Quality cost


#1

Hello,

For my studies I am trying to find the cost of poor quality. Meaning I am trying to find how much it costs for an automotive company to recall or refund a client that received a defectuous car. Do you have any information on how many average recalls or defects a automative company has ? Or the amount of a refund/warranty ?

Thanks !!


#2

I believe most recalls involve design flaws, not shoddy workmanship.


#3

You might want to look at this site https://lemonlawexperts.com/study-lemon-law-claims-data-us/


#4

You might want to think of your question differently. Quality is not about recalls. Recalls as @B.L.E says, is not about quality but about design flaws that affect safety. Using recalls is not a measure of quality.

It can be said that “Quality is Free” but in actuality, you spend money up front to prevent losses down the road.

Think of the cost of quality as “paying it forward.” If a person buys a good car, they might tell 5 friends about the car. If the car has defects that require a return to the dealer for warranty repair - rattles, shakes, leaks, broken accessories, paint defects - they tell 3-4 times more people. If the dealer treats them poorly or doesn’t properly fix their car, they tell even more.

That gives 20 people the impression that car company is not one to consider when they buy their next car. Since the average age of cars on the road is 11 years and the average time someone keeps a car is 6 years, that kind of bad publicity hurts sales for many, many years. It costs a company millions in advertising and sales incentives to overcome that.

As for the individual cost of one trip to the dealer to repair a defect, it is irrelevant compared to the opportunity cost to upset one customer for a poor dealer experience.


#5

To be blunt, unless this is a middle school report, your instructor/professor is going to expect a lot more focus in your lines of inquiry.

None of us have this information at our fingertips any more than you do. You’ll need to research it.


#6

Research warranty costs by company. Here’s what I got after 2 minutes:

from
http://www.warrantyweek.com/archive/ww20160107.html

Here’s some imports (note expanded scale)


#7

Warranty costs are only one facet of the overall total COPQ. Much of that data is not broadcast outside of the company. I agree with others, you need to refine your goal.


#8

Of course, but they’re an indicator. Those plots agree with many folks’ thoughts on car quality by maker.


#9

I wonder who Milena thought they were contacting here. It seems if a subject for research was assigned at least the instructor would have said the research sources should be credible and verifiable . That would eliminate a web site forum.

I think Mr. Turbo is correct , this type of information might not be available to just anyone.


#10

Those plots agree with many folks’ thoughts on car quality by maker.

Of course they do because that’s what the consumer sees.

When someone starts tossing around COPQ and only looks at the externally visible indicators, they’re missing a big chunk of the story. Just because a company has low warranty costs does not mean they do not have numerous internal problems. BTDT.


#11

For those like me who don’t deal in acronyms .
COPQ = Cost of Poor Quality BTDT = Been there Done that


#12

Thank you for your answer. It is a long term research, and I am trying to get all information on processes and experience to broaden my knowledge on the subject. My question was purposely open to see different inputs and different direction/leads or new ideas/costs you could add.

I am taking into account all the prevention, appraisal, internal failure and external failure cost. I only asked about external failure costs on this forum as I wanted answers on experience you could have had on the process when a defect is seen and a customer complaint. If you have input other than the external one we can discuss it !

If you already had a recall or a defect, I wanted to know the procedure you had and the amount you believe was paid. Of course if you have any other input that you think could help me as leads for my research I would gladly take them.

The information I am missing now is the process when a customer complains and the amount given to the customer.


#13

The amount of what given to the customer? Cash? - None Grief? - Could be a little or a lot. Satisfaction? - could be a lot, could be a little, could be none.

When a customer complains, usually to the dealer’s service writer, the dealer addresses the complaint in terms of warranty work done to the car and charged back to the manufacturer. Note: dealers are independent franchises, not owned by the manufacturer.

If the repair doesn’t meet the customer’s satisfaction, they can elevate the complaint to the zone representative of the manufacturer. That might get another attempt at repair or the engineers may be engaged to assist the dealership but little else.

In the event of a car defined under the owner’s state “lemon” laws, the manufacturer will be required to buy back the car. State laws vary. In a rare instance, the manufacturer may get sued in civil court.

I was formerly an engineer for a major automaker. My first car purchased at discount from that automaker was, by far, the worst car I have ever owned and that includes 2 used cars purchased with over 90,000 miles. 14 trips to the dealer for 27 separate complaints. Two that were repaired unsuccessfully at least 5 times. Long before lemon laws. So, been there done that.

My last new car has never been in for a warranty complaint and it is now 14 years old. Oddly enough, from the same manufacturer as the worst.


#14

Your research method is flawed because there is hardly ever money given to a person just because of complaints. The problem is repaired under warranty and if the Lemon Law is applied the vehicle is replaced with possibly some charge for usage . Besides if I gave you some info on this forum how would you even know if it was true?


#15

If you want to see a good example of the cost of poor quality, read the book “Iacocca”.

In the book, Lee Iacocca talks about Chrysler’s reputation poor quality that was so bad, they had to sell cars for less than the cost to manufacture in order to get them out of the factory.