RUESSELSHEIM: Raising standards

Opel must convince a skeptical public that it has improved product quality

Former Chrysler President Robert Lutz once said it takes five years to change consumer perceptions about a company's cars and trucks. If so, then Adam Opel AG will face a battle next year when it introduces its redesigned Vectra.

When a leading consumer magazine concludes that the quality of your flagship car is 'appalling,' you know you have a problem. In this case, Top Gear magazine's harsh assessment in 1999 appears to be justified by the Vectra's plunging sales.

It is Reinhald Hoben's job to change those perceptions. As executive director for quality at General Motors Europe, Hoben is the top quality manager for Opel, Vauxhall and Saab. And he has good news of a sort: GM's cars are better built than consumers realize. To prove his point, he pulls a folder crammed with charts from his desk drawer. He waves it at a visitor, then lets him have a peek. But only a peek.

He has all of the relevant quality statistics. The contents are secret, but he says they make satisfactory reading. To illustrate a point, Hoben reveals a chart from the folder. The glimpse is not long enough for the visitor to comprehend fully, but the gist is clear: Opel had considerable startup problems when it launched the Vectra and Omega in the mid-1990s. A few years later, the charts show a drop in startup-related quality problems for the Zafira, Agila and Corsa.

The message? Opel is making progress, even if consumers do not realize it. 'We have had a 63 percent improvement in our warranty costs since 1999,' Hoben says. Without parameters, that single statistic means nothing to an outsider, but Hoben insists, 'We are happy with the pace of the improvement we are making.'

Hoben teases his visitor with a quick glimpse of other internal documents tracking the quality of rivals. The results appear to suggest GM quality has outpaced European automakers, though Japanese automakers still enjoy an advantage.

Dead last

GM certainly had plenty of ground to make up. In a 1998 customer satisfaction survey compiled in the United Kingdom, the Vectra ranked dead last out of 120 models studied. The survey - jointly conducted by J.D. Power and Associates and BBC TV's motoring program, which also is called 'Top Gear' - gave the Subaru Impreza top marks.

'The Vectra is appalling,' sniffed Top Gear magazine. Too many other GM models were near the bottom of the list for the Vectra ranking to be an aberration. Hoben acknowledges the problem. 'If we look back to the early 1990s, we realized we had to make some significant changes to remain competitive,' he says.

Indeed. GM's woes have been building for more than a decade. First, Nissan Motor Co., Honda Motor Co. and Toyota Motor Corp. raised consumer expectations in Europe after they opened factories in the United Kingdom. Volkswagen AG and Renault SA responded to the challenge with major quality initiatives.

OPEL and GM BATTLE

Meanwhile, Opel was tearing itself apart. The battle between Opel and GM's European headquarters in Zurich, Switzerland, is well documented. In the mid-1990s, Lou Hughes - then chief of GM's international operations - launched a major expansion into Asia and South America. This strategy placed a heavy burden on Opel's engineering resources. After several years of nasty infighting, Hughes was recalled to Detroit in 1998, and Opel Chairman David Herman was banished to Russia.

These distractions began to affect Opel in the marketplace, as consumers deserted Opel and Vauxhall in unprecedented numbers. GM, which enjoyed a pace-setting 12.5 percent share of Western Europe in 1995, was down to 9.7 percent this year.

The downturn is especially acute in Germany, Europe's largest market. In June, Opel's market share in Germany tumbled to 11.4 percent, down from 17.0 percent in 1995. Soft sales forced GM to operate at only two-thirds of its production capacity. It is little surprise, then, that last year's deficit was the largest in Opel's history.

To stop the losses, Opel eliminated jobs and shut plants. This summer it launched Project Olympia, a turnaround plan drawn up by new Opel Chairman Carl-Peter Forster. Project Olympia explains additional cost-cutting measures, plus a new generation of products. But if GM is to win back those lost customers, Hoben must improve quality.

Quality program

First, Opel had to find out the extent of its problem. It created a database of customer complaints in 1994, then established an engineering team to deal with them. More importantly, it gave the team the authority and a budget to make fixes.

'We took the bureaucracy out of the system,' Hoben says. 'As a result, we reduced the 250 days it was taking from a complaint to a cure to 90 days. That's still a long time,' he acknowledges, 'but it includes the validation process.'

Next, GM extended the Eisenach assembly plant's zero-tolerance policy toward production problems to its other European factories. Eisenach is GM's most efficient European plant. Getting it right the first time only gets you 92 or 93 percent of the way,' Hoben says. 'So we need seven final checks, to look at the car with the eyes of a customer.'

All of Opel's plant workers have access to the andon cords that can halt a line if a defect is seen. Information about the fault is given to the appropriate workstation, but the vehicle still must pass a 100 percent quality inspection.

Perceived quality

Opel must improve perceived quality - the standards of touch, vision, feel, sound and smell of car interiors. Hoben says Opel upgraded the perceived quality of last year's Corsa and next year's Vectra.

Next, Opel must enforce zero-defect standards in product development. 'The same principles as manufacturing will apply in product development,' Hoben claims. 'We will implement quality gates in just the same way.'

It may be a while before consumers see the benefits of this latest initiative. GM had not launched zero-defect product design when it engineered its new Epsilon lineup of mid-sized cars. The first of those Epsilon models - the next-generation Vectra sedan - enters production in January in a new $660 million assembly plant in Ruesselsheim, Germany.

The plan calls for annual output of 270,000 units, including a variety of body styles. Michael Wolf, Ruesselsheim's plant director, says the model will require half the production time of the old one. 'With this setup, we will have Eisenach's levels of output,' he says. If so, then Ruesselsheim will be one of Europe's most productive plants. According to a survey of 44 European plants by World Markets Research Centre in London, Eisenach was the fourth most efficient.

`a culture change'

Ruesselsheim's rebirth required a new approach to training. Ruesselsheim had an established work force, and some traditions die hard. 'It was a culture change,' says Klaus Franz, chairman of the Ruesselsheim works council. 'Our people have an average service of 15 years on the job. They didn't want to go back to school.' But they did. All 7,000 employees destined to build the new Vectra have taken part in what Forster calls 'probably the biggest internal training program in the company's history.'

The work by Hoben and his colleagues is beginning to have an effect, according to the most recent customer satisfaction survey by J.D. Power and Top Gear. In 1998, Opel models were mired in the bottom 25 percent. Now they are spread across the bottom 50 percent. Watch for improvements in coming years, says Hoben.

But the legacy of GM's old ways still are evident. This year, the now-abandoned Sintra minivan - imported from the United States - and the old Frontera sport-utility occupied two of the survey's three lowest rankings.

Hoben is undaunted. 'We have learned our lessons and done our homework,' he says. 'The quality of our products has become considerably better than is reflected by the current market situation.'

E-mail writer Richard Feast at RichardFeast@cs.com

You can reach Richard Feast at autonews@crain.com

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