Archive for June, 2009

“Prius headlamp troubles could dim Toyota brand’s reputation,” writes Jean Halliday in today’s Advertising Age and Automotive News. I’ve suggested that manufacturers pick up the cost of common problems out of warranty. That said, this story seems driven more by an agenda than by the facts.

The issue: the optional HID headlights of the circa-2006 Prius are prone to turning off at random times, usually not at the same time. When this happens, they must be turned off, then on again. To fix the problem, Toyota dealers sometimes recommend replacing the entire HID system, at a cost of $1,700. Owners are launching a class action suit to force Toyota to cover these failures out of warranty.

I checked responses to TrueDelta’s Car Reliability Survey for any additional information they might provide. Quite a few owners have reported this problem, yet the Prius still has among the lowest repair frequencies. In all but one case, replacing the bulb seems to fix the problem. Non-OEM bulbs can be purchased on eBay for $90 per pair.

So why do we have an article in Automotive News? Many car models suffer from common problems, and there are plenty of class action lawsuits begging for coverage. Yet I cannot remember the last time AN covered such a problem.

And if they’re going to pick one common car problem to cover, why this one? These headlight failures don’t appear to have left anyone stranded, much less caused an accident. While dealers might try to charge $1,700, it is possible to fix the problem for as little as $90.

The allure appears to be Toyota’s quality reputation, and the widespread desire to take them down a notch or two. A quick read of the comments suggests that some people would like to use this problem as evidence that Toyota’s quality is no better than anyone else’s.

Should Toyota pick up the cost of replacement bulbs? Yes, if they’re smart. The biggest story here is that they didn’t respond more quickly–a sign that their customer care needs improvement. The facts do not support the extent to which AN calls Toyota reputation into question, much less singling them out for this treatment.

The emails we receive suggest that many people misunderstand TrueDelta and its research process. Here I’ll attempt to address the most common misunderstandings.

Misunderstanding #1: TrueDelta wants survey responses many times a month.

Reality: We usually only need a survey response the first month you’re eligible to participate, then at the end of every quarter after that (four times a year). We send at least one email per month, though, so people with repairs to report can report them while their memories are still fresh.

If someone hasn’t responded to the survey, they are sent reminder emails. This can lead to the above misunderstanding–some people get the idea that three emails means we wanted three responses per month, when we were actually looking for–but haven’t received–about one response every three months.

Misunderstanding #2: It’s not possible to avoid the reminder emails.

Reality: It’s easy to avoid the reminder emails. First off, respond to the survey when this is needed. In the months when no response is needed, simply click on the “check in” link in the email–this takes just seconds. If you respond promptly when a response is needed, the system will “learn” that you don’t need reminding. Once this occurs–usually after two responses (so two to four months)–it’s not even necessary to click on the “check in” link.

Misunderstanding #3: Participating takes too much time.

Reality: When there’s no repair to report, responding takes the average participant about 30 seconds, and some as few as ten seconds. Even if there is a repair to report, responding takes just a couple of minutes. Other car reliability surveys are much longer.

Misunderstanding #4: The emails aren’t necessary–why not just let people report repairs as they occur?

Reality: We wish the emails were not necessary, but the response rate would be VERY low without them. Nearly all responses occur within 48 hours of an email. Once 48 hours have past, most people forget to respond, even though many intended to. So it’s also necessary to send reminders.

Misunderstanding #5: There’s no point in participating once you’ve bought a car.

Reality: The only way we can provide information when people need it is if they participate in between purchases. This is a team effort. Provide information when other members need it, and they’ll provide information when you need it. You might not need reliability information on the car you currently own, but you might later need reliability information on cars other members own.

Misunderstanding #6: It’s necessary to check your car to get an exact odometer reading.

Reality: We collect odometer readings to verify that you’re still active, and to get an idea of how many miles (or kilometers) are on the average car. It’s not important to know if the average is 11,000 or 12,000. So an approximate reading is good enough. If you’re guess is way off, we can easily correct it.

Misunderstanding #7: It’s necessary to have a repair receipt to respond to the repair survey.

Reality: The repair survey is designed to be answerable based on what you can remember. The most critical information–whether or not the car was repaired–tends to be easy to remember, especially since you’re only being asked to remember the last month or two.

Misunderstanding #8: We’re only interested in data on fairly new cars.

Reality: The Car Reliability Survey covers any car from 1995 on. The other surveys currently only cover from 2002 on, but we’ll be extending them to cover a few earlier model years.

Misunderstanding #9: We’re only interested in cars owned in the U.S.

Reality: While most members are Americans, we have thousands of Canadians and hundreds from outside North America. The Car Reliability Survey can include any car, anywhere–as long as at least 25 are signed up to participate. We’ve been adding non-US powertrains, for people in the UK and elsewhere who want to participate in the Repair History and Gas Mileage Surveys. Want more participants from where you live? Then please tell friends and family about our research.

Misunderstanding #10: We’re a big corporation collecting data from car owners so we can sell it to manufacturers.

Reality: While a few people are employed part-time on a contract basis, I’m TrueDelta’s only full-time employee. We do not sell data to the manufacturers. Instead, our focus is on providing information to members. When you respond to a survey, you’re helping other participants.

By keeping our expenses low, we’re able to do everything necessary to collect and analyze the data without charging participants any membership fee. We’re able to cover our costs through ads and affiliates–without accepting any ads directly from the car manufacturers.

The main limitation: we can’t afford to spend money on advertising and marketing. So it’s very important that members help the site grow by telling others about what we’re doing here. The more people we can get involved, the more information we can provide.

I’ve written before that Detroit needs to reduce the risk of buying its cars by providing proper customer care. Unfortunately, I recently learned that Ford might be cutting back on the out-of-warranty assistance it provides to customers.

While visiting a close friend of my wife, we learned that her husband’s truck had an electronic controller in its 4WD system fail two weeks after the warranty ended. I have no idea if this is a common failure. But many times manufacturers pick up the cost of failures when they occur so soon after the warranty ends.

I visited a Ford dealer with him. The service writer told us that in the past Ford would probably have covered the part, but that in recent months they rarely have. As far as he could tell, Ford has cut way back on their out-of-warranty assistance as part of their effort to avoid running out of cash.

While I can certainly understand Ford’s need to avoid running out of cash, I’m not sure that cutting back on customer care is the best way to do this.

For 2010 both Buick and Ford are seeking to regain ground in the upper-midsize sedan segment. In Buick’s case, the brand’s future in the U.S. could well hinge on the success of the thoroughly redesigned LaCrosse. And Ford needs the new Taurus to succeed, lest it also be forced into bankruptcy.

Traditionally Buick has matched off against Mercury, not Ford. But the Sable has been discontinued, and the new Taurus has been shifted upmarket.

Though I haven’t had the chance to drive these cars yet, I closely inspected them at this year’s NAIAS. The Ford’s exterior, while less distinctive, has more presence and will likely have a broader appeal. It has the look of a much more expensive car. Inside, both cars’ interiors are the best yet for their respective brands, but here Buick has an edge in styling, materials, and precision.

Ford has taken an interesting tack with the new 2010 Taurus. Though larger than the previous Taurus on the outside, the 2010 is substantially less roomy on the inside, and visibility has been reduced. Overall, function has been sacrificed in favor of form. Where the 2008-2009 Taurus was much roomier than the Buick LaCrosse, the two are now about equal in shoulder room, and the Buick actually has a significant advantage in rear leg room.

And what about price? Similarly load up a Buick LaCrosse CXS and a Ford Taurus Limited, and Buick ends up with an MSRP lower by $225, while the Ford is $1,113 lower when comparing invoices. (Buick is providing its dealers with much less wiggle room.) The Buick has about $675 in additional features. Adjust for these and the feature-adjusted price difference becomes about $900 in the Buick’s favor at MSRP and about $475 in the Ford’s favor at invoice.

The results are similar when comparing the LaCrosse CXL AWD with the Taurus Limited AWD. These cars are priced very similarly, and are bound to be cross-shopped often.

For the details, and to generate your own customized price comparison:

Buick LaCrosse vs. Ford Taurus price comparison

When Honda first launched the 2010 Insight hybrid, I compared its price to the 2009 Toyota Prius because the 2010 was not yet available. Honda has been pitching the Insight as a more affordable hybrid, but how much do you save? Not much, I then concluded. But was it a fair comparison, since the 2009 Prius was in its’s final months and the Insight was an all-new model?

Now the 2010 Prius has arrived at dealers, so a fairer comparison is possible. The standard Prius vs. Insight price comparison similarly loads up both models, fitting nav to both and Package III to the Prius. Results: before adjusting for remaining feature differences, the Insight EX is $1,780 less at MSRP and $1,231 less at invoice. Our feature value adjustment: about $1,400.

Compare base cars with no options, and a $2,292 price difference is almosts exactly offset by a $2,300 feature difference. Coincidence? Not likely. It’s almost as if Toyota is using the same feature values as we are.

When all is said and done, Toyota has priced the all-new Prius very close to the Insight once feature differences are accounted for. Some magazine reviews have favored the Insight, saying it drives more like a normal car. But let’s face it, neither provides a good driving experience by conventional car standards. In the Prius’s favor: it looks better, has a nicer interior, is much roomier, and gets better fuel economy.

So after comparing the Insight to the 2010 Prius, I’m still not seeing the value in Honda’s supposed value hybrid.

I needed to drive my family 800 miles (and back) to visit my in-laws. None of my cars are large enough, so I rented a minivan from Alamo. They had by far the best rate.

Alamo gave me the choice of any car in their minivan lane. Aside from a Dodge Grand Caravan and a Toyota Sienna, they also had a Toyota Sequoia, Saturn Outlook, and Ford Flex. I went with the Ford, since a previous test drive had found the seats to be extremely comfortable. It also had more space behind the third row for our luggage than did the Sequoia and Outlook (the minvans do best here). Luggage for five people fit. A bag for the sixth went on the floor between the second and third rows.

The Flex proved exceptionally well suited for traveling 800 miles in a single day. The seats are comfortable and the ride is smooth and quiet.

The biggest surprise of all, though: this massive vehicle got about 25 MPG running a fairly steady 75-80 with three adults and three kids aboard and the A/C on. (Manual calculations were a few tenths short of this figure, the trip computer read a couple tenths higher than this figure.) Running about 65 MPH on a later stretch, the trip computer read over 27–average, not instanteous–until I hit some hills.

I’m amazed that such a large, heavy vehicle can do so well. My compact Mazda struggles to reach 30 at similar speeds. Then again, the Flex’s 3.5-liter V6 is spinning about 2,000 RPM at 75, while the Mazda’s 2.0-liter four is spinning about 3,500. Extra gear ratios help.

GM added owner loyalty bonuses for many models this month, but reduced the regular rebate by the same amount. So while people who currently own a GM car can get as large a rebate as last month, those who don’t are often being offered $1,000 to $1,500 less.

This doesn’t strike me as a good way to sell more cars.

Following GM’s Chapter 11 bankruptcy filing today, the Internet has been flooded with explanations of GM’s decline. Here’s mine…

Nearly everything wrong with GM can be traced to one source: GM’s senior management has long acted as if it should make all important decisions, and that everyone else involved–middle management, workers, suppliers, dealers–should simply execute their orders.

This essentially tossed a lot of product, market, and manufacturing knowledge that, if effectively applied, would have yielded better, cheaper to produce cars.

It also led to zero-sum thinking all around, where all parties felt they were fighting GM’s senior management, and so pushed for as much as they could get.

This was especially the case with the union. Back in the 1950s GM’s leadership and the UAW struck a deal: in exchange of having no say in how the product was made, the UAW would receive high levels of pay and benefits. In recent decades, GM has forced the UAW to make some concessions. These times, the profits that later followed went towards bonuses, dividends, and acquisitions. They did not go into the product. So why should the UAW make concessions?

Real change will come to GM only when its senior executives admit that they need to forge true partnerships with all of the parties involved, with better cars a shared goal. Since bankruptcy is being used to push through a bunch of unilateral decisions, this hasn’t happened yet.