Detroit Three Discover A Quality Product Saves Them Money Too: Warranty Claims Down 40%

Detroit Three Discover A Quality Product Saves Them Money Too: Warranty Claims Down 40%

Detroit's Big Three have slashed warranty claims more than 40 percent in recent years -- further evidence that the automakers, long plagued by repair problems and consumer perceptions that their products are inferior, are narrowing the quality gap with foreign competitors.

The reduction in warranty claims saves the automakers much-needed money -- perhaps several hundred dollars per vehicle sold -- and boosts resale values. Those savings, in turn, contribute substantially to the operating profits of General Motors Co., Ford Motor Co. and Chrysler Group LLC, and are helping repair their reputations among consumers.

"That's pure operating profit," said auto analyst Joe Phillippi of AutoTrends Consulting in Short Hills, N.J.


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dlindlin - 6/1/2010 3:03:26 PM
+4 Boost
Does it take this long to figure out a stat fact? What are those MBAs doing?


uaw_laxuaw_lax - 6/2/2010 1:05:36 AM
+1 Boost
Huyndia smoke why do you hate the baby boomers so much?


JanizaryJanizary - 6/2/2010 10:24:04 AM
+1 Boost
Reading the article I'm not certain the numbers are on a per-unit basis, or in total. One part of the article states that per-unit costs are down $240million at Chrysler, but the percentage reduction mentioned in the lead-in paragraphs is not specific to total or per-unit.

The problem is, if they are comparing TOTAL warranty claims reductions, the number may be vary misleading, principally due to reduced sales. For example, Ford Motor Company's sales from 2007 to 2009 dropped ~33% (source: Autoblog 'By the Numbers' for 2009 and 2007 sales). If your sales drop 33% and your total warranty claims drop ~40%, your actual per-unit reduction is much smaller. An overall reduction to be sure, but not what the initial ~40% figures would make them out to be.
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