Ford's Warranty Costs Dropping as Quality Improves

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. “This is easily the lowest (warranty costs have) been in the last 10 years.”

Toyota and Honda warranty claims stand at about 1.3%, according to Warranty Week, an industry newsletter.

Yun attributes Ford's improvement to a variety of 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 Ford's reputation and negatively affecting sales. Such was the case with the '00 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 Chevrolet Citation.

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

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