Saturday

Big 3 Warranty Repair Costs Reflect Quality

Ford's 2005 warranty repair costs were $3.986 Billion, which was 2.6% of product sales. Maybe a small percentage, but it's a really huge number.

GM's 2005 warranty repair costs were $4.696 Billion, which was 3% of product sales. The only good news for GM is that the warranty tab dropped in the first quarter of '06 to less than Ford's.

Compared with Ford and GM, DaimlerChrysler's warranty claims have been all over the map, but almost always hugely above the other two. From Warranty Week, here's the warranty claims rates for the big 5 automakers from 2003 to 2006:

The chart shows that the perception of Toyota and Honda quality is borne out by the reality of their warranty claims rates: flat. Then take a look at Chrysler. The numbers are significantly higher and erratic. That matches their perception of quality too.

When Chrysler, Ford and GM get their quality up, their warranty costs will go down. And that will mean their profits will go up. After all, you don't hear Toyota crying the financial blues like GM.

Until the quality goes up, if you've got a lemon, don't go it alone. Know your Lemon Law rights and don't let Detroit run over you!