believe there are any bad feelings towards them. My friend's Toyota Matrix had her engine blow up. My Honda was mechincally sound, but I lost the muffler every other year since it was such a low-rider, here in Pothole country (near Buffalo, ny). I've 0 issues with my Ford Ranger, and, surprisingly, my Dodge Neon.

What I hate is getting sold an additional warranty. If your car is so good, why do I need to buy a warranty? That's why people hate domestics. It's a bad sales culture, not a bad product. Honda and Toyota are priced so high now (that's when you actually buy a product, they only look $1000 more online) that any reliability differences don't matter. I had to replace the Neon's radiator at 105,000 miles. Big deal. I saved like $5000 by buying it (worst of the domestics, though, I agree).

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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