Ford's Warranty Costs Drop

Ford Motor Co.'s warranty costs are dropping rapidly as the auto maker seeks to meet an internal objective of besting the levels of its top Asian competitors, says Curt Yun, Ford's director-global warranty analysis. Ford's warranty cost as a percent of revenue last year was slightly more than 2%, a level that bests the auto maker's domestic competitors and is closing in on the likes of Toyota Motor

Ford Motor Co.'s warranty costs are dropping rapidly as the auto maker seeks to meet an internal objective of besting the levels of its top Asian competitors, says Curt Yun, Ford's director-global warranty analysis.

Ford's warranty cost as a percent of revenue last year was slightly more than 2%, a level that bests the auto maker's domestic competitors and is closing in on the likes of Toyota Motor Corp. and Honda Motor Co. Ltd., Yun tells Ward's.

Yun credits Ford's gains to various initiatives, beginning with a renewed focus on quality during new-car launches.

In the past, vehicles with quality issues at launch led to numerous recalls, damaging the auto maker's reputation and negatively affecting sales. Such was the case with the '00 Ford Focus.

The Focus by 2002 had seen nine safety recalls and five defect investigations, making it the most recalled car since General Motors Corp.'s X-car lineup that included the Buick Skylark and Chevrolet Citation.

Today, Ford will delay a launch than go with less than best-in-class quality levels. It pushed back the rollout of its highly acclaimed Ford Edge and Lincoln MKX cross/utility vehicles for this reason.

Dealers are playing a part in driving down warranty costs, as well, using a multi-step process created by Ford. Dealerships performing more warranty work than their peers or taking more time to make the fix, are given information to help improve their results. If that doesn't work, Ford consults with the dealer. Should all else fail, Ford has a team that works with the dealer onsite.

It's aimed at proactively bettering dealer processes, Yun says. “None of it is punitive.” Dealers have embraced the program, even though fewer warranty claims means less work in their service departments.

“In the long run, customers with higher quality ownership experiences will have higher loyalty to Ford and their dealers, ” Yun says.

TAGS: Dealers Retail
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