GM aims to top Toyota on quality

GM aims to top Toyota on quality
Plans to lead J.D. Power survey by 2005 model year
Hints spending with Canadian suppliers may rise


ROB FERGUSON
BUSINESS REPORTER

HAMILTON—General Motors Canada Ltd. threw down a gauntlet at Toyota Motor Corp. yesterday, setting the ambitious goal of unseating its rival as the top-quality auto maker in North America.

By the 2005 model year, GM said, it plans to lead the well-known J.D. Power survey on initial quality for new cars, in which the world's largest auto maker now lags Toyota, BMW and Honda.

"You have to play the game to win,'" Kevin Williams, GM's vice-president of quality for North America, told hundreds of the company's Canadian suppliers at their bi-annual meeting.

"Quality is one of the only ways we are going to regain leadership in the marketplace; second or third place is no longer good enough.''

By 2006, GM said its aim is to dominate Consumer Reports magazine's long-term vehicle quality survey, which this week named the Oshawa-built Buick Regal as the most reliable family sedan, beating Toyota's Camry and Honda's Accord, among others.

Further out, with no target date set, is the goal of changing a consumer mindset that views automobiles made by Japan-based firms as the best. That perception has led to shrinking market share for Detroit's Big Three auto makers in the past two decades, prompted plant closings and thousands of job losses.

"These are the areas where, quite frankly, we're playing catch-up,'' said Gary Cowger, GM's president of North American operations.

"There's no question about it, our goals are ambitious."

The Big Three — GM, Ford and DaimlerChrysler — have been criticized in recent years for focussing too much on short-term profits, such as developing hot-selling sport-utility vehicles, while their rivals quietly put more energy into the basics like building highly reliable autos.

"We're working to design vehicles that don't break down in the hands of customers,'' Williams said.

Knocking foreign-based auto makers off the top of the quality pyramid is going to be difficult for GM, even as it has steadily improved in quality measures, such as with its revamped Cadillac brand, industry observers said.

"Was that me snickering?'' quipped one auto industry analyst.

"For GM to beat them across the board is going to be a challenge,'' said Robert Lander, chief executive of power train manufacturer Stackpole Ltd., whose major customer is GM.


While GM has five of the top six assembly plants in terms of production quality, foreign-based auto makers "keep raising the bar and the Big Three are going to keep chasing it."

Toyota reported unexpectedly strong growth in its profit for the first half of the fiscal year on thriving sales in North America.

Toyota said yesterday net earnings rose 23 per cent to $4.81 billion (U.S.) for the April-September period from $3.7 billion a year earlier.

In Canada, Toyota's market share has reached 10.6 per cent for the first 10 months of this year, up from 8.6 per cent over that period in 2002.

In October, among auto makers with monthly sales of more than 3,000 units, Toyota was the only car company to register a sales increase in the Canadian market. Toyota's Cambridge plant produces the Corolla, Matrix and the new Lexus RX 330.

Another challenge for GM's quality push comes with a busy schedule for the launch of new vehicles, with 22 in the 2004 model year, including the redesigned Chevrolet Malibu.

Within four years, 90 per cent of GM's products will be new, said Cowger. That puts a lot of pressure on assembly lines and parts manufacturers to get vehicles right.

Williams acknowledged GM needs a "flawless launch,'' without problems quickly cropping up in new vehicles once they get into customers' hands.

Suppliers play a key role in the drive for quality, with big money and jobs at stake in southern Ontario, where the country's auto industry is concentrated.

Williams, who at the same meeting two years ago gave suppliers a verbal spanking for "sub-par" quality over-all, congratulated them for major improvements.

GM held out the possibility it could be spending $20 billion on Canadian suppliers of parts and services in a few years, up from $16 billion now, if quality and costs keep improving.

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