Volkswagen Waging War On Quality ImageBy Bill Visnic September 8, 2011
Most discussions about the Volkswagen Group inevitably turn to its goal of becoming the worlds largest automaker by 2018. But in reality, the issue for VW is as much one of quality as quantity. Sure, the company wants to be the worlds No. 1 automaker but U.S. executives at a recent new-product introduction at Volkswagen of America Inc. headquarters in Herndon, VA, said theyre first engaging in an all-out assault on the perception that the brand is synonymous with poor quality.
Volkswagens U.S. operations are charged with contributing a projected 800,000 sales annually towards the companys 2018 target of 10 million annual sales globally. Thats in excess of three times VWs current annual sales rates in America (2010 U.S. sales totaled 256,830) and requires an annual sales increase of about 15 percent between now and 2018. Company managers know those kinds of numbers wont happen unless the brands rep for poor quality and high maintenance costs is turned around.
Volkswagen ranked 28th out of 32 brands in the most recent J.D. Power and Associates Initial Quality Study (IQS), the metric regarded as the most consistent yardstick of individual brands relative quality. The VW brand has long been well below the industry average in the IQS ranking and executives here know that performance has to be improved. The company recently created the new post of executive vice president of quality, and pirated Audi of America Inc. quality boss Marc Trahan for the position. Trahan, a quiet and low-key executive who is highly regarded throughout the VW Group empire, combines his internal regard with a deep technical knowledge that should serve well in shepherding quality issues to proper and prompt resolution.
Work To Do
In (J.D. Powers) IQS, we have some issues there, Trahan admits. I think its real, I think its valuable, he adds in response to critics of the Power metrics for IQS. But he pointed to other measures that, he believes, show Volkswagen is making progress in the quality war. One, he said, is J.D. Powers APEAL (Automotive Performance, Execution And Layout) study, where VW has had several recent winners. Trahan said APEAL can be a more incisive look at customers overall perception of quality, rather than IQS, which can be skewed by sometimes minor foibles. The APEAL metrics are a better measure of overall quality, he said.
But Trahan also said VW has instituted a system of almost constant monitoring of voice of customer feedback to ensure the company has its finger on the pulse of current customer grievances and concerns. This feedback can go to marketing, factory and even design executives for analysis and finally, if deemed necessary, to the VW management board itself for resolution. He said the process already has yielded quick-fix results for problems such as the user interface for its onboard Bluetooth systems, a redesign for the poorly engineered seatback-recliner adjustment for the Jetta that was called out by media and customers, and improved climate-control markings and indicators for the Tiguan compact crossover. Volkswagens U.S. operations are transmitting more quality and voice-of-customer input to company headquarters in Germany than any other market, he said.
And there have been improvements in certain other measures of quality, Trahan said. There has been a systemic reduction in annual warranty costs since 2005, and he claimed the reduced warranty spending is a valid indicator of improved quality across the board. Including a projected 10 percent year-over-year reduction projected for 2011, there has been an aggregate reduction in warranty costs of more than 50 percent since 2005, according to VWs figures. And Trahan also showed results of a J.D. Power metric measuring the number of visits to service departments that require actual repairs. Here, the brand ranks near the top, with 31 percent of visits requiring repair, the leaders mostly being Japanese brands. He said visits to dealership service departments that dont require repairs also can be an indicator that some brands perceived quality problems might be less severe than others.