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Ford reduces warranty costs by $1.2b

With new car sales dropping like the proverbial lead balloon, virtually every automaker is looking for ways to cut cost. Ford is no exception, with the Blue Oval taking aim at its warranty costs in order to ensure a healthier bottom line.

Although Ford lost more than $5 billion during the fourth quarter of 2008, its efforts to improve quality is showing marked improvements on the company's financial books. According to Ford, it has wiped $1.2 billion in warranty costs off its books over the last two years. The improvements come even as Ford has upped its warranty coverage from 3 years/36,000 miles to 5 years/60,000 miles.

"The last 24 months have revealed some of our best quality results," said Curt Yun, director, Global Warranty. "Our new models have been achieving continuously declining warranty repair rates and lower warranty costs, as a direct result of our overall quality improvements."

In addition to lower warranty costs, Ford also saw significant improvements in "Ėœthings gone wrong', or TGW. The Ford F-150 and Ford Mustang GT500 topped their respective segments for TGW, with 18 of Ford's 24 domestic models showing improvements in TGW.

Overall, Ford has seen the repair rate for Ford, Lincoln and Mercury vehicles decline by nearly 50 percent since 2004, showing the automaker is once again dedicated to making quality products.