Ford quality sinks, but sales soar

DETROIT -- While Ford Motor Co.'s sales and market share gains have outpaced those of competitors this year, its quality ratings keep tanking, in large part because of its balky My Touch infotainment system.

Grappling with that paradox is a top priority for Joe Hinrichs, Ford's energetic president of the Americas.

In the Alan Mulally era, Ford has sought to stake out a position as a technology leader in a field that's changing at warp speed. The connectivity features that Ford sees as key to its 21st century DNA are attracting new customers -- while at the same time giving the company fits in quality surveys.

"There's a correlation between freshness of the product lineup and market share. We've chosen to keep our lineup very fresh, which means more frequent launches, more technology, more newness to the vehicle -- which inherently provides more challenges for the quality surveys," Hinrichs said in an interview last week.

"All that being said, I'm not pleased with where we are. We need to make progress, and we will."

Last week the latest Consumer Reports reliability survey ranked the Ford brand 26th and Lincoln 27th out of 28 brands. The magazine has pinned most of the blame on the My Touch system, branded as MyFord Touch in Ford vehicles and MyLincoln Touch in Lincoln vehicles.

Yet Ford Motor's sales this year have been torrid, up 12 percent through October. And the automaker's market share gains -- up 0.5 percent through October, compared with 0.1 percent for General Motors and Nissan, next among the top eight carmakers -- leave other volume competitors in the dust.

Hinrichs said Ford underestimated how many customers would choose the My Touch and Sync systems, a choice dictated in part by the way Ford packaged them in its popular high-end trim lines such as Titanium and SE.

"We assumed a lot lower take rate than we ended up having. The more you have it, the more 'things gone wrong' you bring to the vehicle," said Hinrichs, who was promoted to the Americas job last December after three years running Ford's Asia Pacific unit.

"But you also have higher customer satisfaction on vehicles that have it than vehicles that don't, which is the fascinating part of all this."

Hinrichs said Ford has considered constraining My Touch to keep "things gone wrong" complaints down.

The Sync voice-recognition system, used primarily for hand-free calling and music, can be purchased alone and comes as part of the more complex -- and more trouble-prone -- My Touch system, which controls climate, radio and other vehicle systems via a touch screen.

On 2014 Ford models, Ford said the take rate is 49 percent for Sync only and 44 percent for MyFord Touch, a combined 93 percent.

"Because we're at 93 percent take rate for Sync or MyFord Touch and because of the math, as a leader in take rates, we're going to get more hits for that," he said. "That doesn't excuse the fact we should have launched the system more successfully."

Hinrichs isn't the first Ford executive to promise improvements for the troubled My Touch system. CEO Mulally and marketing chief Jim Farley have said getting the infotainment system right is a major priority.

Ford has issued several software upgrades, extended the warranty on the system and announced that there will be more buttons and knobs in future versions. In response to the difficulties, Ford even offered dealers a technology allowance -- $75 for each vehicle equipped with MyFord Touch or $50 for the Sync system only. Some dealers used the money to hire specialists to help customers synchronize their smartphones and tutor customers on the system's intricacies.

But the moves did nothing to lift Ford in the Consumer Reports survey.

Hinrichs said quality is a complex problem, one measured in three major ways:

1. Warranty claims, a measure of whether something works or not.

"That's obviously a customer dissatisfier for all of us if something didn't work," Hinrichs said.

But, he adds, Ford warranty claims are low: "Those numbers the last few months were the best we've seen."

2. "Things gone wrong," a fuzzier metric that can encompass systems that malfunction or are simply confusing or difficult to use.

"The things gone wrong surveys ask you: 'Did you have trouble connecting your phone?' or 'Did you have difficulty connecting your voice recognition system or recognizing your command?' Almost everybody checks yes at some point in time.

"It doesn't mean they're mad. They want it to work 100 percent of the time."

Owners like the technology, despite glitches, and Ford has cut the number of "things gone wrong" in half, Hinrichs said. "But it's still a large number," he adds.

3. "Things gone right," an industry term that gauges how much customers like their vehicles.

"Our customer satisfaction is actually pretty strong," Hinrichs said. "So which one has the most influence on your buying interest? People want the infotainment system.

"Of course they want it to work 100 percent of the time. But they want it. That's why 93 percent of the people are buying it."

The Consumer Reports numbers, mostly a measure of things gone wrong, were not pretty for Ford, which had been a domestic poster child for quality improvements until the MyFord Touch system was introduced in the 2011 Ford Edge.

This year Consumer Reports rated 62 percent of Ford and Lincoln models "much worse than average" in terms of reliability. Only one Ford model was above average: the F-150 3.7-liter V-6.

"Electronics and transmissions continue to be troublesome," the report said, referring to the My Touch system and the PowerShift dry dual clutch transmission installed in the Fiesta and Focus.

Only Mini finished lower: 28th of the 28 brands rated.

Ford's hybrid and electric models -- including the Fusion Hybrid, C-Max Hybrid and C-Max Energi -- finished at the bottom of the list in their class. The C-Max Energi plug-in hybrid came in dead last among all vehicles, three times worse than the average hybrid.

Consumer Reports cited ongoing issues with the My Touch system in Ford and Lincoln vehicles as a primary culprit. "There's an indication that while these problems were severe in the first year, they're getting worse," said Jake Fisher, the magazine's head of auto testing.

Fisher acknowledged that Ford's aggressive new model launch program contributed to its low scores.

"New models replaced older, reliable ones," Fisher said today of Ford's product line. "These are vehicles with no carryover engines, transmissions or platforms. And this is causing many problems."

Hinrichs said the character of Ford's quality issues has changed since the last decade. Unlike past problems that involved defective parts or manufacturing errors -- both of which could be fixed quickly -- today's issues are "designed into the vehicle," he said. That means fixes can take longer.

One analyst said Ford's strong sales and share gains seem to show that poor survey results have little impact on consumer choices.

"I used to think there was a strong correlation between Consumer Reports and sales," said Tom Libby, analyst at Polk. "But I'm not sure that's true. In terms of market share and overall image, it's not clear that the low ranking really hurts you."

Ford seems to agree. When asked during Friday's October sales call about the impact of the survey, Erich Merkle, Ford sales analyst said: "We haven't seen any material impact. This was the best October retail sales month since 2004."