WARREN, MI –, looking to duplicate its new U.S. vehicle quality in other markets around the world, will find a smoother road to convincing international customers of its product reliability because its reputation elsewhere “carries less baggage,” Chairman and CEO Dan Akerson says.
“I came from China last week (and) our quality is viewed as very good there, very high,” Akerson tells WardsAuto on the sidelines of an event here celebrating the auto maker’s industry-leading J.D. Power Initial Quality performance.
“We don’t have the kind of baggage in some of our foreign markets as we do here from the bankruptcy, so from a perception point of view it will be easier to plow that field in the future,” he says.
GM last week earned initial quality awards for a record eight products, marking the auto maker’s best-ever performance in the closely watched consumer metric and putting it atop the industry in the U.S. for the first time.
Overall, GM buyers reported the fewest problems in the first 90 days of owning their ’13 model-year vehicle, and a key assembly plant for the auto maker was named one of North America’s highest-quality builders.
U.S. auto makers covet awards from the annual J.D. Power survey, which this year polled 83,000 buyers, because satisfaction typically translates into return buyers. GM estimates for every percentage point of customer retention the auto maker gains $700 million in revenue.
The award also can lead to word-of-mouth recommendations for its products, a key advantage in today’s socially driven market.
Product quality, Akerson told journalists at the auto maker’s annual shareholder’s meeting in Detroit last month, ranks among GM’s top three challenges alongside reducing material costs and product complexity.
To help make GM’s regional success more international, the auto maker today promotes current U.S. quality chief Alicia Boler-Davis to senior vice president-global quality and global customer experience. GM last year united quality and customer satisfaction into one unit under Boler-Davis, and cites the new customer-centric approach as one reason for its J.D. Power performance.
Boler-Davis, 44, will report directly to Akerson.
Boler-Davis, who rose through the auto maker’s engineering and manufacturing ranks to become a key executive, says some elements of GM’s U.S. quality and customer-service programs will carry over into other markets.
“We’re looking at the foundational things we need to put in place in order to listen to our customers and respond to their needs,” she says. “We’re not looking at it as a program we can introduce on day one. It’s looking at what our customers have told us, what are they expecting and what can we do immediately.
“There’s a lot of synergy already in the different regions, “Boler-Davis adds. “We want to pull them together and drive a laser-like focus to ensure we’re improving as fast as we possibly can.”
One program GM recently introduced was free maintenance for two years or 24,000 miles (39,000 km) on all ’14 models, broadening across its portfolio similar programs used more selectively in the past. Such programs are popular among consumers, especially in the luxury market, but expensive for auto makers without bullet-proof quality.
Dave Sargent, vice president-global automotive at J.D. Power, says GM will have a difficult time repeating its ’13 U.S. quality performance because many of the models earning top scores will be phased out this year in favor of redesigned or all-new products. Newly launched products historically encounter more problems.
Only one all-new GM product, the ’13 Buick Encore small cross/utility vehicle, won its segment in this year’s survey.
“Next year, life may not be so easy,” warns Sargent, who joined Akerson and Boler-Davis for an expansive employee celebration to mark GM’s J.D. Power wins this year. “The landscape will get tougher.”
Sargent also says the auto maker still faces an uphill battle in terms of customer perception of its quality, which remains “nowhere near reality.” J.D. Power research shows 44% of GM buyers cite reliability as a top reason for purchasing their vehicle.customers cite quality 67% of the time and buyers 72%.
“So you have work to do on your perception,” Sargent tells GM in his prepared remarks.
Akerson agrees. The auto maker in the U.S. will launch over the next 12 months 20 all-new or significantly redesigned cars, trucks and CUVs, including pivotal new large pickups arriving in the market now.
“We’ve brought a lot more discipline to our launch cycles, because we have not always had success,” Akerson says. “We’re in the midst of a huge truck launch right now. The initial cut is it is our best launch ever. It takes attention to detail, crisp execution (and) inspect, inspect inspect.
“I’m not telling you we’re going to be flawless, but that is what we are going to strive for.”
And perhaps a more modest celebration if GM repeats the performance, Akerson adds. The celebration here includes remarks from Major League Baseball player Max Scherzer, who leads the American league in wins. Local radio personality Paul W. Smith serves as emcee, and a band made up of GM employees plays rock and roll music. A free lunch to workers is on tap.
“You don’t ‘hot dog’ too much,” Akerson says, citing U.S. football players who dance after scoring. “Act as if you’ve been there before, and we have.”