• by Karl Greenberg , May 14, 2010

In the world of automotive quality consumer perception may lag reality, sometimes by years, but it also trumps reality when it comes to determining things like resale value, and therefore what an automaker can charge for a vehicle when it is new.

Jim Farley, Ford's head of marketing was on the phones this morning with salubrious news for the Dearborn automaker, which has been dealing for some time with consumer perception being way behind the automaker's real-time improvements in vehicle quality. The Automotive Lease Guide (ALG) says Ford now tops the industry in how much it has improved in the lastest study. In the Guide's Automotive Consumer Attitude Survey (ACAS) which measures a brand's Perceived Quality Score (PQS) relative to the industry, Ford and Ford trucks are first and third place, with Kia in the middle and Hyundai at number four.

Chevrolet is the fifth most improved brand in perceived quality. Also striking in the Spring 2010 study is how much Toyota's recall issues around unintended acceleration have hurt its PQS: the brand is in last place, with quality having dropped 16.5 points on a 100-point scale per ALG. It's worth noting that this rank really measures and automaker against itself since it's a ranking of improvement or decline in a brand's PQS. . "Perception of brand is just as important or even more than fact," said Farley. "But what I've learned over twenty years is the truth comes out. And what we are starting to see this year is about 84% of Ford customers are satisfied with the quality of their vehicles. The other thing we are seeing in the data this year is that of the people who have bought our products of the past couple of years the favorable opinion is higher than that of our competitors, so the people buying our current Fords have a different experience of perception of Ford than people on the outside," he says. "But we are starting to see perception catch up to reality."

Farley says that proof of Ford's altered status in terms of perception is in the pudding: people are voting with their wallets. "Resale value is the ultimate proof point. You can win awards like [J.D. Power & Associates'] IQS but until you can prove to customers that their car is worth more than other companies, it's a reputation issue, not a wallet issue. Now it's becoming a wallet issue.

He says for vehicles in service one to five years Ford vehicles outperformed Toyota by 17% at auction prices, and that vehicles with one year of service like Fusion, Taurus, or F-150 have experienced a 17% improvement in pricing at auction. "Perception of quality, company and product are leading resale values," he says. "It means we can eliminate discount relative to quality and get back to pricing power and parity."