chuckNX

I was reading an article on Tesla's quality issues (link below).

A few salient points.

1. Tesla spends more than twice as much on warranty repairs than Ford or GM.
2. Tesla spends more on warranty costs than Mercedes Benz
3. Tesla and other auto makers don't reveal specific figures for warranty costs per vehicle, but they do disclose vehicle deliveries, and total spending for warranty repairs and accruals, representing money set aside for future warranty repair work.
4. Last year, according to a Reuters analysis of data provided in the company's annual report, Tesla spent $1,043 per vehicle on actual repairs and set aside $2,036 in warranty accruals to cover future repairs on the vehicles it sold in 2015. It trimmed warranty expenses by 17 percent from 2014 and cut warranty accruals by 34 percent.
5. GM spent just $400 last year for every vehicle it sold on warranty repairs and set aside $332 for future work. Ford spent $429 per vehicle and set aside $308. Daimler spent $970 per vehicle and set aside $1,294.

This got me to thinking. Why doesn't the automotive industry and consumer reporting agencies use the (average warranty repair cost per vehicle metric) when determining quality/reliability?

Now obviously Tesla is an outlier since it only builds 50k or so vehicles per year compared to millions for Ford and GM. Consequently, Tesla may not enjoy the same economies of scale which may be impacting warranty costs. However, for the other large car brands, this metric would seem valid.

I would be curious to know what Toyota and Lexus spend to determine if there is a correlation to quality and reliability or just inefficiencies in the various warranty repair processes among the different car makes.





http://www.reuters.com/article/us-te...-idUSKCN0XO1M3

Toys4RJill

Interesting article, however Tesla stills sells to a highly affluent population who keep buying their cars. They are selling a future vehicle with supercar performance for flagship pricing. The numbers don't really compare all that well as Tesla sells in low low volume whereas everyone else has huge high volumes that keep the averages of the warranty claims lower

mmarshall

Although it doesn't necessarily explain all of the reasons, one factor among the reasons Tesla has high warranty costs (besides very complex electronics that aren't always reliable) is the fact that, unlike most manufacturers where dealerships are privately-owned franchises, and bear most of the costs of operating them, Tesla outlets are company-owned. That means that, unlike most manufacturers, Tesla not only has to pay for just the parts and labor on warranty repairs at the dealerships, but also all of the other costs involved in running those shops...energy/utility costs, property taxes, management salaries, employee benefits besides the labor, costs of maintaining the buildings, insurance on the buildings and the vehicles in stock, and a number of other things. It can quickly add up, even for just a few warranty repairs.

Bob Lutz, an auto executive I have always thought highly of, has pointed out several times that, while he personally likes Elon Musk (Tesla's chief), he doesn't think that the Tesla system of doing business is going to survive in the long run. Though it has been tried several times before (including with John DeLorean's stainless-steel sports-car), no auto company or corporation has ever made money on company-owned outlets/dealers....the overhead costs are just too high.

chuckNX

Interesting, that makes total sense. My friend just purchased a Model S in Portland. He has been complaining about the poor service for two months. Either tesla needs to build real dealerships or partner with someone. I don't think they can scale working out of shopping malls and business park warehouses.

mmarshall

I like the term you use......."Business Park Warehouse". Couldn't have said it better.....Unless they've changed or remodeled since the last time I went there to look at a Model S, that's exactly what the local Tesla shop at Tyson's Corner in the D.C. suburbs (just a couple of miles from my house) looks like....even the customer showroom. It's basically a couple of bare-concrete structures, with a window built into one of them for a showroom, a couple of rudimentary desks, and hardly any place for customers to even sit down. This, right next door to a bunch of high-zoot privately-owned dealerships (Porsche, Mercedes, Jaguar, Aston-Martin, etc,.....) in a classic big-money area.....the second-most expensive business real-estate on the East Coast, outside of Manhattan in New York City.

Fizzboy7

A few points about this. One, more expensive cars such as the Tesla usually cost more to fix. So higher repair costs do not necessarily mean more things are breaking. Two, those buying cars such as these and other high brand, usually have a much higher standard and expectation about the quality of their vehicle. So these owners are far more likely to take the car in for minor things or just annoyances. Lastly, another thing I've noticed over the passed few years is the age of Tesla owners. They are young to middle-age. Such younger demographic is far more likely to hear squeaks and rattles compared to a senior.

mmarshall

You can't just attribute it unto younger ears. Today's vehicles, mainly because of better assembly-tolerances, stiffer frames/unibodies, and advances in robot-welding precision, DO, in fact, have fewer rattles and squeaks than before....young ears or not. I can remember brand-new GM and Chrysler vehicles from the late 70s and early 80s becoming rattletraps almost overnight.....within the first couple of thousand miles. That (and numerous other quality problems) is basically what drove American-brand car owners to Japanese brands in the 1980s.

Wandl

Great statistic I didn't know someone even collected that across the industry. I'm sure extended warranty companies rely on this for their pricing; curious how much FCA spends on warranty as most of their vehicles rank horrendously in reliability and repairs - especially since they have an available lifetime bumper-to-bumper Maxcare warranty

Toys4RJill

I would bet it is competitive with GM and Ford. It's all calculated and built into the design of the vehicle. There is no secret thing that makes a car reliable or lot. A manufacturer either designs a vehicle to be reliable based on a combination of parts, design, manufacturing etc etc. They all watch what the others are making and they reverse engineer. General Motors has not be reliable for the last 30 years not because they cant make a reliable vehicle, it's because reliability is not a hallmark of their brand.

mmarshall

http://www.detroitnews.com/story/bus...inue/80843824/

General Motors Co. and Toyota Motor Corp. are leaders in vehicle dependability,

Both GM and Toyota had all of their brands perform better than average, with several vehicles leading in their respective segments.

GM received eight segment awards, the most of any carmaker: Buick Encore; Buick LaCrosse; Buick Verano; Chevrolet Camaro, Chevrolet Equinox; Chevrolet Malibu; Chevrolet Silverado HD; and GMC Yukon.

Toyota followed with six segment awards: Lexus ES; Lexus GS; Lexus GX; Toyota Prius v; Toyota Sienna; and Toyota Tundra.

mmarshall

Good point. I agree......I'm sure they look at whatever stats are available. Some of those extended-warranty-companies, though, are scams. In general, the ones that are scams (and I've seen some of the offers they send through the mail) send notices that are disguised to look like official vehicle recall-notices, to try and make you think that it is something important or legitimate. I did a thread in Car Chat some time ago on how they operate.

FCA vehicles probably aren't any worse than Jaguar or Land-Rover in average number of problems per vehicle...but you won't see Jag or LR on some reliability-ranking lists simply because of lack of data from low sales.

TRDRAV4

When you do with a vehicle positioned as a 'luxury' car, chances are, they are leased vehicles, and for Tesla, many of the buyers aren't concerned about the long-term because they won't be in the driver's seat past the lease/warranty period.