Has Ford Solved Its Quality Woes?

Delivery delays. Customer complaints. A big drop in the Consumer Reports ratings consulted by millions of car buyers.

Lost sales.

Big public quality glitches are a huge problem for any automaker in today's hypercompetitive global auto market. The pressure to achieve quality levels that match the legendary standards of Toyota (NYS: TM) and Honda (NYS: HMC) is immense, particularly in the U.S., and a failure can be expensive -- even if the exact cost is often difficult to quantify.

All of the automakers have quality flaws every now and then. Even Toyota's products don't always live up to Toyota's standards. But Ford's (NYS: F) recent experience with a quality problem with a highly visible feature -- a feature that drives a lot of sales for the Blue Oval -- is an instructive lesson in how even a minor issue can become a big deal, and how expectations around "quality" have shifted in recent years.

When Ford's secret sauce turned less tasty
Ford's acclaimed SYNC system has been a surprisingly big sales driver for the Blue Oval over the last few years, with lots of buyers listing the "infotainment" suite as a major factor in their decision to buy a Ford. SYNC, if you're not familiar with it, is a suite of high-tech features that includes advanced voice-recognition from Nuance Communications (NAS: NUAN) and audio hardware from Sony (NYS: SNE) powered by a special Microsoft (NAS: MSFT) operating system. It integrates your cell phone with the car's stereo and navigation systems, lets you activate many features via voice commands, and offers a whole suite of gadgety experiences (like a Twitter connection) that Ford's competitors have lacked (at least until recently).

As General Motors (NYS: GM) , Hyundai (OTC: HYMTF.PK), Toyota, and other key rivals upped their infotainment offerings in response to Ford's success, Ford naturally sought to extend its lead. The company introduced an add-on to SYNC called MyFord Touch, an optional upgrade that adds a large touchscreen to control dozens of additional features.

Those touchscreens started arriving in showrooms early this year, and that's when the complaints started. Some drivers found that their screens froze, or often failed to respond. And the user interface was widely panned as confusing and cumbersome. Consumer Reports dissed the system as "complicated" and slow to respond in initial reviews, and followed up with complaints that MyFord Touch and Toyota's similar upcoming Entune system were potentially dangerous distractions for drivers.

Complaints about MyFord Touch were a big contributor to Ford's recent fall in the magazine's quality ratings, it said. Clearly, a response was needed, and Ford committed the resources needed to make it happen quickly. Ford CEO Alan Mulally said in October that solutions were already being implemented on production lines.

Ford released some details on the MyFord Touch solution on Monday, and it comes with an interesting twist: It's a software upgrade, meaning that it can be applied to all affected cars -- even the ones that have already been sold.

Planned un-obsolescence
Ford will mail all current MyFord Touch owners a copy of the upgrade on a flash drive, which will install itself automatically once it's plugged into the dash -- or they can have it installed by a dealer, the company said. The upgrade makes the system faster and easier to use, simplifying data displays while keeping the familiar color-coded look of the system intact.

In a way, the MyFord Touch drama shows just how far the auto industry, and Detroit in particular, has come in recent years: Not long ago, cars were designed with "planned obsolescence" in mind. Essentially, products were created with the intention that they would look and feel dated in a few years, in order to encourage owners to buy another vehicle.

Cars still get regular improvements and styling changes, but part of the current understanding of "quality" is that a car should feel current and new (or at least new-ish) for several years. One of SYNC's selling points has been that Ford would continue to upgrade the system in coming years, and that those upgrades would be available to all owners of the system, just like we've come to expect with our smartphones and computers. Having just delivered on that promise, it will be interesting to see how the results are reflected in future quality surveys.

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At the time thisarticle was published Fool contributor John Rosevear owns shares of Ford and General Motors. You can follow his auto-related musings on Twitter, where he goes by @jrosevear. The Motley Fool owns shares of Ford and Microsoft. Motley Fool newsletter services have recommended buying shares of General Motors, Microsoft, Nuance Communications, and Ford, as well as creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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