IMI Magazine

IMI Magazine

News analysis


German quality takes a knock

Findings from the Consumers’ Association latest survey of car reliability suggest that the paths of the world’s two most respected car manufacturing nations are diverging noticeably. While Japan’s reputation for dependable products remains untarnished - with models from Honda, Lexus, Mazda, Nissan and Toyota holding 13 of the top 15 spots - there are unambiguous signs that German marques are sliding down the infallibility curve.

Volkswagen’s rating in particular should be providing its management with cause for concern following a stumble from ‘good’ to ‘poor’ over the past year, while Audi and Seat from the same stable fell from ‘good’ to ‘average’. Neither can BMW and Mercedes-Benz take comfort from their ‘average’ ratings, the latter having fallen from ‘excellent’ in the previous year. Volkswagen and Audi’s problems are blamed on a batch of faulty electrical components, but this knowledge will be of little comfort for consumers whose vehicles suffered a breakdown as a result.

Component shortcomings apart, one of the conclusions from these findings is that German manufacturers’ fabled build quality cannot be replicated easily outside their domestic bases. Over the past couple of decades, as manufacturers like BMW and Mercedes-Benz have established assembly facilities throughout the world, the claim has always been that product quality would be guaranteed by the tag ‘made by BMW’ or ‘made by Mercedes’ rather than ‘made in Germany’. However, this is looking somewhat suspect with, for example, BMW’s 3 Series (some of which are sourced from SouthAfrica for the UK market) trailing Ford’s Mondeo in the reliability stakes and the Hungarian-assembled Audi TT firmly rooted at the bottom of the pile with one of the lowest Consumers’ Association reliability scores.

This experience is in direct contrast to that of Japanese vehicle manufacturers who have managed to maintain quality (and productivity) standards at their overseas plants, including those in the UK. The presumption must be that Japanese companies are more successful in transplanting their manufacturing standards.


Ford: It just gets worse

Only those in the inner management circle know the full reasons for departures of colleagues. The background behind some partings are fairly clearcut, aswith Jacques Nasser’s exit from Ford and Bernd Pischetsrieder’s from BMW,but others are more opaque and frequently are made more so by briefings andcounter briefings from those who remain and maybe have a personal or political point to make.

Martin Leach’s exit from the position of president and CEO of Ford Europe, after 24 years with Ford, falls into the latter category. Only a few days before the announcement of his resignation he had been widely viewed as a strong contender for the rumoured new position within Ford’s top management team of European ‘czar’, with responsibility for bringing about a closer integration between Ford Europe and Premier Automotive Group.

Meanwhile, Ford Europe incurred an operating loss of  $525m for the second quarter of this year. Even allowing for the current perilous state of much of Europe’s vehiclemanufacturing sector, these results indicate a strategy which is failing to move the company in the right direction. Maybe Martin Leach felt that resigning was the honourable thing to do or, perhaps more ominously, he was unconvinced that the game plan devised for European recovery was capable of achieving its target.

With a mountain to climb in its North American heartland - not least due to a more confident and resurgent General Motors - and a need to maintain the confidence of its investors and bankers, Ford simply cannot allow its European operations to drift. But after an extensive period of restructuring - which, among other things, has seen the closure of its entire UK car assembly network – and a model range which ismodern and suited to the needs of the European motorist, the company could be forgiven for wondering what else can be done.


BMW’s catch-‘em-young move

BMW’s initiative to develop its own sales talent, through the recruitment of 750 youngsters who will pass through a two-year internal sales training programme, is a welcome recognition of the need to raise the level of professionalism in UK car showrooms. Although some marques are better than others, mystery shopping exercises consistently highlight the inadequacies of sales staff with regard not only to product knowledge but also to the niceties of customer relationships.

As well as being a welcome development, BMW’s move is an intriguing one. For example, the clear inference is that the company intends to retain a strong element of influence at the retail level, with indications that the new staff will be on the BMW payroll rather than the responsibility of the franchised network.

Success or failure will rest heavily on the ability to retain the enthusiasm and interest of the new recruits in order to minimise the dropout rate. Moreover, showroom sales staff are notoriously nomadic and the temptation for others to poach the newly qualified recruits will surely be irresistible.