Why Ford Motor Company's Quality Ranking Improved By Leaps and Bounds

Ford Motor Company's ranking in J.D. Power's initial quality study jumped 11 spots, more than any other brand. Here's why.

Jun 21, 2014 at 10:01AM

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Ford's Escape has impressed critics, though its previous MyFord Touch did not. Source: Ford Motor Company

Over the past couple of years there was a clear trend with Ford's (NYSE:F) quality ratings: The cars overall were improving, except the infotainment system built into them was getting worse. While Ford's Fusion and Escape were impressing consumers with their performance, the vehicles' MyFord Touch infotainment system was tarnishing first impressions with consumers and critics alike.

Let's examine the root of the problem, see how Ford responded, and assess how that helped the company jump higher in the rankings than any other brand in J.D. Power's 2014 Initial Quality Study.

How bad was MyFord Touch, really?
Starting things off on the wrong foot, the automaker's MyFord Touch system replaced common knobs and buttons with touch and voice activated features, which proved only to irritate consumers. Complaints typically noted that Ford's infotainment system often froze, quit responding to commands, and had poor connection with mobile phones.

MyFord Touch was so awful that a group even proposed a class action lawsuit to sue Ford regarding its defective infotainment systems.

To help emphasize the impact that Ford's buggy infotainment system had on its quality scores, consider that Ford had ranked in the top five of J.D. Power's initial quality study as recently as 2010 before beginning its steep downward spiral the very next year when the MyFord Touch was first introduced.

Ford took the complaints and feedback in stride and made numerous improvements to the system over the last few years, including adding knobs and buttons back into the interface. Finally, the folks at the Blue Oval are reaping the rewards of those efforts in J.D. Power's 2014 Initial Quality Study.

Mustang

Interior of Ford's 50th edition 2015 Mustang. Source: Ford Motor Company

Vast improvement
J.D. Power's quality study, now in its 28th year, examines problems experienced by vehicle owners during the first 90 days of ownership. Feedback was incorporated from more than 86,000 buyers and lessees of the new 2014 model vehicles through the first five months of this year.

With Ford's infotainment system vastly improved it lowered the problems and complaints in its 2014 models and drove Ford's ranking in the study up 11 spots to No. 16. That jump was the biggest improvement by any other brand in the study and the folks at the Blue Oval are surely thinking that 16th place never felt so good.

Ford's luxury Lincoln lineup also uses a similar infotainment system, thoughtfully dubbed the MyLincoln Touch. The improvement to that system also helped propel Lincoln's ranking seven spots higher which landed it inside the top 10.

Despite the improvement Ford has made on its often maligned system, it recently offered some hints as to what the future holds.

Back in February Ford ended its partnership with Microsoft that had developed the MyFord Touch system and switched to new software made by BlackBerry. Ford hinted that a very significant overhaul is well into the development stage and could be ready for vehicles by the end of 2014.

Why it matters
Investors would be wise to keep an eye on Ford's all-new or significantly overhauled infotainment system for a few reasons. First, such a system's ability to connect to drivers' everyday digital lives has become a key differentiating factor between automakers and is becoming a battleground of sorts over which automaker has the best technology.

Second, these infotainment systems, along with other vehicle technologies, enable automakers to charge a slight premium for vehicles, which helps improve average transaction prices as well as a company's top-line revenue.

Third, automakers have caught on to the fact that newer technology in vehicles tends to attract a younger, and sometimes more difficult to lure, consumer. Also, just as one would surmise, J.D. power found that a strong correlation existed between brands with fewer problems and higher customer loyalty -- maintaining consumer loyalty is critical in the highly competitive automotive industry.

If Ford takes another big stride forward with its next-generation infotainment system, which could be introduced later this year, expect its quality rankings to jump even higher next year. It would be just another bonus in Ford's overall turnaround story, for consumers and investors alike.

A technological shift that Ford called "fantastic"
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to invest in this megatrend. Click here to access our exclusive report on this stock.

Daniel Miller owns shares of Ford. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford and 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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