Joe Hinrichs, the former Ford of Canada president who now oversees all of Ford’s operations in both North and South America, says he and everyone at Ford have a laser-like focus on quality. Good thing on a bunch of fronts, especially when it comes to brand-building.
Ford Motor has suffered a recent series of embarrassing recalls, and the delayed arrival of the new Lincoln MKZ – to fix quality issues before customers experience them – has been costly. Hinrichs, a manufacturing expert and a contender for the CEO job at Ford at some point, is on a quality mission to change all that.
“There’s a reason that when you walk in my office, you see that headline from the Detroit Free Press: ‘Quality? It's Ford.’ Everything to do with quality is without question of the highest priority to the North American team – MyFord Touch specifically,” he recently told Automotive News.
This brings me to brand-building. It is as if Hinrichs, 46, had just read the prescription for improving the value of a brand in the latest Millward Brown survey of the world’s most valuable brands. Indeed, in the 2013 BrandZ Top 100 Most Valuable Global Brands report, Ford’s brand value improved 8.0 per cent from 2012. The Blue Oval is now worth $7.6-billion (U.S.) and is ranked No. 7 among the world’s auto makers. Apple is No. 1 overall, worth $185-billion (U.S.).
Now imagine what might happen to Ford’s brand if the No. 2 Detroit car company somehow manages to attain Toyota’s quality reputation, or something close to it. Have a look at the Top 10 car companies in the Millward Brown report. The numbers below are in billions of U.S. dollars. In parentheses you’ll also find the overall Top 100 ranking of the car companies, and the percentage increase in brand value in U.S. dollars:
|Auto Maker||Brand Value (in U.S. billions)||Overall Top 100 ranking||Brand Value % change 2013 vs 2012|
(*) Did not rank in the top 100
Source: Millward Brown
So the Toyota brand is worth roughly three times that of Ford and rising with a bullet, suggesting that over the last couple of years Toyota “rehabilitated a reputation for reliability compromised by the recall problems of 2010,” said the report. In other words, you can put a dollar value on quality.
“Car makers improved quality and added features consumers wanted (last year),” adds the report. “They set the bar higher. Their expectations raised, consumers want uncompromised quality and can easily switch brands if necessary.”
Think on those last few words – consumers “can easily switch brands if necessary.” Poor quality necessitates a brand switch in the eyes of many consumers. On top of that, Toyota’s success with gasoline-electric hybrids has been a brand enhancer, says Millward Brown.
"Its hybrids are reinforcing the experience of the brand, and in so doing, Toyota continues to magnify what is special and different about it,” Peter Walshe, Millward Brown global brand director, told Automotive News.
I mention Toyota again because Ford’s Mulally has made no secret of his admiration for Toyota’s ways. Ford, under Mulally, regularly makes a point of emphasizing that its products now beat Toyota on fuel economy in every segment where the two compete head-to-head. I’ve never seen it, but I suspect that if you walk into Ford’s world headquarters in Dearborn, Mich., you might find a big blue banner (for Ford) with red letters (for Toyota) screaming “BEAT TOYOTA!”
And another thing: new products and fancy technologies that work also make a big difference. Millward Brown says BMW’s brand value fell marginally thanks to a lack of big-time product launches last year. BMW is a powerful and distinctive brand, but Walshe told the industry publication that the “automotive brands that grew the most were the ones that launched the most models."
This takes us back to Hinrichs. In a separate interview with Automotive News, he discussed the ramped-up pace of new models introductions at Ford – how the advanced designs and the fancy hardware and software that Ford is counting on to buff its brand have put tremendous pressure on the company, its engineers, designers, factories and suppliers. The pace of launches and the complexity of the new technologies will accelerate at all car companies.
“You can't wait five years to introduce new technology to a vehicle,” he told Automotive News, adding that all Ford’s models will regularly get “major changes to the vehicle to keep them fresh in the eyes of the consumer.”
The trick for Ford and its rivals is to get the quality right – right from the moment a new model leaves the factory door. Failure comes at a very real price, as the Millward Brown study shows.